Market update

26/09/12 - 05:00

Chris Weston, Melbourne
 

In the past 24 hours, there has been a tug of war between negative macro forces and pleasing economic data points.

It was always going to be the way that despite improving sentiment from US consumers, the top-down forces would win the battle; and in the absence of any fresh catalysts to buy, the bears would have the upper hand.

Fed member Charles Plosser’s comments that QE won’t boost growth were largely known, but it serves as a timely reminder that the Fed has its back against the wall and will clearly need the assistance of governments if it is going to really reach its potential nominal growth and employment targets.

ECB member Mr Asmussen seemingly also had a hand in damaging sentiment, saying the bank won’t take part in any debt restructuring. Again, did we really expect anything different from an ECB member. There would clearly have to be a rather lengthy consultation process before the ECB writes off a chunk on bond holdings of any nation’s debt it holds on its balance sheet.

Of course then any mention of Spain either through the public protests or the reputational damage from an ever-evolving regional situation seems to have traders pushing the sell button on risk assets.

See what our insight, news and analysis centre can do for you.

IG provides an execution-only service. The material on this website does not contain (and should not be construed as containing) investment advice or an investment recommendation, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. This communication must not be reproduced or further distributed.