IFC Markets - Analytics

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    Oil rebound and ECB dovish comments drive markets up

    US stocks were on the rise on Thursday due to the oil prices rebound from the multi-year losses and the ECB President Mario Draghi dovish comments. S&P 500 index closed 0.52% higher at 1868.99 with 9 out of 10 its sectors being in the black. Energy and telecommunications services were the top performers (3% and 2.39% respectively) while financials were in the red having lost 0.11%. Dow Jones industrial average index added 0.75% to 15,884.23 while Nasdaq 100 composite added 0.55% to 1,869.6. The fourth quarter earnings season is on track now and S&P 500 components are expected to report 4.5% lower earnings. Mostly the gross earnings were dragged down by the poor performance of the energy sector. Today at 15:45 CET the December manufacturing PMI will be released by Markit in the US, the outlook is negative. At 16:00 CET the leading economic indicators for December will come out, the outlook is negative. At 19:00 CET the Baker Hughes US oil rig count is expected.

    European stocks advanced on Thursday rebounding from the Wednesday losses thanks to ECB head Mario Draghi’s dovish comments. Yesterday the ECB meeting took place which resulted in no change in the interest rates. However, Draghi gave hints on further economic stimulus possible on the next ECB meeting in March given the turmoil in financial markets and Chinese slowdown. His speech supported the investors’ confidence and made the euro weaker. EURUSD currency pair lost 0.4% and is currently traded at 1.0838. The FTSEurofirst index added 1.3% yesterday having lost 3.3% in the previous session and hitting on Wednesday a fresh low since October 2014. FTSE 100 index edged up 1.81%, Dax 30 index added 2.1%. Stocks of the UK’s Pearson sky-rocketed 15% on the news it planned to cut 10% of its staff and restructure. On the other hand, Deutsche Bank stocks dropped 5.2% on the news the bank expected a net loss of almost 7 bn. euros. Today in the morning the preliminary January PMIs (composite, services and manufacturing) were released in Germany, France and Eurozone by Markit, they all fell even more than expected. No more important data are expected today in EU.

    Asian stocks advanced today on dovish ECB comments and oil rebound from its 12-year lows. Previously the Asian markets were at 4-year lows. Nikkei index jumped 5.9% today from the Thursday’s 15-month lows supported by the belief the bank of Japan will further stimulate national economic growth. The decision is to be taken on the following Bank’s meeting on January 28-29. The USDJPY exchange rate rose 0.3% to 118.03 yen, up from this week’s one-year bottom at 115.97. The Chinese yuan is steady against the dollar and is traded at 6.5794.

    Brent crude edged up 5% to $30.75 a barrel today while WTI added almost 4% to $30.75 a barrel. The recovery of the commodity market was driven by the lower-than-expected growth in oil stockpiles in some US states and the spell of cold weather that pushed the demand up. Previously this week both Brent crude and WTI hit fresh 12-year lows below $28 a barrel after the international sanctions imposed on Iran amid its nuclear program were lifted raising concerns of Iranian oil inflow to the global commodities markets.

    Gold prices looked down on Friday as prospect of additional monetary stimulus by ECB dragged euro down and pushed the European stocks up which limited demand for gold. Spot gold fell 0.5% to $1,096 an ounce while the February gold futures fell to $1,097.60.

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