The markets opened up yesterday in fairly predictable circumstances given all the stories circulating at the moment. Three things in particular are moving all financial markets. The possible Greek exit from the Eurozone. How quickly the ECB are going to embark on a quantitative easing programme. The dwindling price of oil.
The oil price continues to drop. Whisper it quietly – the UK consumer may reap the benefit soon with petrol being available for under £1 per litre. Supply currently outstrips demand and this is causing huge issues for many economies. The major oil countries, such as Russia, need a barrel of oil to be priced between $90-$105 to break even. You don’t need to be a leading economist to realise that $50 a barrel isn’t doing them any favours.
In Europe, all eyes are on the Greek election on 25th January and whether the opposition Syriza Party gains power. Angela Merkel who during the last Greek crisis refused to allow Greece to leave the Eurozone is not so clingy now. She is now saying that the Eurozone could cope without Greece, so it will be interesting to see what happens next.
In a story that has been doing the rounds since April 2014, Mario Draghi could finally be ready to introduce QE as early as next week. He seems to have run out of options and a weak CPI number from Germany yesterday simply underlined the Eurozone’s readiness for this. If Europe was to replicate this weakness then the talk could finally be over.
In Greece, Spain and Italy we have Epiphany but we also have PMI from various European countries and the headline number from the Eurozone. We also have PMI from the UK and the US.