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Spreadex Market Update

Monday, January 12, 2015 - Afternoon Market Update
Connor Campbell - Market Analyst at Spreadex

US open causes global markets to suffer in anticipation of poor earnings season

Banking firms like Wells Fargo, Goldman Sachs and Bank of America all expected to post Q4 2014 earnings later in the week; this soft opening from the US markets in anticipation of these results suggests that, despite many of the positive figures last week, there are still key areas that need to be addressed before an interest rate hike can take place. A limited day for data means that the statement from FOMC member Lockhart later today will gain extra significance, especially in light of last week’s dismal wage growth figures.

After receiving its downgrading from Goldman Sachs this morning, oil didn’t stand a chance of making any gains this afternoon. Brent Crude dipped below $48 per barrel as the day went on, weighing more and more heavily on the very concept of an oil support level.

Despite oil’s continued decline, as well as the colossal drop by Afren, the FTSE had managed to hold onto its marginal morning gains. A quiet Monday had allowed the FTSE to putter along without much trouble until the open of the US markets introduced instability and caused the index to suffer alongside its bigger colleagues. Tomorrow could see more bad news as the UK announces its CPI figures; with the Eurozone slipping into deflation last week, a careful eye will be on the direction of the UK’s figure.

With more QE-positive comments sprinkled throughout this morning, the Eurozone ignored any less-then-favourable remarks from people like French finance minister Emmanuel Macron and Ifo President Hans-Werner Sinn to restart the gains it had begun to make last Thursday. Macron asserted that the ECB would need approval from France and Germany for QE to go ahead, comments in conflict with Draghi’s remarks last December that the Central Bank does need unanimous support to start a stimulus plan. Instead of acknowledging the fraught relations at the heart of this QE push, investors continued to focus on the likelihood of quantitative easing, allowing the Eurozone to escape once more from its internal troubles.

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The Trading Day and Week Ahead

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If you are unsure what different Economic Figures mean take a look at our Economic Indicators Explained guide.

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