Global Equity markets continued their recovery on Friday, supported in-part by surging oil prices. Markets responded positively to the ECB’s post-meeting comments signaling for potential policy easing in March. Euro and US markets continued their recovery with the FTSE and DAX closing up around 2%. US markets followed trend amid better than expected Manufacturing PMI data, with the S&P500, DJIA and NASDAQ gaining 2%, 1.33% and 2.66% respectively. The Nikkei boasted the strongest rebound with a 5.88% gain, however eyes will remain on the outcome of BoJ’s meeting later this week for further policy direction.
Commodity prices rallied as market sentiment reversed. Oil prices recorded a 10% gain, hitting $32.30/bbl, up from last week’s low of $27.50/bbl. This recent rally in oil has provided equity markets with much needed stability, however concern lingers as downside risks remain. Iron ore also experienced modest gains, rising to $42.20 (up 2.2%) off the back of the Brazilian closure of Vale’s main port. Despite recent gains, downside risk over the medium term is expected as China’s iron ore port inventories totaled at 95.35mt as of Friday.
As it stands, the AUD and NZD are more focused on current global sentiment than domestic events. Despite the strong influences from global risk sentiment and commodity prices, traders will keep an eye on domestic CPI figures and the RBNZ future outlook mid-week.
Trading quote of the day: It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. George Soros
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