BOE and ECB comments lift markets

Thursday, March 06, 2014

With plenty of macroeconomic data to keep investors busy today markets broke free from the uncertainty that has dominated headlines during the first half of the week with most major European equity indices pushing higher. London’s blue chip index closed 0.19% higher while France’s CAC also managing to make steady gains, up 0.59% on the day while Germany’s DAX struggled towards the close, ending the day broadly unchanged.  

Markets were encouraged higher after both the ECB and BOE left rates unchanged at record lows of 0.25% and 0.5% respectively. Mark Carney was first up at midday today providing further assurances that rates were unlikely to rise soon, unsurprising for many market participants who continue to view the economic recovery as fragile at best amid fresh concerns of a potential housing market bubble emerging. Mario Draghi was next up with his market soothing commentary as the ECB left rates unchanged for the fourth consecutive month despite deflationary concerns cropping up in the past few months. In a forecast that extended its outlook towards 2016 the central bank indicated that they expected increases consumer prices to accelerate in the coming years but any gains would remain below target. Growth forecasts were also revised upwards to 1.2% this year for the currency bloc, compared with a previous forecast of 1.1%. GDP forecasts for 2015 and 2016 were also published at 1.5% and 1.8% respectively.

Gold prices managed to recover some of the losses accrued early on in the week on the back of uncertainty in Ukraine, however, spot prices remain resistant to moves above $1,350. At the time of writing US markets were trading between 0.3-0.4% higher on speculation that the ECB would commit further to supporting the eurozone amid hopes that diplomatic efforts between Ukraine and Russia were making steady progress.

Spot gold prices remain resistant to significant moves above $1,350

XAU Curncy Gold Spot Oz D 2014 03 06 16 37 22

Topics: Equities, Gold, ECB, BoE
More from: Kash Kamal