Thursday: 5 Things The Markets Are Talking About

Credit Suisse shares plunge, oil’s wild ride and it’s Bank of England decision day. Here are some of the things people in markets are talking about today.

1. Credit Suisse plunge

Shares in Credit Suisse Group AG dropped to their lowest level since 1991 after the bank posted a loss of 5.8 billion Swiss francs ($5.8 billion) as it wrote off goodwill and set aside provisions for litigation. Chief Executive Officer Tidjane Thiam has said the global markets and investment banking divisions will probably struggle in 2016 as he speeds up implementation of his plan to shrink the bank. Shares, which were down 10.8 percent at 11:02 a.m. London time, have lost 32 percent so far this year.

2. Oil

Oil is extending its rally from its biggest drop in seven years this morning, with West Texas Intermediate for March delivery at $32.47 a barrel as of 11:12 a.m. London time. The recovery in oil prices coincides with the dollar posting its biggest two-day drop since March of last year. Elsewhere this morning, Royal Dutch Shell Plc said fourth-quarter profit fell 44 percent following the deepening oil-price rout. Morgan Stanley are not predicting a recovery in the commodity, seeing it staying ‘lower for longer.’

3. Bank of England

At 12:00 p.m. London time, the Bank of England will announce its interest rate decision and release its latest inflation report. With every economist surveyed by Bloomberg expecting no change in rates, investors will be watching for any hint on the timing of a future rate rise – or cut.

4. EU cuts forecasts

The European Commission trimmed its 2016 growth forecast for the euro area to 1.7 percent from 1.8 percent previously. At the same time, it slashed its 2016 inflation forecast, dropping it to 0.5 percent for the year, from 1.0 percent. In a speech at Germany’s Bundesbank this morning, ECB president Mario Draghi said that weak global inflation would not stop the central bank from adding more stimulus at its March meeting. The euro currency did not seem impressed by his dovishness, rising to a three-month high versus the dollar.

5. Bond warning

The recent rally in bonds, which saw the yield on German two-year notes fall to minus 0.5 percent yesterday and U.S. treasury yields approach record lows, may be overdone, say Goldman Sachs Group Inc. and Pacific Investment Management Co. who are predicting a fall in bond prices. Jan Hatzius, chief economist for Goldman Sachs, said the 10-year yield will rise to about 3 percent by year end as the Federal reserve will raise interest rates faster than the market is now expecting.

Forex heatmap

Bloomberg

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
Dean Popplewell

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