Comment: China Braces for Slow-down, Indian Elections, Japanese Macroeconomic Numbers
May 12, 2014 7:44 am
European financial markets trade a touch higher Monday, kicking off the week on a positive note following on from sturdy gains in the Asian session overnight. That said, weekend developments in Ukraine remain a concern for market participants who are currently managing risk appetite appropriately by not putting all their chips on the table.
Last week, the Stoxx 600 gained for the fourth straight week after European Central Bank President Mario Draghi said the central bank is ready to take action to support the economic recovery, raising expectations for a rate cut next month. That pushed the euro off highs around $1.40 against the US dollar, which was largely welcomed by the market given the currency’s recent strength.
With no major economic releases due Monday, market participants will closely watch ECB Vice President Vitor Constancio and other officials who are meeting in Vienna to further discuss plans for a European banking union. Foreign ministers from the EU meanwhile are meeting in Brussels today to discuss slapping on further sanctions on individuals and companies which are linked with Russia due to the continued unrest in Ukraine.
Over the weekend, reports suggest that voters in Ukraine’s eastern region of Donetsk have backed a plan to break away from Ukraine. The results so far show a growing divide between pro-Russian rebels and other Ukrainians who want the country to remain unified and strengthen ties with the EU.
This latest ballot is of course going to cause much angst to both the current government in Kiev and the West who have all called the referendum illegal. Traders will keep a keen eye on developments there with euro zone policymakers now under increased pressure to respond appropriately.
Overnight in Asia, India’s national market jumped to a new record as investors have priced-in an election win for the pro-business opposition leader Narendra Modi. That led the rupee currency to jump up 0.4% against the US dollar to RS59.71, which is near its strongest level in around 10 months.
Over in China, stocks gained despite president Xi Jinping’s remarks reaffirming the slowing economy over the weekend, saying that the country is transitioning to a “new normal” of slower growth. This suggests that China policy-makers are comfortable with letting growth come in at 7% for the year in terms of real GDP, which could devastate countries heavily exposed to Chinese growth prospects. After last week’s inflation data showed declines in CPI and PPI, raising worries about disinflationary pressure in the country, the market is now looking to this Tuesday’s release of April industrial production and retail sales data which could show further weakness in activity.
Meanwhile, Japanese equities declined following the release of data which suggested the surplus in the nation’s current account came in sharply below market forecasts in March, as imports surged ahead of the sales tax hike. Traders will keep an eye out on Japan this week as the country prepares to report preliminary first quarter GDP figures, due Thursday.
European financial markets trade a touch higher Monday, kicking off the week on a positive note following on from sturdy gains in the Asian session overnight. That said, weekend developments in Ukraine remain a concern for market participants who are currently managing risk appetite appropriately by not putting all their chips on the table.
Last week, the Stoxx 600 gained for the fourth straight week after European Central Bank President Mario Draghi said the central bank is ready to take action to support the economic recovery, raising expectations for a rate cut next month. That pushed the euro off highs around $1.40 against the US dollar, which was largely welcomed by the market given the currency’s recent strength.
With no major economic releases due Monday, market participants will closely watch ECB Vice President Vitor Constancio and other officials who are meeting in Vienna to further discuss plans for a European banking union. Foreign ministers from the EU meanwhile are meeting in Brussels today to discuss slapping on further sanctions on individuals and companies which are linked with Russia due to the continued unrest in Ukraine.
Over the weekend, reports suggest that voters in Ukraine’s eastern region of Donetsk have backed a plan to break away from Ukraine. The results so far show a growing divide between pro-Russian rebels and other Ukrainians who want the country to remain unified and strengthen ties with the EU.
This latest ballot is of course going to cause much angst to both the current government in Kiev and the West who have all called the referendum illegal. Traders will keep a keen eye on developments there with euro zone policymakers now under increased pressure to respond appropriately.
Overnight in Asia, India’s national market jumped to a new record as investors have priced-in an election win for the pro-business opposition leader Narendra Modi. That led the rupee currency to jump up 0.4% against the US dollar to RS59.71, which is near its strongest level in around 10 months.
Over in China, stocks gained despite president Xi Jinping’s remarks reaffirming the slowing economy over the weekend, saying that the country is transitioning to a “new normal” of slower growth. This suggests that China policy-makers are comfortable with letting growth come in at 7% for the year in terms of real GDP, which could devastate countries heavily exposed to Chinese growth prospects. After last week’s inflation data showed declines in CPI and PPI, raising worries about disinflationary pressure in the country, the market is now looking to this Tuesday’s release of April industrial production and retail sales data which could show further weakness in activity.
Meanwhile, Japanese equities declined following the release of data which suggested the surplus in the nation’s current account came in sharply below market forecasts in March, as imports surged ahead of the sales tax hike. Traders will keep an eye out on Japan this week as the country prepares to report preliminary first quarter GDP figures, due Thursday.
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