Equities rebound as confidence improves

Friday, January 30, 2015

Global equity markets managed to bounce back yesterday, putting an end to the broad sell-off that had dominated trading activity earlier in the week. European benchmark indices traded confidently higher throughout the session and despite struggling to post significant gains, remaining within the week’s range, the positive sentiment spilled over to the US session with both the S&P 500 and DJIA adding 0.95% and 1.31% respectively.

US benchmark indices have experienced choppy trading activity throughout January with prominent swings between 2,000 and 2,050 in the S&P 500 throughout the month, however, investors have gained confidence in recent sessions and while the VIX index has recorded spikes towards 23 in recent weeks the number of calls and puts on the volatility index has fallen to 2.4m and 1.6m contracts respectively, the lowest call/put ratio in over two years signalling the majority of investors do not anticipate a significant increase market uncertainty.

Gold prices reflected the renewed confidence in global equity markets, with spot prices for the precious metal closing lower for the second straight day, losing 2.1% from the previous session’s close as investor’s rebalanced portfolios and sought out higher yielding assets. Intraday moves tested levels towards the 200 day MA, currently around $1,252/tonne before partially recovering to end the session at $1,257.27/oz, however, activity early this morning has seen the yellow metal rally towards $1,262/oz as investors continue to assess the wording of this week’s FOMC statement and its implications for a potential rates rise later this year.

S&P 500 swings throughout January

SPX Index SP 500 Index SPVIX 2015 01 30 07 22 07

Gold prices pull back towards 200 day MA

XAU Curncy Gold Spot Oz 2015 01 30 07 27 38

JPY continues sideways consolidation

JPY Curncy Japanese Yen Spot 2015 01 30 07 38 26

Events for today

0001

UK

Jan

GfK Consumer Confidence

1000

EZ

Dec

Unemployment Rate

1330

US

Q4

Personal consumption

1330

US

Q4

GDP & Employment

1445

US

Jan

Chicago PMI

 

 

Topics: GDP, Equities, Gold, Yen
More from: Kash Kamal