Spreadex Market Analysis: European Indices Trade In A Tight Range

AM Analysis – “US stock indices see higher returns than relative European outflows” – David White
The theme of Europe underperforming the US has indeed continued into the end of the week, as US stock indices drive returns higher against relative outflows from Europe. UK listed equities in particular have underperformed since Carney guided the recovery as stronger than originally thought. This saw investors sensitive to assets purchases pull capital from London-listed stocks in favour of cash and equities still the beneficiary of firmly loose monetary policy.

Gold remains unloved and has demonstrated why Goldman favours short positions. The yellow metal arguably has a lot of what could drive it higher already priced in, with many participants believing the likelihood of further currency debasement through increased assets purchases as unlikely. This would likely have the effect of harming gold prices in the absence of any other drivers.

PM Analysis – “European indices trading tight as FTSE 100 underperforms” – Max Cohen
European indices have traded in an extremely tight range as the week comes to a close with the FTSE 100 underperforming against its continental peers. With mining shares weighing on the index the prospect of a third straight week of losses seems likely. However, the FTSE did rise this morning after Bank of England officials reaffirmed monetary policy would remain accommodative for some time, and with the index still up 13% so far this year, the recent dips will not be considered a major setback.

U.S stock index futures are little changed after the Dow Jones closed above 16,000 for the first time last night. This major milestone was achieved after data showed improvement in the job market and consumer sentiment. For the first time in a while, good macroeconomic figures have been welcomed positively suggesting that the markets health is no longer dependant on QE. The S&P 500 closed at 1,795.85, near last week’s all-time high of 1,798.18.

Gold analysts are becoming extremely bearish on gold as the prospect of Federal Reserve tapering edges closer, cooling demand for an investment haven. The metal is heading for its first annual drop in 13 years with some investors losing faith in gold as a store of value. Bullion slumped 26 percent this year to $1,244 an ounce in London, reaching $1,236 yesterday, the lowest since July 9th.

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

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