Wednesday turned into another optimistic session for the US and European indices, who appear to be putting all their eggs in a central bank basket.
There, arguably, is plenty of reason for markets to be in the red. Donald Trump keeps poking the Beijing bear, stating that he is determined to ‘take China on’ regardless of whether the short term impact is good or bad for America. The Italian political situation is yet to be resolved (even if President Sergio Mattarella has begun talks with the country’s political parties). And, let’s not forget, the economic situation globally remains troubling.
However, ahead of this evening’s potentially crucial Fed meeting minutes, investors barrelled back into the Western indices, increasingly confident that central banks will step in to try and avert a recession. The CME Group’s FedWatch tool has Jerome Powell – who came in for another attack by Trump this Wednesday – and his colleagues at a 98.1% likelihood of cutting rates again in September, a number that in and of itself helps explain the market’s performance this afternoon.
The Dow Jones crossed 26175 as it added more than 200 points, while the DAX and CAC rose 1.1% and 1.6% respectively. The FTSE snuck back above 7200, striking a one-week peak as it reclaimed 80 or so points.
Not doing so good was the pound. With the relationship between the UK and EU seemingly at a Johnsonian low, sterling fell 0.4% against both the dollar and the euro, wiping away the gains seen following Angela Merkel’s comments about a ‘practical’ solution to the Irish backstop on Tuesday.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."