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Spreadex Market Update

Tuesday, January 20, 2015 - Afternoon Market Update
Connor Campbell - Market Analyst at Spreadex

Markets continue to wait with bated breath for Thursday’s ECB meeting

After having the day off yesterday, the US markets follow their European counterparts to a strong open; however as the afternoon went on the Dow Jones began to fall, with companies like Morgan Stanley disappointing investors. Despite falling legal costs resulting in a rise in revenue, Morgan Stanley was the latest big bank that couldn’t hit the estimates analysts had provided, causing share prices to decline. A trend is also developing in the FICC trading sector, as Morgan Stanley joined Goldman Sachs, Citigroup, Bank of America and JP Morgan Chase in posting declining revenue from this area. The recent global volatility, including the fall in oil, a potential Russia recession and an unstable Eurozone, has created less than optimal trading conditions, conditions that have been felt by these finance powerhouses.

There also were interesting comments from US Fed member James Bullard, who spoke of wanting to ‘get going’ with a US interest rate hike, something many had assumed would come later than had been thought around Christmas, after the New Year saw a string of disappointing figures relating to consumers.

One of the few pieces of significant data provided a boost for Europe this morning, as both the German and Eurozone ZEW sentiment rose for the third month in a row. However, the ZEW data hasn’t always corresponded with reality, and the feeling in Germany may be very different after the Greek election on Sunday. The positivity caused by the figure couldn’t extend all the way into the afternoon, as the DAX began to slide following in-country discord over QE rumours ahead of Thursday. The FTSE, on the other hand, continued its strong performance, prompted by renewed vigour from its mining sector as Rio Tinto posted better-than-expected fourth quarter figures.

Brent Crude continued the decline that had set in on Monday, as the $48 per barrel mark became the latest level for the commodity to dip below. Copper, on the hand, performed slightly better; despite the IMF downgrading world growth forecasts, copper took solace in the fact that Chinese GDP grew at all, causing the metal to make marginal gains as the afternoon went on. Finally, gold continued to crawl back to the psychologically significant $1300 per ounce mark, and will be eagerly anticipating some more forex floundering if the ECB proceed as expected on Thursday.

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The Trading Day and Week Ahead

For further information on the trading day ahead, take a look at our Financial Diary, which previews all the Economic Data due out to today and projected or previous figures.

Our Financial Diary is updated in real time as the figures are released throughout the day.

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

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