Stock Markets Rally as Mario Draghi Hints at Upcoming ECB Stimulus

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Stock Market Trading

: 09 May 2014

When trading starts this morning European equities look set to reverse some of their gains from the previous session.

Mario Draghi strengthened stocks but put a banana skin underneath the heels of the euro in his press conference yesterday.

Initially, the shared currency nearly hit the dizzying heights of $1.40 before the more dovish side of his personality began to unveil.

Although rates stayed put, a cut at next month's meeting could not be ruled out pending some inflation analysis.

Today's opportunities to trade some news volatility are probably limited to UK Industrial and Manufacturing production, but with all the goings on in the Ukraine, and the weekend break to come, it wouldn't be a surprise to see money taken out of risk assets later on.

After an initial rally, the technology stocks did the damage again, reversing the positive trend so that the Dow Jones ended just 26 points higher at 16,549.

With Fed Chair Janet Yellen sending mixed signals, mentioning on the one hand the need to spur economic growth but on the other hand cutting the assets buying, it's hardly a surprise the markets are looking for clear direction.



Stock Market Trading

: 08 May 2014

European equities will open fairly flat this morning in what is becoming a common theme of late.

May has provided traders with very little volatility despite a host of company earnings, economic data and geopolitical tensions; the FTSE has a 70 point range this month.

Investors are very comfortable where they are and will presumably be plotting their next attack on new highs.

Imagine where the markets might be without the crisis in Ukraine?

However, the BoE and ECB are both coming to the party today.

Mark Carney and his band of merry men are not expected to do anything so the interest lies with Signor Draghi.

Given the improvement in the performance of the Eurozone recently, rates are expected to stay stuck in the mud, but the following press conference usually gets the market examining his poker face.

He has surprised us before, don't assume an eventless session.

Fed Chair Janet Yellen reiterated her monetary accommodating views yesterday, saying that the US must continue to spur growth given the lingering issues surrounding inflation and employment.

In reaction, stocks moved higher, with the Dow Jones gaining 94 points to 16,522, discarding another bad run for internet shares led by Groupon and Yahoo.



Stock Market Trading

: 07 May 2014

Technology and financial shares were the main culprits in sending the US indices down yesterday.

In turn, those sectors were led by Twitter and the American International Group respectively after disappointing results.

Consequently, the Dow Jones slumped 102 points to 16,427, with corporate earnings continuing to show a mixed bag.

This morning, European investors look set to take more money off the table as the state of affairs in the Ukraine begins to deteriorate more rapidly.

It has been a terrible week for violence and discussions in Eastern Europe.

The country looks increasingly like it is heading for civil war and so the change in outlook among investors is understandable.

The difficult trading session in the US, as well as a slump in Asia overnight, will only contribute to the negative global sentiment.

Markets seem to be stuck in a bit of a stalemate for the time being; surely it is only a matter of time before something gives, although it seems hard to believe that there are more buyers than sellers waiting in the wings.

Today is very light on data, with mortgage applications from across the pond the only highlight.



Stock Market Trading

: 06 May 2014

Despite UK markets being closed for the bank holiday, stocks are looking like they will open mostly flat this morning which should soothe the extended weekend hangovers.

The markets are struggling for direction at the moment, with good news and bad news counteracting each other in seemingly perfect harmony.

The situation in Ukraine looks set to be something that will continue to influence financial markets for a considerable amount of time, and markets will struggle to push much higher until investors can see a real improvement in Eastern Europe.

On the other hand, economic data is improving all the time in what is becoming an increasingly stable financial situation.

Today there is a whole host of services data to look forward to in the Eurozone and the UK, followed by the Trade Balance in the US this afternoon.

However, given the relatively small impact that resulted from Friday's Non-Farm Payrolls, this isn't expected to stir up a storm.

In the initial stages of yesterday's session, the Dow Jones headed south on the back of disappointing figures regarding the Chinese economy touching an intraday low of 16,274.

But later on, US equities reversed course following an expansion in service industries led by Apple climbing above $600 for the first time since 2012.

So, the Dow ended 21 points up at 16,532.


By Jonathan Sudaria, 9 May 2014


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