A volatile month for global equities and commodities

Friday, January 30, 2015

The weaker than expected US economic data added further pressure to global equity markets today and weighed on market sentiment, prompting investors to another round of heavy sell-off across the US and European equities. The CAC, DAX, IBEX and London equity benchmark index retreated between 0.4% and 0.6%, while in the US the Dow Jones plunged over 100 points (-0.6%) towards 17,300.

The Dow Jones index plunges 100 points following disappointing US GDP data

INDU Index (Dow Jones Industrial 2015-01-30 16-06-48

On the macroeconomic front, the US economy grew 2.6% in Q4 2014 compared to a 5.0% growth in Q3 2014, missing analysts’ expectations of 3.0%. The disappointing GDP data limited risk appetite but the failed to have a negative effect on the USD as the US dollar index continued its strong upside momentum towards 95.0. However, the University of Michigan survey showed improvement current market conditions of 109.3 in January compared to 108.3 in December, while market sentiment was reported at 98.1. The Chicago Purchasing Manager rose to 59.4 in January, beating analysts’ expectations of 57.5.

WTI front month futures rally above $45/barrel

CLH5 Comdty (WTI CRUDE FUTURE  M 2015-01-30 16-08-52

There was a strong rebound in crude oil and base metal prices. WTI front month futures climbed over 1.8% above $45 per barrel following yesterday’s sharp sell-off, while Brent front month futures edged higher towards the key level of $50/barrel.

Aluminium and copper rallied strongly with copper heading towards $5,500 following the sharp declines this week. Precious metals also posted renewed gains as gold climbed above $1270/ounce and silver breached $17.0.  

LME Copper 3M rebounds towards $5,500

LMCADS03 Comdty (LME COPPER    3 2015-01-30 16-10-12

It has been a fairly volatile month including nervous trading conditions for global equities and commodities markets. The strong USD currently weighs on market sentiment limiting any upside potential, while mixed economic data from the US and Europe continues to limit risk appetite. 

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