Market Attention Shifts to Central Bank Speeches at the Jackson Hole Symposium

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Stock Market Trading

: 22 August 2014

European equities are set to open flat as traders turn cautious.

There's little in the way of economic data out today, so attention has turned towards the Jackson Hole Symposium where traders will look for further clarity on global interest rates.

With speakers from the Fed, BoE, ECB and the BoJ, it will be a smorgasbord of global monetary policy for traders to feast on.

The consensus for today is that comments will lean to the dovish side, but traders may not want to take the risk of a rogue tongue slip going into the long weekend.

Also, there could be a few rogue hawks lying in ambush to grab the mike following the most recent FOMC and BoE minutes.

US stocks continued to rise on Thursday, with hawkish Fed Minutes failing to spook the bulls.

The S&P 500 surged to record highs and the Dow Jones climbed 60 points to 17,039.

It's been a great week for equity traders, with the Dow gaining 2.3%, but the key question still remains; how long can these markets continue to rally with an inevitable rise in interest rates on the horizon?

For now though, the bulls seemed for focused on the short term, taking solace in larger than expected US jobless claims which helped push the markets even higher.



Stock Market Trading

: 21 August 2014

Even though there are several negative cues lining up, European shares are set to creep higher this morning.

Hawkish minutes from the BoE and the Fed, Ukrainian troops moving into rebel held territory, weak Chinese manufacturing data overnight and expectations of poor European PMI figures this morning should have traders on the back foot.

Despite this, markets have developed a remarkable ability to shrug off the bad news and have needle-like focus on the good, although no one seems quite sure what that is today.

If markets manage to finish the day in positive territory then it will either be an amazing feat of blind faith or because Mario Draghi unexpectedly decides to put his 'whatever it takes' words into action at Jackson Hole.

US equities continued to climb for the third consecutive day on Wednesday, with the Dow Jones index climbing almost 60 points to close at 16,979.

Stocks had initially fallen after the release of the FOMC minutes which showed a growing number of officials considering an increase in interest rates sooner rather than later.

However, the Dow managed to recover from the initial drop, spurred on by positive earnings data from Home Depot which has benefited from the improving housing market.



Stock Market Trading

: 20 August 2014

Yesterday's slip in inflation added more confusion into the UK rates debate and, with MPC and FOMC minutes coming up today, European equities are set to ease back a little on the open.

US stocks continued to gain momentum on Tuesday, reacting positively to corporate earnings and news on home building.

The bulls found solace in last month's bounce in home construction and solid consumer inflation figures, with the Dow rising 80 points to close at 16,919.



Stock Market Trading

: 19 August 2014

US markets rallied yesterday after a shaky end to last week saw stocks fall on the news of Russian trucks being destroyed by Ukraine.

The bulls seem to gather strength from positive housing data and growing M&A activity in the US.

As a result, the Dow Jones Industrial Average surged by 175 points and the NASDAQ climbed to new highs.

The positive close is set to feed through to Europe this morning, with stocks looking for a firm start to the session as the bulls seem to have had enough of geopolitical jitters.

The Ukraine situation has been a serious source of uncertainty over the last few months, keeping bullish spirits subdued.

The stock markets sold off after every single flare up on fears that NATO and Russia were about to go head to head.

However, persistent false alarms have forced traders to become more hardened to the sentiment rollercoaster.

It's doubtful that equities will react so negatively the next time Putin holds a military jaunt near the border or the Ukrainians claim to have destroyed an invading force.

With geopolitics shrugged off for now, it's time to get back to divining what is going on in the heads of central bankers.

Carney has been characteristically flip-flopping around lately, coming out all dovish in the quarterly inflation report and then suggesting that rates could be hiked before real wages catch up.

This has left traders none the wiser, so expect them to take their cue from any slight bias in tomorrow's MPC minutes, especially if there's a dissenter or two on the vote.

With the FOMC minutes also out after tomorrow's close, traders may keep the buying urge to splurge until after they have been reassured by Yellen that US interest rates are going nowhere for the foreseeable future.



Stock Market Trading

: 18 August 2014

The markets seemed to be off to a good start on Friday, with equities showing slight gains as traders prepared for the weekend.

But the markets of late have resembled a dry forest, never more than a spark away from a forest fire.

That spark came in the form of a report from a Ukrainian military leader saying that his forces had attacked a column of Russian armoured trucks that had crossed the border.

Within minutes the markets were falling sharply and the flames were spreading.

Confirmation from Ukrainian President Petro Poroshenko that the Russian vehicles had been destroyed sent markets into a tail spin.

After a drop of almost 200 points in Dow, the fire fighting bulls came to the rescue, with stocks recomposing themselves as traders shrugged off the news' impact and questioned its legitimacy.

This saw indices regain some lost ground, but the damage was done, with the Dow closing more than 100 points lower.

Despite the falls, European equities are set perk up on the open as the tension seems to be subsiding somewhat.

Optimism is coming from crisis talks in Berlin between German, French, Ukrainian and Russian Foreign Ministers due to the fact that they were able to hold the talks at all.

However, with the Russian 'aid' convoy now at the border, the situation is still a geopolitical tinder box just waiting for the smallest ember of trouble to set things alight, so despite the positive start, caution remains high.


By Jonathan Sudaria, 22 August 2014


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