ETX Capital Daily Market Bite, 22nd February, 2013: Markets Rebound; German IFO Helps
February 22, 2013 11:18 am
February 22nd, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stocks are rebounding in Friday’s session after registering bulky losses in the previous session amid fears the Fed will slow down and/or abruptly end QE and grim euro zone composite PMIs. Stocks dropped sharply on both sides of the Atlantic, the euro slid against the dollar while core government bonds were favoured. Today’s rebound however sees a mild reversal of yesterday’s price-action with the support coming from a much better than expected German IFO survey which overshadowed the weak 4Q German GDP figures. Germany’s economy contracted in the last quarter of 2012 but the recent ZEW and IFO survey indicate that 2013 has kicked off optimistically with German businesses and consumers confident over their economy’s prospects. After two days of losses, traders are latching onto the positive sounds out of the German economy but today’s rebound does seem fickle. Italian consumer confidence in February may have rose to 86.0 vs 84.7 but Italians are heading to the polls this weekend for the elections which are prompting hesitation with investors still unclear over who is really leading in the polls. At the same time, US sequesters kick off March 1, and are likely to pressure sentiment in the sessions ahead. Back here in Europe, the European Commission’s latest projections are kicking down the euro a little but stocks remain broadly supported by the German data. The EC predict that the euro zone economy will contract for the second year in a row in 2013, dampening hopes for a recovery this year and in contrast to ECB chief Mario Draghi’s remarks that the euro zone will gradually post growth later this year. The EC expects the euro zone economy to contract by 0.3% this year and growing 1.4% next year. It also sees the average euro-zone budget deficit falling below the target 3% in 2013 for the first time since 2008. And, unemployment in the periphery is expected to accelerate further as austerity measures bite hard; the EC expects the average unemployment rate to hit 27% in Greece, 26.9% in Spain and 17.3% in Portugal. Looking ahead, the ECB will offer details of how much banks will look to repay LTRO funds.
February 22nd, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stocks are rebounding in Friday’s session after registering bulky losses in the previous session amid fears the Fed will slow down and/or abruptly end QE and grim euro zone composite PMIs. Stocks dropped sharply on both sides of the Atlantic, the euro slid against the dollar while core government bonds were favoured. Today’s rebound however sees a mild reversal of yesterday’s price-action with the support coming from a much better than expected German IFO survey which overshadowed the weak 4Q German GDP figures. Germany’s economy contracted in the last quarter of 2012 but the recent ZEW and IFO survey indicate that 2013 has kicked off optimistically with German businesses and consumers confident over their economy’s prospects. After two days of losses, traders are latching onto the positive sounds out of the German economy but today’s rebound does seem fickle. Italian consumer confidence in February may have rose to 86.0 vs 84.7 but Italians are heading to the polls this weekend for the elections which are prompting hesitation with investors still unclear over who is really leading in the polls. At the same time, US sequesters kick off March 1, and are likely to pressure sentiment in the sessions ahead. Back here in Europe, the European Commission’s latest projections are kicking down the euro a little but stocks remain broadly supported by the German data. The EC predict that the euro zone economy will contract for the second year in a row in 2013, dampening hopes for a recovery this year and in contrast to ECB chief Mario Draghi’s remarks that the euro zone will gradually post growth later this year. The EC expects the euro zone economy to contract by 0.3% this year and growing 1.4% next year. It also sees the average euro-zone budget deficit falling below the target 3% in 2013 for the first time since 2008. And, unemployment in the periphery is expected to accelerate further as austerity measures bite hard; the EC expects the average unemployment rate to hit 27% in Greece, 26.9% in Spain and 17.3% in Portugal. Looking ahead, the ECB will offer details of how much banks will look to repay LTRO funds.
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