Markets look to an optimistic start

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Today’s Economic events

  • BoJ Governor Kuroda Speech
  • Australia home loans m/m 1.50% vs. 1.90%
  • China CPI y/y 2.30% vs. 2.40%; PPI -4.30% vs. -4.50%
  • Italy industrial production m/m -0.60% vs. -0.50%; y/y 1.20% vs. 3.90% previously

Coming Up

  • Fed Dudley Speech
  • Fed Kaplan Speech

The quarterly earnings season gets underway today with Alcoa set to open the US earnings with its quarterly report. The equity markets are likely to see some volatility but are high in hopes that the markets will turn around following the strong risk aversion sentiment prevailing last week. Global equity markets were trading positive today as a result tracking Oil’s gains from last Friday. In Asia, the Nikkei225 was the exception, losing 0.44% for the day while the Shanghai Composite gained 1.66%.

Economic data from China today saw the release of monthly inflation numbers, which continued to show some modest gains. Consumer price index in China grew at a pace of 2.30% in March, same as in February. While missing estimates of a 2.40% increase, with no downside surprise, the markets took the report in their stride. Producer price Index data was also better than expected, falling 4.30% against estimates of -4.50% and better than February’s dismal -4.90% print.

In Australia, economic data saw the release of home loans for February, which increased 1.50% following January’s 3.90% decline. Analysts forecasted a 1.90% increase instead. AUDUSD is up 0.15% for the day in what was a rather choppy trading. However, the currency managed to remain well supported following last Thursday’s lows near 0.7499. NZDUSD is up 0.34% reflecting the risk on sentiment.

While the Japanese yen continued to trend weaker, USDJPY managed to turn around following comments from BoJ Governor Kuroda, who said that the central bank could take appropriate measures to reach its 2.0% inflation target, which still, according to market speculation is a hard target to achieve. While USDJPY briefly posted a few 17 month low, prices managed to turn around strongly with USDJPY currently up 0.12% trading at 108.24.

In Europe, economic data was limited to Italy’s industrial production which fell 0.60% in February, more than analyst expectations of -0.50%. January’s numbers were also revised lower from 1.90% to 1.70%. The euro remained weak since the start with EURUSD down 0.07% at the time of writing. Prices are trading back below the 1.40 handle.

GBPUSD was the surprise mover of the day, however, as the Pound Sterling over 0.68%. The pound was seen trading at $1.422 posting a 3-day high.

European equity markets are trading mixed with the German DAX up 1.15% while the London FTSE100 is down a modest 0.04%.

In the US, economic data is quiet with no major events scheduled. There is, however, a surprise “closed door meeting” from the Federal Reserve, but no major surprises are expected as far as interest rates are concerned. Fed members Dudley and Kaplan will, however, be taking turns to speak later in the day. US equity futures are pointing to a higher open. The Dow Jones futures are up 0.33% while the S&P500 futures gained 0.34% ahead of the opening bell.

On the commodity front, Crude Oil’s strong rally on Friday saw the bullish momentum take a pause with prices currently down 0.08%. WTI Crude Oil futures are trading at $39.50 a barrel following Friday’s rally to $40.24. Gold prices posted some strong gains into the early trading session, but prices soon lost momentum after touching a 2-month high 1254. Gold prices are currently trading at $1249 an ounce.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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