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EU Market Outlook - Time for EU to turn talk to reality

Last updated 6/22/2012 1:22 AM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

European markets are expected to open lower to account for solid selling in the US market which saw the Dow record one of its biggest falls for the year. Commodities and risk currencies have also fallen victim to strong selling as markets look ahead to the next event post Fed disappointment.

The confirmed slowing of global production has seen Industrial metals and Oil breaking strong support levels as demand is brought to a standstill.

US manufacturing and jobless claims did their bit to tame risk appetite as further evidence that the US economy is weakening showed that bad news is now actually bad for the markets. Moody’s also came out to finally announce one of the markets worst kept secrets to downgrade 15 global banks mostly due to exposures to European debt.

We have had a fair amount of talk come from the EU leaders post the G20 meeting. Today will see a forum for the finance ministers to take this talk to the next level. Although I do not expect anything concrete to be revealed, I do see this meeting and next week’s EU summit as the right time for leaders to address the challenges at hand if they so desire. Recent German economic data suggests that perhaps certain leaders may be more open to discussions but that’s as far as I will allow my hopes to run.

The Asian session saw markets hold close to their lows with only a slight rally attributed to profit taking before the weekend.  We don’t have much on the data front apart from German business climate which will have risks clearly to the down side. Today should see a steadying of the ship after an initial fall on open. The pressure will remain and rallies will be fade traded barring any major news announcements.

Economic Events to watch:

0800 GE                Jun Ifo Business Climate Index

0830 UK                May Bank of England capital issuance

N/A EU                                 Danish EU Presidency - EU finance ministers meet

N/A UK                                 Bank of England - Financial Policy Committee meeting.

N/A Italy France-Germany-Italy-Spain leaders' summit in Rome

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.