10th April - Market and Economy Review
Global Market Data as of 10th April 2014
FTSE 100 6,635.61 (+0.68%) Dax 9,506.35 (+0.16%)
CAC 40 4,442.68 (+0.40%) BEL 20 3,105.16 (+0.23%)
Madrid IBEX 10,485.20 (+0.04%) Zurich SMI 8,411.43 (-0.14%)
Moscow MCIEX 1,350.46 (+0.05%) Sydney ASX 5,477.50 (+0.32%)
Nikkei 225 14,303.71 (+0.03%) Hang Seng 23,144.54 (+1.32%)
Shang SSE Comp 2,105.24 (+0.33%)
Dow Jones 16,437.18 (+1.11%) NASDAQ 4,153.90 (+1.72%)
S&P 500 1,872.18 (+1.09%)
Yesterday saw a turnaround in the markets, with Europe and the US both posting gains late in the day which helped the Asian markets start Thursday positively and reach near five month highs in early trading.
Notes from the FOMC yesterday helped reverse a 4 day losing streak in the US. Last month's comments from the Fed were well received however didn't really underline a timeframe to their suggested program. Yesterday however gave clearer lines and investors took the statement as a positive approach to the situation in the United States. Previously the Fed stated that they were looking to increase interest rates and look to reduce their bill buying program substantially. Though no specifics were given, general sentiment is that instead of a rate increase in late 2015, mid 2016 is a more likely timeframe. This news spurred the local indexes to gains and the tech sector in particular clawed back some good ground with the NASDAQ putting on almost 2%.
In Europe, the UK announced better than expected economic data back to back. On Tuesday Manufacturing Growth was up 1% for February which was a 3.8% better than the same month last year. Yesterday, import and export figures were released that gave a trade deficit lower than predicted. Imports were down to £32.6bn (2.2%) and exports were down to £23.5bn (1.6%). This left the deficit at £9.1bn as opposed to £9.4bn for the month before. With imports at their lowest since April 2011 and exports at their lowest since November 2010 this is hardly good news however the IMF increased the Growth forecast for 2014 for the UK to 2.9%. Europe insists it is well within recovery parameters and this week has seen consistently positive data out of the Eurozone. With the ECB on the case with regards to QE and the EU members who were bailout recipients last year starting to turn a corner, you could say that the EU is in a far better position now than they were just 6mths ago. This could, however change dramatically if the situation in the Ukraine does not end anytime soon. Peaceful talks are again being requested by the US and Russia with the EU looking to their western ally to help negotiate a resolution that doesn't involve sanctions that could seriously harm the EU recovery.
As mentioned Asian markets are close to five month highs today off the back of the Fed notes and trade data out of China. Despite reductions in imports and exports they still managed to turn a deficit in February of $23bn to a surplus for March of $7.7bn. Imports and exports were both down on 2013 levels, 6.6% for exports and 11.3% for imports. Exports in February had dropped 18.1% and these haven't dropped on consecutive months since 2009. It should be expected that China will start supplying some better data soon as they will no doubt have been accounting for the slow start to 2014 with the Lunar New Year as the main culprit for poorer economic figures. With the mini stimulus package being implemented and the government promising better controls we expect a turnaround for one of the world's largest and leading economies.
To round off the week on a high note shouldn't be too hard. A handful of meaningful indicators will be announced later today and tomorrow. Importantly, out of the US we have jobless claims, import and export prices and the Fed balance sheet at the close of the day. Tomorrow China releases its CPI data.
Europe and the US are expected to continue the run started yesterday and which has helped Asia back into positive gains today. We will no doubt end in positive territory come the closing bell on Friday, and as we head into April proper, things will start to improve as the inclement weather in the US, flooding in northern Europe and the Chinese New Year no doubt stop affecting the data we have been seeing since the beginning of the year.
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