Though in the game of eurozone political crisis whack-a-mole, a new issue – ousted Spanish PM Mariano Rajoy – has popped up just as another –Italy’s governmental void – is sorted, the European indices remained in a robust mood on Friday.
The differing levels of support for the euro in Italy and Spain are the main reason why the Rajoy-removing vote of no confidence hasn’t sent a significant ripple of fear through the markets. In fact, the Spanish IBEX 35 is still up nearly 1.8% despite this instance of political instability, gains that outstrip all but the FTSE MIB, which surged 2.6%, in terms of the eurozone indices. For comparison, the DAX rose a still healthy 0.9%, with the CAC climbing 1.2%.
The euro has proved reluctant to join in with this relief rally, instead nudging 0.1% higher against the dollar while dipping by the same amount against the pound, the single currency wary of the make-up of the new Italian government and the unresolved trade tensions between the EU and US.
While the pound, which returned to $1.33 against the dollar after rising 0.3%, was the main beneficiary of May’s better than forecast manufacturing PMI, the FTSE clung onto the coattails of its eurozone peers to jump more than 0.6%. That increase allowed it to once again cross 7700, hitting its best levels in around a week.
Turning to this afternoon and, with the Dow Jones facing an 100 point increase when the bell rings on Wall Street, it is going to be interested to see what role the latest non-farm jobs report plays in the day’s trading. Wage growth is likely to be the focus, and is set to rise from 0.1% to 0.2% month-month; the headline non-farm data, meanwhile, is estimated to come in at a solid 189k compared to April’s 164k.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.