End of Quarter Volatility Looms Large
Today marks the end of Q1 of 2015 and as such we should expect a volatile day on the markets as traditionally the end of the quarter is when investors look to balance their books. Coupled with lots of important data coming out of Europe, the US and the UK, today should certainly be interesting.
In the UK, we have GDP figures coming out which are expected to confirm results from Q4 of 2014 showing the UK economy grew at a rate of 0.5%, down from 0.7% in Q3. The Pound has been stalling a bit of late as we approach deflation. Unlike the Eurozone where it is a huge risk, deflation in the UK is actually relatively positive as it is coming from falling energy and food prices and so is acting as a stimulus. Of course, all data out of the UK is currently being usurped by the uncertainty provided by the May 7th General Election so sustained positivity for the Pound is not to be expected until we have more of an idea where the country is heading politically.
In Europe, as has been the case for the entirety of Q1, Greece is still the major talking point. We wait for news from the ECB, EU and IMF regarding the Greek list of reforms and although QE looks like it is going to plan with over €41bn having been poured into the markets since its introduction earlier this month, a Grexit could undermine all of this. The need for external funding for Greece is paramount as without this an exit will surely follow which will set the country back years and will also set an unwanted precedent for the Eurozone.
We have already seen positive retail sales and unemployment figures out of Germany this morning. Although both are healthy, no one is getting too excited by them.
Also, we have UK GDP figures released first thing, followed swiftly by Eurozone CPI and then US Consumer Confidence this afternoon.