TINA strikes again to new all time highs and EUR Slump
Markets continue to be wary of the potential impact of the Covid 19 virus infection.Global markets held their nerve last week despite a re-evaluation of the infection rate by Chinese authorities.As many commentators have suspected the infection rate is higher that that actually reported so far. The infection rate has jumped sharply but this re-evaluation does not signal an increasing threat of a global pandemic.The mortality rate remains low, especially in the infections outside China.
Global stock markets moves last week reflect a cautious but measured view on the Covid 19 outlook.
USmarkets were the better performers last week with modest gains of a approximately 1% to 2%.
European markets were more affected by their respective currency moves.
In the UK, the FTSE 100 struggled as Sterling jumped following the resignation of Sajid Javid and subsequent appointment of Rishi Sunak as Chancellor.
Sterling jumped as commentators quite rightly expect the new Chancellor to be following the line from No.10 with expectation for cuts in taxes and increases in spending. The jump in sterling makes the UK stocks markets less attractive in other currencies …..hence the falls last week.
Conversely, the Eurozones’ main stock markets had a better week with the Dax up 1.7% on the back of further falls in the Euro.
The Euro fell 114 pips against the USD or just over 1%. The close on Friday night marks the lowest close in nearly 2 years, following consecutive falls over the last 10mtrading days. The weakness in the Euro is most pronounced against The USD and GBP, largely due to poor eurozone data and the safe haven status of the USD and prospects for the UK economy and UK interest rates.
Oil markets jumped 5% last week in line with the optimism shown by global stock markets, although the recovery still leaves oil well below January’s peak following the US / Iran spat.
Data / events this week
Monday
US bank holiday Presidents day / Washington’s Birthday
US stock markets closed. Lower liquidity in FX markets
Tuesday
German ZEW economic Sentiment leading indicator will be closely watched as German economy continues to struggle, having posted zero growth in last quarter.
Wednesday
UK CPI – Inflation data. No chance of any pickup just yet, with oil prices slumping over the past 5 weeks.
US FOMC Minutes from last FOMC meeting held on January 28th / 29th. Could help shed light on next moves from the Federal Reserve. USD and stock markets sensitive.
Thursday
UK Retail sales. Rebound expected from last months surprisingly weak number.
Friday
Eurozone & UK manufacturing and services PMI data. Still struggling all round. No respite just yet. EU markets and FX sensitive.
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