EconomyPrice AnalysisStocks

FTSE Falters as European Markets Rise to Close The Week

The European markets started strong today, 11th November, utilizing yesterday’s US CPI gains to bolster its numbers after China made an official declaration signaling a slight reprieve from its aggressive COVID-19 pandemic restrictions. However, the growth did not last long. The EU market’s momentum showed a sudden slowdown as it headed toward the end of the week. 

Due to pressure on the market’s more defensive sectors, the FTSE100 began regressing majorly. Despite this, the EU markets have had a great week overall, with the German DAX finishing higher for the sixth consecutive week this year.

EU Markets Surge Despite China Covid Conditions 

Markets are once again making a turning point and getting ahead of themselves, even though China’s quarantine period remains extended, and Covid 19 infections rage the country. The infection rates in the country are rising instead of declining, even with all the policies and precautions put in place. 

A city in China, Guangzhou currently holds a population of over 15 million residents, and due to its high population, the city is on the verge of another lockdown. The most prominent market players have unsurprisingly been in primary resources and energy sectors following the significant increases in commodity prices. 

Companies like Rio Tinto, Anglo America, Prudential, and Antofagasta have all displayed a significant amount of gains, especially Prudential, which does a majority of its businesses in the Greater China district.  However, even with the gains seen recently in significant market players, FTSE100 still underperformed, making an unfortunate backtrack when it failed to top the 7,400 mark. 

Commodity Price Levels Soar Following China’s Quarantine Regulation Reports 

Yesterday’s US CPI number came in shorter than predicted, with a relatively muted response from crude oil commodity prices. However, today’s reports revealed China alleviating quarantine regulations on inbound travel had a somewhat shocking impact on crude oil commodities.

The price values of WTI and Brent were among the commodities which soared after the news was announced, even though COVID-19 cases remain rampant in the country. While a modification in China’s Covid regulations and policies is a well-needed reprieve, it’s still not enough to restore the economy. As a result, prices have remained below expectations and this week’s gains. 

In contrast, Copper prices have risen to their most excellent levels since June. Heightened anxieties from a possible rise in economic activity in 2023 are pushing copper prices closer to the 200-day SMA. At the same time, yesterday’s upswing has prompted gold prices to hold out remarkably well, and next week, when US bond markets resume following today’s Veteran’s Day holiday, gold prices may see a return to $1,800 per ounce.

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