Market News & Analysis

Top Story

DAX Down 2% As Europe's Outlook Goes From Bad to Worse

No matter which direction European traders looked on Thursday they couldn’t escape mounting evidence of an economic slowdown in Europe. The European Commission slashing economic forecasts across the eurozone region sent the euro and European bourses sharply lower. Whilst the BoE’s trimmed growth forecasts initially hit the pound, sterling recovered on Mark Carney’s optimism.

The DAX led the charge southwards tumbling over 2% after the European Commission cut economic growth forecasts for all the major European economies. The commission also warned that Brexit and the slowdown in China threaten to make the dismal picture even worse, as risks mount to the downside. The downbeat report confirmed what the markets have been alluding towards for the past few weeks. A whole percentage point was knocked off growth for Italy, the eurozone’s fourth largest economy, whilst growth for the region was slashed to 1.3% from 1.9% for 2019.

The gloomy report has confirmed investor fears of a slowing outlook. There is a feeling in the market that not all the bad news surrounding Europe is out yet. There is likely to be more weakness in data before we eventually start to see a turnaround. The mood in Europe was strongly risk off, with investors moving out of riskier assets such as equities, particularly the banks. Safer havens such as bods and the Japanese yen benefited from the risk averse sentient, as did gold which rallied over $10 from earlier lows, into positive territory.

Pound pares losses on Carney optimism
The pound pared earlier losses following the BoE trimming its growth forecasts, rallying over 1% on Mark Carney’s optimism. Despite growth forecasts being downwardly revised to the weakest level since 2009, Mark Carney’s upbeat tone regarding the UK economy in the case of an orderly Brexit, helped boost the pound to just shy of $1.30.
Whilst the central bank governor offered some pound pleasing views, until Brexit “fog” clears we are not going to have a clear idea on the future path of interest rates. May’s quarterly inflation report should give more clarity over the expected path for policy. Not only should we know the type of Brexit the UK is going through, but we should also have a better understanding of the gravity of the global economic slowdown.

Global growth concerns spilled across the Atlantic sending Wall Street lower for a second straight session. The Dow Jones dumped 174 on the open with Apple and Caterpillar lagging. 
Whilst 2019 was already earmarked to be a challenging year, slashed outlooks for both UK and the eurozone doesn’t bode well.  


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.