European News Threw Markets into Confusion

February 5, 2015

On Wednesday, the world’s financial markets closed mixed due to ambivalent news from the European Union. In Europe, the British FTSE 100 fell 0.17 percent down to 6,860.02 points, the German DAX grew 0.19 percent up to 10,911.32 points, and the French CAC 40 gained 0.39 percent up to 4,696.30 points.

Yesterday the eurozone PMI report for January 2015 was released. According to it, the index went up to 52.6 points while the in December 2014 the value was 51.4 points. The figure above 50 points indicates greater economic activity and growth in the region.    

At the same time, the ECB decided to revoke the waiver that had allowed Greek banks to use government bonds as collateral for ECB loans. Now Greek banks would have to apply for ECB emergency liquidity assistance whereas earlier they could receive central bank loans in the regular manner.

As oil prices dropped, so did the RTS index on the Russian equity market. It reached 770.63 points, which is 2.04 percent lower than the previous closing rate. However, the MICEX index grew, albeit slightly – just 0.1 percent up to 1,656.02 points.

In the USA, the Dow Jones grew 0.04 percent up to 17,673.02 points but the S&P 500 BMI dropped 0.42 percent down to 2,041.51 points, and the NASDAQ fell 0.23 percent down to 4,716.70 points.  

On the NYMEX, the price of WTI oil futures for March went down by $4.60 and reached $48.45 a barrel. On London’s ICE, the price of Brent oil futures for March dropped by $3.75 and ended up at $54.16 a barrel. This was the market’s reaction to the data on US oil reserves that had increased again and reached an 80-year high. Besides that, the USA didn’t cut back its oil production. Investors were once again reminded of oversupply on the oil market.

The Forex market saw the euro get weaker against the dollar. Nonetheless, EUR/USD is still holding within the 1.1550-1.1097 range.

Anna Gorenkova, NordFX Analyst

 

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