ETX Capital Daily Market Bite, 7th March, 2013: Stocks Edge Up Ahead Of BOE And ECB Meetings
March 7, 2013 10:39 am
March 7th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European stock markets are steady Thursday, but market participants are holding back from making any bold moves ahead of central bank policy meetings by the Bank of England and European Central Bank later and a Spanish debt auction before those. The DJIA on Wednesday printed fresh all-time highs but volatility crept in overnight with Asian markets trading in a mixed manner.
The risk tone is still broadly positive, thanks to the run of strong US economic data we have seen this week and hopes for a stellar nonfarm payrolls report from the US on Friday. But, we have central bank meetings up first with both the BOE and ECB widely expected to keep policies unchanged, though some may argue that action is warranted.
For the BOE, the recent meeting minutes indicated that Governor King swung toward more QE at last month’s meeting, a surprise to market participants. Since the last meeting, UK economic data has remained mixed with manufacturing activity slowing but jobs and services growing. Moody’s cut the country’s credit rating by one notch, adding to the concerns about the UK’s stalling growth. Though consensus is calling for the BOE to sit on its hands, King may have been able to persuade his colleagues to consider more QE since the last meeting.
In Europe, the distress after Italy’s inconclusive elections which continue to threaten peripheral bond yields and soaring unemployment rate for the euro zone, does mean there is a case for an ECB rate cut. Again, the central bank is widely expected to stay on hold with attention mostly on the press conference after the meeting where Mario Draghi will emphasize the need for conditionality for his OMT programme and insist the ball is in the court of fiscally distressed nations and not the ECB. Other than the central bank meetings and Spanish auction, we have German industrial orders and US weekly jobless claims.
March 7th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European stock markets are steady Thursday, but market participants are holding back from making any bold moves ahead of central bank policy meetings by the Bank of England and European Central Bank later and a Spanish debt auction before those. The DJIA on Wednesday printed fresh all-time highs but volatility crept in overnight with Asian markets trading in a mixed manner.
The risk tone is still broadly positive, thanks to the run of strong US economic data we have seen this week and hopes for a stellar nonfarm payrolls report from the US on Friday. But, we have central bank meetings up first with both the BOE and ECB widely expected to keep policies unchanged, though some may argue that action is warranted.
For the BOE, the recent meeting minutes indicated that Governor King swung toward more QE at last month’s meeting, a surprise to market participants. Since the last meeting, UK economic data has remained mixed with manufacturing activity slowing but jobs and services growing. Moody’s cut the country’s credit rating by one notch, adding to the concerns about the UK’s stalling growth. Though consensus is calling for the BOE to sit on its hands, King may have been able to persuade his colleagues to consider more QE since the last meeting.
In Europe, the distress after Italy’s inconclusive elections which continue to threaten peripheral bond yields and soaring unemployment rate for the euro zone, does mean there is a case for an ECB rate cut. Again, the central bank is widely expected to stay on hold with attention mostly on the press conference after the meeting where Mario Draghi will emphasize the need for conditionality for his OMT programme and insist the ball is in the court of fiscally distressed nations and not the ECB. Other than the central bank meetings and Spanish auction, we have German industrial orders and US weekly jobless claims.
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