European and US equity markets rejoiced overnight posting considerable gains as OIL prices climbed. Speculation of OPEC and non-OPEC output freeze helped drive WTI upwards of 8% while Brent rose 5.4%. Oil price gains supported US equities as the S&P500 and DJIA boasted 1.4% gains. Despite Brexit fears, the FTSE closed 1.47% in the green while the DAX gained 2%. Unlike equity markets, the GBP was unable to avoid a selloff as the GBPUSD pair tumbled from 1.4400 down to 1.4055 (most in 6 years), it has since retraced sitting at 1.41470 at time of writing. This followed London Major Boris Johnson backing Brexit plans from the EU, as the country readies for a referendum on June 23.
Gold prices fell sharply from 1226 to 1201 after gains in equity markets shifted investors focus from the yellow metal which is sought in times of uncertainty and falling stocks. Gold has since pushed back up towards 1210 levels.
Investors are also keeping a close eye on the U.S. Federal Reserve for its next move on interest rates. While Fed Chair Janet Yellen has indicated the central bank would stick to its rate hike program, policymakers appear at odds and traders have all but given up on a hike this year.
ECB easing remains likely as the flash Markit Eurozone manufacturing PMI fell from 52.3 to 51.0 showing further signs that the region continues to experience slowing growth in Q1. Pressure continues to mount on the ECB coming into the March 10 meeting where they will decide whether further easing is necessary. Analysts from Goldman Sachs are expecting a 10bp cut in the deposit rate and an extension of QE to September 2017. Further monetary support will continue to place downward pressure on the EUR.
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