ETX Capital Daily Market Bite, 4th April, 2013: Markets Weak; ECB And BOE In Focus
April 4, 2013 1:28 pm
April 4th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Cautious start for European stock markets this morning with investors reluctant from building risk exposure ahead of central bank meetings from the BOE and ECB together with PMI services data from the region before that. The BOE are expected to keep policies on hold despite calls for QE by some in the market – however, many traders believe the BOE will hold fire as the UK economic outlook, though murky at best, is not in such a dire situation that could warrant an imminent release of more QE into the system, at least not yet. The ECB on the other hand will be under pressure to act given the recent political uncertainties in Italy and the bailout for Cyprus. That, together with run of poor euro zone economic data, which some argue warrants a rate cut. Expectations are for the ECB to hold fire too but the attention will be on President Draghi to offer some clues as to the central bank’s near-term outlook of the euro zone economy. Some believe he may be under pressure to consider multiple options such as another round of LTRO, interest rate cuts and encourage lending to corporates in the region to ease liquidity conditions. Much of the questions in the Q&A press conference post the rate call will be about Cyprus and Italy. Ahead of that, euro zone PMI services are expected to depict a steeper than expected contraction in the region, firmly below the 50 mark, while the UK PMI is set to moderate slightly but remain above the 50 mark. Below 50 signals contraction and above that number indicates expansion. Look out for Spanish and French debt auctions and weekly US jobless claims data due later in the session. After the central bank meetings, the market attention will turn to the hotly awaited monthly US nonfarm payrolls report due Friday.
April 4th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Cautious start for European stock markets this morning with investors reluctant from building risk exposure ahead of central bank meetings from the BOE and ECB together with PMI services data from the region before that. The BOE are expected to keep policies on hold despite calls for QE by some in the market – however, many traders believe the BOE will hold fire as the UK economic outlook, though murky at best, is not in such a dire situation that could warrant an imminent release of more QE into the system, at least not yet. The ECB on the other hand will be under pressure to act given the recent political uncertainties in Italy and the bailout for Cyprus. That, together with run of poor euro zone economic data, which some argue warrants a rate cut. Expectations are for the ECB to hold fire too but the attention will be on President Draghi to offer some clues as to the central bank’s near-term outlook of the euro zone economy. Some believe he may be under pressure to consider multiple options such as another round of LTRO, interest rate cuts and encourage lending to corporates in the region to ease liquidity conditions. Much of the questions in the Q&A press conference post the rate call will be about Cyprus and Italy. Ahead of that, euro zone PMI services are expected to depict a steeper than expected contraction in the region, firmly below the 50 mark, while the UK PMI is set to moderate slightly but remain above the 50 mark. Below 50 signals contraction and above that number indicates expansion. Look out for Spanish and French debt auctions and weekly US jobless claims data due later in the session. After the central bank meetings, the market attention will turn to the hotly awaited monthly US nonfarm payrolls report due Friday.
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