Today felt a little like payback for markets as the bounce in equity indices comes amid rises for recently beleaguered names such as Glencore, Tesco and J Sainsbury. However, the overall picture remains worrying for bulls as the losses continue to outweigh the gains which come as almost an afterthought.
Bringing a close to the worst quarter for four years, there are many who hope that there will be similarities to the 2011 selloff, which largely ended as Q3 changed into Q4. Today’s rally is one part of such a recovery, but for now, we remain firmly below the 6123 level which would bring about hope for a more protracted period of upside for the FTSE.
Nothing buoys markets like the idea of more QE and for that reason, this morning’s data release from the eurozone certainly ticked the boxes to set up the second largest rally in September. Rising unemployment and a deflationary CPI number in the eurozone provide a perfect backdrop for Mario Draghi to further broach the idea of an extension and/or intensification of the current QE programme.
Draghi has already mentioned QE expansion is possible and according to S&P, the ECB could push back their QE end date to mid-2018; some three years of additional easing, which would amount to a total of €2.4 trillion.
Today’s ADP payrolls number punched higher to 200k, only to be set back by a downward revision to the August figure. Unfortunately, the impact of the jobs market appears to be waning, with many believing that even a strong employment market may not be the key to a rate hike, owing to the impact of disinflation and Chinese worries. Thus the already questionable ADP figure today took a backseat as we await Friday’s main event.
Crude inventories saw the biggest weekly rise in September, rising by four million barrels to send both Brent and US light crude tumbling once more. September has seen the least oil volatility for a year, but this was more than made up for by the rapid rally that then recouped all the losses suffered in the aftermath of the release.