Ooh er!

All over the place

Astronomers think they have discovered a ninth planet in our solar system. Because it takes tens of thousands of years to orbit the sun the pace of life there is slow. Financial markets on Planet 9 move gradually and predictably and investors never panic. Unlike on our own dear Earth.

It is impossible to put a finger on exactly what is feeding the nervousness that has battered stock markets this year and driven a migration towards safe-haven currencies. The candidates are many and varied; illiquidity, fear of higher US interest rates, an oversupply of oil, low inflation, persistently slow growth, (add your own suggestions here…). There is no single villain but the combination of factors has created a sense of insecurity that has resulted in equity bear markets in the Far East and Europe and a 7% jump in the value of the Japanese yen.

That skittishness was evident again overnight, with US equities bouncing around and Chinese share prices failing to hold onto the modest gains inspired by another massive injection of cash by the People's Bank of China. Currencies were all over the place: New York's late equity rally sent the yen lower only for it to recover as the Shanghai stock market fell back early today.

Jobs help sterling

A fall in the rate of UK unemployment to 5.1% and 4.3k fewer jobseekers took the pressure off the pound but failed to engender any new wave of support for sterling. US inflation came in higher but below forecast at 0.7%, doing no favours to the dollar.

The jobs data allowed sterling to rebound from the selloff that had preceded the ecostats' announcement. It picked up further ground in the evening before retreating alongside Far East equities and oil this morning. There was no lasting impact on the US dollar from the inflation numbers.

The Loonie put in the best overall performance after the Bank of Canada left its benchmark interest rate unchanged at 0.5%. Although the majority of analysts had forecast the decision correctly, many investors had evidently been expecting a cut so the Canadian dollar enjoyed a relief rally.

Frankfurt and Davos

At the top of today's agenda, Mario Draghi's press conference at half past one will be watched closely by investors keen to discover whether the European Central Bank is still committed to doing "whatever it takes". They will also take a close interest in what emerges from the World Economic Forum in Davos.

In early December the ECB surprised markets by not announcing dramatic new easing measures. Since then the euro has strengthened by 3% against the dollar and by 8% against sterling. A less-than-wholly-dovish ECB president could send it higher again today.

The cable news channels are making the most of the WEF, interviewing bankers, economists, business chiefs and politicians for their take on the current market upheavals. Their guesses might be no better than anyone else's but they will carry weight among investors.