Draghi Pushed The Markets Higher

European markets are trading higher this morning on the back of the European Central Bank’s comment. Mr Draghi, who is the president of the bank, has confirmed yesterday at the IMF conference that he is still fully committed towards their QE program and anticipate that the process will continue as planned. He did confirm that there has been a difference in the shape of the Eurozone’s economies and the positive impact has only taken place due to their ultra loose monetary policy. Therefore, it is only reasonable to think that the ECB will complete its path to bring the full recovery in the system.

Back in the U.S. last night, the indices have made another record high however the positive momentum failed to filter in the Asian markets. Most of the Asian indices closed mixed on the final trading of the week. The U.S. indices on the other hand closed nearly one percent higher as investors feel more confident about the bond market which was under immense selling pressure.

As for Greece, it remain the major point of interest amid investors who are still gauging every single dialogue very closely and these are still making the statements. The country is seriously strapped for cash and there is still no hope insight which is making the possibility of more volatility to come. However, this concern is of no major worrisome for investors who are more focused towards the equity rally and want to participate in that in a hope that we will continue making record highs as long as the European Central Bank will continue their commitment. The IMF said yesterday that they are showing their flexible behaviour towards the country and they hope that other creditors will also show some more lenient behaviour.

As for the rate hike in the U.S., investors are still trying to make some sense of the economic data which is being released this quarter and their efforts are devoted in guessing the timing of this rate hike. The PPI reading yesterday has confirmed that there was another unexpected drop, and this is on top of the U.S. Retail sales data which was feeble as well, it is making it difficult for the Fed to convince that rate hikes are coming any time soon. There is also a strong possibility that we may get another downward revision for the U.S. GDP forecast. Today we have the Empire manufacturing data due for the U.S. and the forecast is for 4.75 and the industrial production is also expected to show a reading of 0.0%.

Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.

by Naeem Aslam