ETX Capital Daily Market Bite, 9th May, 2013: Markets Pause For Breath; BOE Meeting Eyed
May 9, 2013 10:17 am
May 9th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pausing for breath today after racking up fat gains over the past few sessions which has seen the DAX in Germany print new all time highs, the FTSE100 in the UK edging closer to the 6600 level, not too far off its all time high just below the 7,000 level reached back in December 1999. In the US, both the DJIA and S&P500 continue to rally to new higher highs and in Asia, Japan’s Nikkei index is nicely above the 14000 mark.
With indices sitting on such lofty levels, it’s natural investors pause and book profits but that has not changed the overall improved risk-tone we have seen in markets since the ECB cut interest rates last week. Reassurances by ECB members that the central bank is ready to act, aggressive easing by the BOJ, interest rate cuts by the RBA and Bank of South Korea together with the Federal Reserve leaving the door open for more stimulus, are the driving forces behind this rally.
An easing recession in the euro zone, with German economic fundamentals indicating an improvement has soothed fears the region’s power house’s economy has stalled. Similarly, better data out of the euro zone’s periphery such as today’s Spanish industrial production and the fact the country continues to draw strong demand at bond auction, reinforces the view that the crisis is abating somewhat though it must be noted that the latest legal blow for Italian politician Silvio Berlusconi over tax fraud does prompt some concern over the prospects over the country’s newly formed broader coalition. Though Berlusconi will appeal, his removal from the coalition would be a setback for the country that has finally started to make some progress in resolving its political mess by implementing a government.
In the UK, industrial production numbers today are encouraging, up 0.7% in March was much stronger than expected as was the manufacturing output figures, suggesting that poor weather conditions did not have a material impact on UK growth. The UK data today is now likely to prompt an upward revision to Q1 GDP data but moreover, it will force the hand of the Bank of England to retain current policy measures with rates at ultra lows and QE at £375billion. The BOE’s meeting will be today’s highlight though unlikely to impact price-action as the market is convinced the decent run of UK data is a strong enough excuse for the MPC to sit on their hands again. Other than the BOE, market attention will be on US weekly jobless claims for further clues over the state of the US labour market which appears to be stabilizing.
May 9th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pausing for breath today after racking up fat gains over the past few sessions which has seen the DAX in Germany print new all time highs, the FTSE100 in the UK edging closer to the 6600 level, not too far off its all time high just below the 7,000 level reached back in December 1999. In the US, both the DJIA and S&P500 continue to rally to new higher highs and in Asia, Japan’s Nikkei index is nicely above the 14000 mark.
With indices sitting on such lofty levels, it’s natural investors pause and book profits but that has not changed the overall improved risk-tone we have seen in markets since the ECB cut interest rates last week. Reassurances by ECB members that the central bank is ready to act, aggressive easing by the BOJ, interest rate cuts by the RBA and Bank of South Korea together with the Federal Reserve leaving the door open for more stimulus, are the driving forces behind this rally.
An easing recession in the euro zone, with German economic fundamentals indicating an improvement has soothed fears the region’s power house’s economy has stalled. Similarly, better data out of the euro zone’s periphery such as today’s Spanish industrial production and the fact the country continues to draw strong demand at bond auction, reinforces the view that the crisis is abating somewhat though it must be noted that the latest legal blow for Italian politician Silvio Berlusconi over tax fraud does prompt some concern over the prospects over the country’s newly formed broader coalition. Though Berlusconi will appeal, his removal from the coalition would be a setback for the country that has finally started to make some progress in resolving its political mess by implementing a government.
In the UK, industrial production numbers today are encouraging, up 0.7% in March was much stronger than expected as was the manufacturing output figures, suggesting that poor weather conditions did not have a material impact on UK growth. The UK data today is now likely to prompt an upward revision to Q1 GDP data but moreover, it will force the hand of the Bank of England to retain current policy measures with rates at ultra lows and QE at £375billion. The BOE’s meeting will be today’s highlight though unlikely to impact price-action as the market is convinced the decent run of UK data is a strong enough excuse for the MPC to sit on their hands again. Other than the BOE, market attention will be on US weekly jobless claims for further clues over the state of the US labour market which appears to be stabilizing.
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