Week Ending Apr 4 2014 Market and Economic Update.
The last day of trading is going to be a busy day as the markets react to the strew of data that has come out so far this week and that is impending today.
Markets in Asia have been quiet today after what appeared to be a strong rally mid week. Stimulus plans out of China backed by strong data out of the US helped push all the indexes near four month highs. The Chinese confirmed that they are looking to ways to help bolster their potentially floundering economy by extending the tax cuts currently benefitting small businesses and by investing in their rail networks in the region of $24.6Bn. With China and Japan's economies constantly under scrutiny lately the feeling is that they both need to do more to strengthen their positions and as time wears on this is going to prove more and more difficult. How long they can hold their positions as economic power houses will continue to be up for discussion and it is imperative that they act on this sooner rather than later.
The IMF met earlier this week to discuss the state of the global economy. Speaking in Brussels before the ECB meeting Ms. Lagarde said that tensions in the Ukraine were at the forefront of their concerns as the circumstances had far reaching effects. The situation in Crimea continues to stagnate as moves by the UN, NATO and the EU start to provoke reactions from Vladimir Putin and his colleagues in Russia. The effects felt already by the Russian economy are hard to quantify and may be too early to judge however there is no doubt that the crisis is far from resolved even if tensions on the ground in the Ukraine are reducing.
Speaking in Brussels, The President of the European Central Bank, Mr. Mario Draghi stated that there were possibilities of quantitative easing al la Federal Reserve style. Although this has been previously and strongly advised against by member nations such as Germany, this is now becoming a more and more likely scenario. Even though many EU countries are reporting better than expected economic data there is still the issue of record low inflation and interest rates being at an all time low for such a long period of time. Europe appears to be in the midst of potentially huge political upheaval as local governments face the backlash of their local economies poor performance on a voters level. All this adds weight to the need to sort the Eurozone's financial predicament out sooner rather than later and although this has been hinted at, no timeframes were mentioned and this may have grave repercussions should any more EU members need to go down the bailout route any time soon.
The US keeps propping up the markets with positive data. With a whole host of indicators this week the US indexes have managed to make and hold the gains achieved. Driving prices late in the day on Wednesday was data from the Institute for Supply Management. March figures of 53.7 bested February's 53.2 showing an expansion mainly put down to better weather. The change in weather was also reported as the main reason behind the positive construction figures. Government projects managed to get back on track and new homes data implied that the building industry was back in line with last year if not a little stronger. Today March Payroll data is due to be announced and this has kept trading in Asia and Europe relatively quiet as they looked to get through the end of the week. It is predicted that there will be good results to back up the weather theory and no doubt the US markets will react accordingly.
Major Indexes as of 4th April:
Index % Change Close/
DOW Jones (+0.00%) 16,572.55
FTSE 100 (-0.15%)
CAC 40 (+0.42%)
Nikkei 225 (-0.17%)
Hang Seng (-0.25%)
Commodities. Gold has had a tough week as it saw the gains of the previous month disappear as the situation in Crimea and the Middle East along with strong economic data saw cash move away from the precious metal back into the markets. Gold contracts for May delivery are up slightly on early Friday morning trading sitting at $1,291.50. This is over 6.5% down on 2014's high of $1,385.00 but still below the average of the year so far at $1,292.77. Many gold bulls still believe there is going to be a run on the metal however as economic data keeps improving it is hard to see whether the highs of a few years ago will be seen any time soon. News out of Libya has driven Crude Oil up late in the week, as the government looks to be closer to resolving issues with rebels and exports should be set to resume. Up just under half a percent on early European trading at $100.70 this should stay taper as the data out of the US is supplied later today.
Commodity Prices as of 4th April:
Brent Crude (+1.40%) $106.27
WTI Crude (+0.80%) $100.39
Comex Gold (-0.60%)
Comex Silver (+0.10%) $19.83
As the week draws to an end we expect the markets to hold the gains posted late on. Unless the payroll data out of the US is significantly different to what is expected, the indexes should start next week on an even footing.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Triumph Financial Advisors.All market data within this release is for your general information and enjoys indicative status only. Triumph Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.