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Daily Market Report 31/01/2012

European Shares
Another round of cheap talk but no major breakthrough came out of Brussels yesterday with all EU member states but the UK and the Czech Republic voting in favour of a German-led fiscal pact. Although the Eurozone officials continue to slowly flesh out the outlines of a compact that shall institutionalize budget discipline within the currency bloc, the pressing issues remain resolved. Perhaps more importantly, no agreement on private sector involvement in the second Greek bailout was achieved, prompting fears that Portugal will follow Greece downwards, after the Iberian country saw yields on ten-year bonds jump to record highs of 17% yesterday. Despite the headwinds the markets continue to reflect risk appetite trends with the FTSE 100 edging higher in early trade. At 5716 at the time of writing key support and resistance levels to watch are 5623 and 5780 respectively.
FXThe Euro was inevitably hit yesterday as nerves are still running high in the market over the bigger picture. The concerns over the debt crisis that crept back in yesterday caused EUR/USD to snap back on its gains but this morning FX traders seem to have regained their confidence with the Euro trading in a positive mood at 1.3182. Carrying on the bullish trend, the sterling continues its grind higher as the cable is trading up at 1.5741 and looks set to break above a key resistance line.
Commodities
Gold also has the wind in its sails with the precious metal heading for biggest monthly gain since August after the euro recouped some losses and lingering concerns about growth in the US prompted buying from investors. Brent continues to be propped up by the geopolitical tensions in the Middle East with the price above $111 this morning, on track for its first monthly rise in two months, as worries over supplies form OPEC’s second largest producer, Iran, rose after Europe and the US stepped up pressure on Teheran.
Today’s Calendar
Economic data starts to pick up again today with a swathe of unemployment data coming out of Europe, that are expected to paint a bleak picture. From across the Atlantic, the Chicago PMI und US Consumer Confidence are among the most notable releases that are being put out later in the day.

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