Europe
There has been a relief rally in Europe after Greece managed to get its detailed list of reforms in on-time before the deadline set out by its creditors. European stocks built on positive sentiment built up over the weekend on speculation China, one of its biggest trading partners may look to stimulate its economy through monetary and fiscal policies.
People’s Bank of China Governor Zhou Xiaochuan and Chinese Premier Xi Jinping both spoke of having tools to stimulate China’s economy if needed over the weekend.
The German Xetra DAX had dipped almost perfectly 5% from its peak on March 16 to its low on March 26 and has now re-taken 12,000 potentially setting up for another run at the highs. German inflation data showed a small pickup to 0.1% YoY growth in a positive sign for the European economy that ECB policy is starting to have an effect.
UK
The dissolution of the British parliament and the official kick-off of political party election campaigning was met with mixed emotions in markets. There has not been too much evidence that the UK general election is troubling markets in recent weeks with the FTSE 100 breaching 7,000 for the first time, though the pound has come under some pressure of late.
The FTSE 100 moved back above 6,900 but gave up some its earlier gains as election campaigns began with opinions split between a traditionally business-unfriendly Labour party and Conservatives who plan to hold a referendum on EU membership.
Although oil prices were down, oil majors BP (LONDON:BP) and Royal Dutch Shell (LONDON:RDSa) traded higher on speculation the companies could be big beneficiaries of better relations with Iran following any successful Nuclear treaty.
UK banks including Royal Bank of Scotland (LONDON:RBS) and HSBC (LONDON:HSBA) jumped on statistics showing wide-spread industry job cuts as companies fight increased industry-regulation.
US
A slight change in tact and verbiage from Fed Chair Janet Yellen was still reverberating through US markets on Monday boosted by the prospect of further stimulus in China.
Chair Yellen didn’t deviate too far from the latest Fed statement in her speech on Friday regarding the timing of the first rate hike but shifted focus to the speed of tightening thereafter. Of particular import was Yellen stating that “policy tightening could speed up, slow down, pause, or even reverse course”. So even if rates do rise later this year, we’ll still be data-watching because there is no predetermined path of rate hikes following it.
Although she specifically didn’t say it, Yellen essentially said if the US economy rolls over, we could even move back to QE again. Markets are interpreting Chair Yellen’s statements as a win-win in a never-ending game of moving between economic expansion and Fed backstopping.
The GoDaddy IPO prices tomorrow and is expected to begin conditional trading on Wednesday April 1st.
FX
The US Dollar strengthened across the board on Monday after personal income rose but personal spending dropped more than expected and traders started early positioning for non-farm payrolls on Friday given the shortened week.
The euro drifted lower on Monday, largely dismissing in-line German and Spanish CPI data ahead of consumer prices across the whole Eurozone released tomorrow. EUR/USD failed to sustain above 1.09 and fell towards 1.08.
The pound was lower following disappointing consumer credit data; having failed on several occasions to get past 1.50 GBP/USD dropped through 1.48 while EUR/GBP caught a bid above 0.73.
The Australian dollar fell alongside gold and iron ore prices. AUD/USD has a false break at 0.79 but has since plummeted back beneath 0.7650.
Commodities
Crude oil extended losses despite more trouble in Yemen as it becomes clear supply-lines won’t be disrupted by the conflict. Focus is shifting to Iranian nuclear talks that should a deal be struck, lead to the lifting of sanctions and add to the global oil supply-glut.
Copper moved higher alongside speculation that its biggest consumer, China will move to loosen monetary policy and extend infrastructure projects after a speech from President Xi Jinping at the weekend. There was otherwise dollar-induced weakness in the metals space as gold and silver declined and Iron ore hit new 6 year lows.
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