Wednesday: 5 Things The Markets Are Talking About

Assets globally rebound (except for Chinese shares) and stuff is happening in U.S. politics. Here are some of the things people in markets are talking about today.

1. Rebound

The MSCI Asia-Pacific Index jumped by the most in four weeks, led by gains in Japan and Hong Kong while the Europe Stoxx 600 was trading 1.4 percent higher at 11:00 a.m. London time. U.S. index futures indicate the equity rebound will extend to a third day with contracts on the S&P 500 expiring in March adding 0.8 percent at 5:52 a.m. in New York. The only real blot on the global equity copybook was China, with the Shanghai Composite Index closing down 2.4 percent and falling below the 3,000 level for the first time since the peak of the August selloff.

2. Commodity recovery

Both Brent and WTI are trading higher than $31 a barrel this morning, reversing much of yesterday’s selloff which briefly saw a barrel of West Texas Intermediate drop below $30. The Bloomberg Commodity Index, which measures the returns on raw materials – it is not a spot index – fell to its lowest level since 1991 yesterday, but is trading 0.6 percent higher this morning.

3. Inflation returns – to Greece

After three years of falling prices Greece reported a 0.4 percent increase in November. While the positive number can be seen as a move in the right direction for Greece, much of the increase in prices was driven by a new sales tax. The country is still waiting to complete the current review of its most recent bailout, a process that will take months, rather than weeks, according to Jeroen Dijsselbloem’s latest assessment.

4. U.S. politics

The U.S. Presidential election has seen some noteworthy events in the last 24 hours. While yesterday’s State of the Union address was perhaps a little over-optimistic, and a little overshadowed by events in the Persian Gulf, it can be seen as launch of the democratic campaign to keep the White House. On the Republican side, the latest Bloomberg poll shows it is very much Cruz vs. Trump in Iowa.

5. Gundlach’s bearish outlook

Jeffrey Gundlach, who has generally been negative on the economy and the market says there’s more bad news ahead. “This is a capital-preservation market, not a money-making environment,” said Gundlach, co-founder of Los Angeles-based DoubleLine Capital. His 2015 calls were mostly right, so perhaps best not to dismiss him immediately.

Forex heatmap

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell