Markets will remain subdued after Paris attacks – eToro Tips & Picks
Friday's horrific scenes in Paris will undoubtedly have an economic impact, and although it seems trivial to talk about financials and markets at a time of such horror and pain for so many people, the events will nevertheless leave their mark.
Investors gravitated towards gold as a relative safe haven after a mixed start yesterday. Oil prices have also seen some movement as France increased airstrikes on Isis targets. The scale of the military response to the Paris attacks will be closely watched by investors and by the ECB. A speech by Mario Draghi yesterday hinted yet again that he is ready to increase stimulus, but prolonged and intensified military action could well delay the Eurozone’s recovery, meaning the increase may have to be bigger than first expected.
It’s a busy week for the economic calendar, with huge numbers and speeches from across Europe, the US and Asia. The inflation reading in the UK will be a major highlight as we approach next week’s Autumn Statement. And the Fed will yet again be in focus. The expectations for a December rate hike seem to be higher with investors than they are with government officials. We have to be careful not to get carried away, learn the lessons from September, and realise that, if the Fed wants to find a reason not to raise rates, it would be very easily done.
But we cannot overlook the impact the attacks in Paris will have on the markets. Until we have further details on the West’s reaction, expect sentiment to be subdued.
ETORO INVESTMENT ANALYST
MATI GREENSPAN
Eurozone investors will have watched European Central Bank president Mario Draghi’s speech yesterday morning and will have paid attention to European inflation figures.
There will be more inflation figures released in the UK and US today. Other UK data will include PPI and retail price index inflation, so many will be looking towards the cable.
Traders at eToro are still very much behind sterling at the moment, with over 70 per cent of clients buying the pair on both long and shorter-term positions. With the inflation reading, Autumn Statement and not much chance of a rate hike, it will be a pair that at least for this week is pretty heavily traded.