Spreadex Market Analysis Update: For Investors, No News Is Good News

AM Analysis – “European markets opened confidently today” – Shavaz Dhalla
European markets opened confidently today as better-than-expected manufacturing data from China provided an excuse for investors to dive back into the equity markets in full throttle. Although some analysts have pointed out that they expect a period of consolidation owing to the near all-time highs of equities as well as restrictions in the flow of cash from China, investors nevertheless still think that there are bargains out there and have adopted a buying mentality today.

And yet, perhaps this is not necessarily a solely headline driven market some may assume the rally has arisen from. If one considers that the debt issues in the US have been provided with a temporary resolution, the Eurozone economic area is slowly recovering and even manufacturing data from China rose to a seven-month high in October. Thus, before bears voice their concerns that the rally today has arisen as a result of investors looking for any excuse to hold equities then perhaps one should remember that it’s been long time since investors have actually had a series of sound economic fundamentals to entice such optimism.

PM Analysis – “A positive afternoon for markets on the whole” – Alex Conroy
A positive afternoon for markets on the whole, the FTSE 100 finished up 36.82 and the Dow is currently trading 81 points higher. Sentiment appears to be no news is good news amongst investors after a relatively quiet day. Results were mixed today with US trade balance being better than forecast, however, unemployment claims were 7000 more than forecast.

With Mario Draghi announcing yesterday that the ECB would not hesitate to fail banks in its stress test next year, the Federal Reserve not to be outdone today announced plans for new liquidity rules to help prevent a future credit crunch. These rules are in accordance with the Basel III international regulatory accords are targeted to be implemented two years earlier than in Europe. This should provide a boost in the markets with the Fed working towards a more stable future.

A gaggle of angry Germans today called on the U.S ambassador to answer questions over suspicions that Angela Merkel’s phone may have been bugged. Should this turn out to be true such an egregious breach of privacy would undoubtedly scupper any free trade deal that was on the cards prior. Don’t expect this issue to go away quietly which in turn could lead to volatility in the markets as tensions rise.

[The original articles by Spreadex can be found here.]

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