ETX Capital Daily Market Bite, 10th July, 2013; Stocks Pause For Breath; Egypt Gets Funding
July 10, 2013 9:43 am
July 10th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pausing for breath this morning following bumper gains since the start of the week. That said, equities remain broadly supported thanks to the improved sentiment in global markets which sees investors being able to shake off bad news such as S&P’s downgrade of Italy’s credit rating by one notch to BBB. Asian markets overnight were under pressure after China printed weaker than expected trade data [exports and imports both deteriorated] which reaffirmed stalling growth in the country.
There’s been little reaction in stock markets to Italy’s rating downgrade which comes ahead of Thursday’s debt auction by the country. But Italy’s 10-year bond yields have crept a little higher following the action while the euro has regained composure this morning after hitting lows not seen since April this year. That was mostly down to ECB policymaker Joerg Asmussen on Tuesday saying the central bank’s forward guidance on interest rates extends beyond 12-months and the ECB could consider embarking on other measures to prop up the euro zone economy.
FX traders fretted over his comments, selling the euro aggressively with Italy’s rating downgrade adding further pressure together with the IMF throwing in some gloom over the euro zone’s prospects. Early Wednesday, the euro and sterling are at $1.27 and $1.48 respectively against the USD while core government bonds such as UK gilts and German bunds are catching bid. In commodities, metals are picking up the pace with gold up 7 bucks while oil remains elevated on tensions in Egypt.
The IMF on Tuesday slashed global growth forecasts for 2013 and 2014, warning of a slowdown in emerging markets and a deeper recession in the euro zone, which wasn’t a huge surprise to the market [given the precarious state of both EMs and the euro zone] but did slap some sense into bulls who were getting too carried away in recent days. There was a pleasant surprise in the shape of a rosier picture for the UK’s outlook which the IMF revised upwards for 2013.
To add to that optimism, Goldman Sachs and think-tank NIESR on Tuesday raised their GDP forecasts for the UK too while Moody’s this morning cheered the market by raising its outlook for the country’s banking system from stable to negative, although did note of low growth prospects. So looking ahead, economic data in Europe is thin on the group so the focus is on the FOMC meeting minutes later in the day which undoubtedly the big risk-event for global markets. US stock futures in the black at the moment with the DJIA up around 16 points and the S&P500 up 1 point, indicating a positive open on Wall Street. Attention will also be on upcoming earnings as the reporting season gets underway.
July 10th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pausing for breath this morning following bumper gains since the start of the week. That said, equities remain broadly supported thanks to the improved sentiment in global markets which sees investors being able to shake off bad news such as S&P’s downgrade of Italy’s credit rating by one notch to BBB. Asian markets overnight were under pressure after China printed weaker than expected trade data [exports and imports both deteriorated] which reaffirmed stalling growth in the country.
There’s been little reaction in stock markets to Italy’s rating downgrade which comes ahead of Thursday’s debt auction by the country. But Italy’s 10-year bond yields have crept a little higher following the action while the euro has regained composure this morning after hitting lows not seen since April this year. That was mostly down to ECB policymaker Joerg Asmussen on Tuesday saying the central bank’s forward guidance on interest rates extends beyond 12-months and the ECB could consider embarking on other measures to prop up the euro zone economy.
FX traders fretted over his comments, selling the euro aggressively with Italy’s rating downgrade adding further pressure together with the IMF throwing in some gloom over the euro zone’s prospects. Early Wednesday, the euro and sterling are at $1.27 and $1.48 respectively against the USD while core government bonds such as UK gilts and German bunds are catching bid. In commodities, metals are picking up the pace with gold up 7 bucks while oil remains elevated on tensions in Egypt.
The IMF on Tuesday slashed global growth forecasts for 2013 and 2014, warning of a slowdown in emerging markets and a deeper recession in the euro zone, which wasn’t a huge surprise to the market [given the precarious state of both EMs and the euro zone] but did slap some sense into bulls who were getting too carried away in recent days. There was a pleasant surprise in the shape of a rosier picture for the UK’s outlook which the IMF revised upwards for 2013.
To add to that optimism, Goldman Sachs and think-tank NIESR on Tuesday raised their GDP forecasts for the UK too while Moody’s this morning cheered the market by raising its outlook for the country’s banking system from stable to negative, although did note of low growth prospects. So looking ahead, economic data in Europe is thin on the group so the focus is on the FOMC meeting minutes later in the day which undoubtedly the big risk-event for global markets. US stock futures in the black at the moment with the DJIA up around 16 points and the S&P500 up 1 point, indicating a positive open on Wall Street. Attention will also be on upcoming earnings as the reporting season gets underway.
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