A strong rally for global equity markets after ECB's decision

Friday, January 23, 2015

European equity markets continued their strong uptrend in early trade this morning. The DAX, CAC and London equity benchmark climbed higher, adding 0.5% and 1.23%. The European Central Bank confirmed yesterday that it will purchase EUR 60 bln of assets per month compared to EUR 50 bln initially expected. The programme will run from March 2015 until at least September 2016 with a total balance sheet expansion of over EUR 1 trn.

The EUR plunged towards 1.1250 against the USD following ECB's decision

EURUSD Curncy (EUR-USD X-RATE)   2015-01-23 08-58-52

Asian equity markets surged overnight, tracking strong gains in the US and European equity markets. China’s HSBC manufacturing PMI rose to 49.8 in January preliminary compared to 49.6 in December, beating analysts’ expectations. The Nikkei index added over 180 points (+1.05%) to finish the session at 17,511.75, while the Hang Seng index rallied over 300 points (+1.34%) towards 24,900. In the US, the Dow Jones surged 1.48% and breached 17,800, while the S&P 500 and Nasdaq rallied 1.53% and 1.78%, respectively.

The USD index spiked and tested a high at 94.49 yesterday against a basket of currencies, while this morning the USD held strongly above 94.0, verifying the recent uptrend. The recent US dollar strength has weighed on market sentiment, adding pressure to some commodity prices as base metals continue to trade in negative territory. Copper slid lower towards $5640 and aluminium retreated to retest $1850.  

The USD index rallied above 94.2

DXY Curncy (DOLLAR INDEX SPOT)   2015-01-23 08-21-11

Precious metal prices gave back part of earlier gains this week and reversed to trade lower within the recent range. Gold came under renewed pressure after retreating towards $1290 in early trade this morning. Silver also slid also lower towards $18 this morning.  

XAU- Gold spot remained under pressure

XAU Curncy (Gold Spot   $_Oz )  D 2015-01-23 09-00-59

Saudi Arabia’s King Abdullah bin Abdulaziz Al Saud died on Friday and was succeeded by his half-brother Salman on the throne. Crude oil prices rallied strongly following the news with WTI front month futures climbing over 1.8% towards $47.50, while Brent front month futures surged to retest $50 per barrel.

 

Events for today:

 

0930

UK

Dec

Retail Sales

1330

US

Dec

Chicago Fed

1500

US

Dec

Existing Homes Sales

1500

US

Dec

Leading Index

 

All times UK Local Time

 

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