Week Beginning 10th Mar 2014 Market and Economic Update.
After a fairly quiet end to the global markets last Friday very little is expected to happen this week until further news comes out of the Ukraine. Ending the week relatively flat all the major indexes posted nominal gains at the closing bells.
Better than expected Jobs Data out of the US was parried by a higher unemployment rate. 179,000 new jobs were added in February 30,000 higher than expected. A small increase from 6.6% to 6.7% for unemployment did little to move the US markets as many investors looked to hold off from putting the cash they took out on Monday back in. The Dow closed at 16,452.72 (+0.19%), S&P 500 at 1,878.04 (+0.05%) and the NASDAQ closed in negative territory at 4,336.22 (-0.39%).
The gains precious metals showed at the start of last week were clawed back despite Gold being looked at rather bullishly, albeit very cautiously by fund managers. The commodity is again being looked at as a safe haven against the news coming out of the Ukraine. COMEX Gold is expected to start slowly as new information comes out of Eastern Europe. Closing at $1,348.25 (+1.1%) for April delivery is hardly ground breaking however with a referendum being penciled in for the 16th March in the Ukraine, it is quite possible that there will be a stronger run on the precious metal. COMEX Silver closed at $21.38 (+1.3%).
Energy commodities had a similar story. Despite posting gains early last week, only for them to return to the previous week's levels there was no real movement in prices. Brent Crude ended the week at $108.79 (+0.6%) with WTI Crude closing out at $102.60 (+0.7%). Oil will again be in focus this week as figures out of China support that their economy is set to continue to decline. With exports down a massive 18.1% and a trade deficit of $22.98Bn, China, the world's largest energy consumer , will no doubt be the focus of investors around the world looking to read what is actually happening.
South East Asia dominated the news at the weekend with the disappearance of a Malaysian Airlines MH370 flight out of KL. The plane bound for Beijing went missing early Saturday morning and at time of press was still no located. Reports that 2 passengers boarded under fake passports have been headline news pointing to a terrorist plot however as there are still many unanswered questions, specifically where is the plane, very little has been confirmed over the course of the last 3 days. Considering the situation in the South China Sea it is good to see the efforts of the countries in the region. With 9 nations taking part in the search comprising of 40 ships and almost 34 aircraft looking for signs of debris it is proof that these nations can work together.
Continuing in Asia, Japan released less than impressive data on their revised economic growth for 2013. Reduced from 1% down to 0.7% they have seen their largest deficit since 1985 being $15bn. This is directly related to recovery from the Tsunami but the competition Japanese companies are starting to experience must have an adverse affect and is expected to continue as the year progresses.
Finally, tensions in the Ukraine have progressed little. Peaceful demonstrations in Kiev at the weekend, by both sides, did not cause further drama. As stated proposed referendum on the 16th March giving the Ukrainian people the choice of whether to stay independent or re-join mother Russia; the sentiment is that it is a foregone conclusion for its return to the former USSR. Although this will have huge implications for the people, it will also allow investors to decide whether they can get back into the markets. Last week's trading volume in the US alone was the lowest seen in months. A direct response to the potential economic factors this type of situation in Eastern Europe can cause.
After last week slew of economic data having minor effects on the markets as a whole, the fact that there are hardly any indicators this week should keep the markets steady. The UK inflation report will be eagerly awaited on Tuesday with US Retail Sales Data and Consumer Activity/ Sentiment expected to be relatively positive on Friday.
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