Spreadex Market Update
Tuesday, January 13, 2015 - Morning Market Update
Mixed morning on the markets as earnings season proves inconsistent
United Arab Emirates’ oil minister Suhail bin Mohammed al-Mazroui was the latest member of OPEC to defend the consortium’s refusal to act over oil’s precipitous fall. Stating that the cabal were correct not to cut in November, the minister went on to mention the importance of US shale gas to the global commodity markets. As the minister pontificated over the correctness of OPEC’s decision, oil continued its point purge, with Brent Crude slipping to 6 year lows of $45.25 per barrel.
Despite oil’s decline, the FTSE has finally shown resilience towards its energy-sector, and was buoyed at the start of the day by some better-than-expected Christmas statements from key companies. The announcement that CEO Dalton Philips was leaving caused Morrisons’ stocks to rocket up, proving that cutting dead weight can overcome bad news in times of crisis. ASOS was a big winner this morning as retails sales were up 15%, with investors ignoring a decline in its retail gross margin; Greggs was also positive, claiming that the company expected to beat expectations following a strong Christmas. Results like these helped the UK index overcome struggling stocks like Debenhams, and its suffocating energy-sector, to post gains after the bell.
However, the party couldn’t last all morning, as the confirmation that the UK’s inflation had fallen to its lowest figure since 2002 at 0.5%. Embarrassingly for Mark Carney, such a fall means he will be the first governor of the Bank of England to have to write to a Chancellor to explain why an inflation target was under, rather than over, shot. Yet the expectance of this news meant investors had factored in the disappointing figure, and the FTSE was allowed to continue its marginally positive run this Tuesday morning.
More political uncertainty is exactly what the Eurozone doesn’t need at this key juncture in its history; however, as news came out of Italy that President Giorgio Napolitano is expected to stand down, potentially as soon as tomorrow, that is exactly what it got. With the Greek election looming next week, the ECB gearing up for decisive (or potentially indecisive) QE action, alongside the growth of Spanish political upstarts Podemos and the most unclear election in decades from its EU partner the UK, the Eurozone is currently stumbling in the proverbial dark for economic and political consistency. This instability is being felt on the markets as Eurozone indices lurch between gains and losses on the back of the slightest hints of QE hope or dismay.
Finally, the US markets closed at a loss last night as investors were spooked by analysts’ negative expectations for this quarterly announcement season, despite the Fed’s Dennis Lockhart claiming the Federal Reserve is ready to raise rates in mid-2015. With a flurry of banking firms to announce earnings later this week, today’s stock focus will be on GameStop, as the company tries to avoid going the way of the UK’s Blockbuster by modernising its approach to in-store sales.Recent Posts:
Afternoon Market Comment 12/01/2015
Stock of the day 12/01/2015 - Morrisons
Weekend Paper Roundup 12/01/2015
Morning Market Comment 12/01/2015
Afternoon Market Comment 09/01/2015
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