Market Comments – Monday, December 29, 2014
Mining companies have unaccompanied propped up the London market in a day that would have seen it brought down by the euro-zone. There have been many trading sessions as soon as the natural resource component of the FTSE 100 held it back, in contrast to its European equivalents, but today it has confirmed to be an asset.
Equities in the euro-zone are continuing the brunt of the Greek election that has been published for next month. Three failed attempts by Antonis Samaras to protect a president have left the door open to the anti-austerity Syriza party who are important in the polls. As grim as the outlook in Greece is, I think the problem isn’t as catching as the debt crisis a number of years ago.
Many indebted euro-zone nations have made treads to shore up their finances while Greece still struggles to keep up, and maybe it is time Brussels agrees that the model doesn’t work for everyone. As we enter a new chapter in the Greek saga traders will be staying clear of euro-zone stocks.
The Dow Jones is doing amazingly well to post marginal gains on a day when its European counterparts are exactly in the red. The resilience of the US equity market is obvious as Dow futures were initially indicating a lower open, but without killing anytime time the index pushed higher after the opening bell. Traders across the pond seem set on retesting the Dow’s record high before the year is out.
Once even the least political doubt in Greece would send traders scrambling for gold but those days are departed. The expensive metal is set for a second successive yearly loss as it seems to have lost its ‘quality’ standing.
All through the year it has failed to grip on to any rallies it enjoyed when a safe-haven was required, and with the view of the Fed raising rates next year the metal has lost its shine. Brent crude has stabilized in the $60 region as supply concerns in Libya tempted some short-term buyers, and although the wave of selling has collapsed for now there is a feeling it still isn’t secure to get back in the water.
The euro is back below the $1.22 mark as the declaration of a Greek election in January 2015 could be the establishment of the end of the nation’s use of the single currency. Given the significance of the circumstances in Greece the euro is holding up very well, but that could all change as the festive season has led to low trading volumes.
The euro is going to have a complicated year in 2015, as the ECB edges closer to following the QE footsteps of the Fed. In the meantime, the US central bank is trying not to hurry into an interest rate rise.