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Spreadex Market Update

Friday, May 22, 2015 - Afternoon Market Update
Connor Campbell - Market Analyst at Spreadex

US markets flat ahead of important inflation data

After noted dove John Williams, head of the Federal Reserve Bank of San Francisco, ducked questions over the rate hike outlook in a speech last night, investors will be eager to note the direction of the USA’s inflation figure, which holds a key role in the interest rate debate. Inflation has stabilised at a growth rate of 0.2% in the past two months, but analysts are forecasting a decline to 0.1% for April.

With the dollar already suffering since mid-week, a lower inflation figure could, theoretically, bring with it both widening declines for the greenback alongside another record-breaking push from the Dow Jones. Almost equally important as this inflation figure will be Fed chair Janet Yellen’s speech before the Greater Providence Chamber of Commerce Economic Outlook this evening. Like Draghi in Europe, Yellen’s comments usually hold a powerful sway over the markets, something that could increase tonight dependent on what way the inflation figure turns out.

The news that the latest German Ifo business climate suggested a worsening environment in the country, however slight, compounded the weak morning for the DAX, sending it into the red and in danger of falling below 18000 once more. The rest of the region followed suit, with Greek PM Tsipras’s constant claims of optimism undermined by the bearish tone struck by Wolfgang Schauble yesterday and Angela Merkel today.

The FTSE’s morning push, which has seen the UK index reach its highest point in nearly 2 weeks, was aided by the news that public sector net borrowing had fallen faster than expected in the month of April. The FTSE’s biggest hurdle now will be to weather the sleepy trading environment that is likely to creep in as the day continues, with investors unwilling to carry too much risk into the Spring Bank Holiday weekend.

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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.

For a look at the trading week ahead our Financial Diary also lists all the companies due to submit trading updates this week. Each Friday, our diary will preview the forthcoming week's economic indicators and company reports schedule.

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