Daily Market Report 30/01/2012
A combination of some encouraging data out of the euro zone and a dovish Fed policy has been driving the markets in the previous week. European shares fell on this morning as Greek talks failed to produce an agreement on debt swap on Friday, with banking stocks among the worst performers. The series of EU meetings continue today with Greece remaining the focus, as the imminent Greek default could happen even before March raising fears of a snowball effect. There is still a lot of work that needs to get done in order to restore any lasting confidence in the region. With the prospect of a new recession rife on investors’ minds and the recent rally now being called into question, the FTSE 100 is trading down at 5.693 this morning.
The euro is hovering at six-week highs against the greenback today with the EUR/USD riding on a neat uptrend support line that began from January’s trough. The coming days could prove pivotal for the recently fast-rising single currency. From 1.3511 this morning, we could still see additional gains, with the Euro potentially extending into the 1.3400 area before finally stalling out. The risk appetite that has built up in the past weeks has rubbed off well on cable with the sterling trading down at 1.5672 against the greenback this morning.
In line with equities, gold ended the previous week to its highest in more than seven weeks buoyed by slower than expected growth in the US. Today’s profit taking pushed the precious metal lower at 1.726. Key support and resistance levels to watch are 1.673 and 1.787 respectively. As with gold, Brent crude fell victim of the bears in early trading with investors cautiously eyeing the EU summit. However, concerns over supply form Iran and South Soudan are holding Brent above $111 this morning.
Unsurprisingly today sees focus on the EU summit with Greek talks still of key importance. On the economic data front things are a little quiet with the EU economic sentiment due for release at 10.00 GMT and the US personal income and outlays coming out at 13.30 GMT among the most notable.