ETX Capital Daily Market Bite, 10th January, 2013: Markets Digest BOE And ECB Policy Meetings
January 10, 2013 12:40 pm
January 10th, 2012, Daily Market Bite from Ishaq Siddiqi Market Strategist.
The US now surpassing the EU as China’s largest trading partner will see stocks on Wall Street open modestly higher — we see the DJIA up around 30 points and the S&P500 higher by 4 points. Data from China showing an impressive trade surplus kicked up Asian markets overnight and now US futures, but European markets are currently too concerned with BOE and ECB policy decisions. We lacked conviction earlier on in Europe, trading mostly flat across the region’s core markets due to a reduction in risk exposure before the central bank decisions, however strong auctions from Spain and Italy have helped to indices find direction. Spain smashed expectations in a bonds auction, selling above its target range while Italy’s bills auction pushed 12-month funding costs to hit the lowest level in three years. Bond yields for both countries have eased from session highs as such, vaulting the euro to a session high in the process. Core government bonds [seen as safe havens] have declined in response to the ramp up in risk appetite. BOE unlikely to move on rates and QE; reaction is likely to be muted to the event with traders more focused on what the minutes will reveal when released in later weeks. The ECB is also most likely to stay on hold for rates although there is some speculation the central bank will cut rates by 25 basis points given the raft of recent grim readings from the euro zone, particularly German data over the past two days. Unlikely the ECB will cut rates however, but markets will be keeping their ears out for any hints of a rate cut at the press conference which starts at 1.30pm. ECB chief Draghi is expected to retain a dovish tone, suggesting that risk appetite has helped to steady price-action in financial markets and may even produce some positive sounds over the euro zone staging a mild recovery in 2H 2013. On the topic of the ECB’s OMT programme, Draghi will continue to express that financial assistance is available for nations that comply with ECB conditions but most journalists will most certainly be asking how the ECB views Spain’s easing borrowing costs and if the ECB thinks Spain actually needs a bailout or not. In the US, look out for weekly jobless claims and wholesale inventories.
January 10th, 2012, Daily Market Bite from Ishaq Siddiqi Market Strategist.
The US now surpassing the EU as China’s largest trading partner will see stocks on Wall Street open modestly higher — we see the DJIA up around 30 points and the S&P500 higher by 4 points. Data from China showing an impressive trade surplus kicked up Asian markets overnight and now US futures, but European markets are currently too concerned with BOE and ECB policy decisions. We lacked conviction earlier on in Europe, trading mostly flat across the region’s core markets due to a reduction in risk exposure before the central bank decisions, however strong auctions from Spain and Italy have helped to indices find direction. Spain smashed expectations in a bonds auction, selling above its target range while Italy’s bills auction pushed 12-month funding costs to hit the lowest level in three years. Bond yields for both countries have eased from session highs as such, vaulting the euro to a session high in the process. Core government bonds [seen as safe havens] have declined in response to the ramp up in risk appetite. BOE unlikely to move on rates and QE; reaction is likely to be muted to the event with traders more focused on what the minutes will reveal when released in later weeks. The ECB is also most likely to stay on hold for rates although there is some speculation the central bank will cut rates by 25 basis points given the raft of recent grim readings from the euro zone, particularly German data over the past two days. Unlikely the ECB will cut rates however, but markets will be keeping their ears out for any hints of a rate cut at the press conference which starts at 1.30pm. ECB chief Draghi is expected to retain a dovish tone, suggesting that risk appetite has helped to steady price-action in financial markets and may even produce some positive sounds over the euro zone staging a mild recovery in 2H 2013. On the topic of the ECB’s OMT programme, Draghi will continue to express that financial assistance is available for nations that comply with ECB conditions but most journalists will most certainly be asking how the ECB views Spain’s easing borrowing costs and if the ECB thinks Spain actually needs a bailout or not. In the US, look out for weekly jobless claims and wholesale inventories.
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