Calm bond markets see eurozone jitters cease

Heading into the close the FTSE 100 is up 95 points at 6290 as fears over the eurozone ease for now.

Janet Yellen
Source: Bloomberg

Eurozone fears ease

In London equities are finishing the week on a positive note as Greek bond yields retreat. The fear has evaporated out of the eurozone today as bond markets have calmed down but I wouldn’t get too comfortable as next week is likely to be a rocky ride.

The eurozone debt crisis has a history of rearing its ugly head, Ebola has yet to be contained, China’s GDP report will tell us the golden days of Chinese growth are over. Confidence in equity markets takes months to be gained but it is lost in hours. 

General Electric's direction pleases traders

In the US the Dow Jones is up 245 points at 16,362. Strong consumer confidence, combined with robust results from blue-chip stocks, is fuelling the rally. Bank of New York Mellon and Morgan Stanley proved that Wall Street banks rule the roost, while General Electric’s earnings per share marginally missed estimates but the change of strategy away from finance and more concentration on the industrial side of the business pleased traders. 

Gold in downward trend

High grade Copper is hovering above the 300 cents per pound level. The Hong Kong protests may have faded from the headlines but China is still in focus as the third-quarter figures are out next week. Soft GDP numbers could be the final straw for the red metal.

Gold has slumped back into the downward trend — traders are less fearful about Greek debt so gold has lost is edge. Meanwhile, oil has recouped some of this week’s losses. The energy is firmly in oversold territory but the fundamentals don’t show a major correction any time soon. 

Yellen focuses on wealth inequality

Traders were looking to Janet Yellen for a clue as to when interest rates will be on the move but Ms Yellen dedicated much of her speech to wealth inequality. The only wealth inequality traders are interested in is the widening gap between the US and the eurozone.

The University of Michigan consumer sentiment jumped to a seven-year high, which gave the traders ammunition to go long on the greenback again. The jump in consumer confidence was taken as a sign that quantitative easing is soon coming to end. 

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