Thungen Financial Markets Update 14th April 2014
With what was quite possibly the most dramatic week in the markets so far this year, this week should prove to be relatively quiet as we head towards the long Easter break.
Markets in Asia started out mixed in early trading as Japan continued to feel the pinch of the tech sell off in the US on Friday and continued concerns about its economic recovery. The Nikkei 225 had its worst week in three years posting a 7.3% drop. The sensitive exchange appears to be relatively level so far today and should be able to hold some ground as this week's driving factor for the region will be a host of economic data out of China that will no doubt have an effect on the markets as the week draws on. Of note, data out of China this week includes Foreign Direct Investment figures on Tuesday, Wednesday will be an important day as we will see year to date and quarter on quarter growth figures which are predicted to be down and Retail Sales and Industrial Production which are expected to be up. Less important but still of interest will be Friday's House Price Index. Both the Hang Seng and Shanghai Comp have stayed flat so far and this is a fair indication of what we should expect until we see some positive data from the region and some indication from the US that their markets will start to level out too.
Asian Markets as of 14th April 2014:
Nikkei 13,910.16 -0.36% SSE Comp. 2,130.54 -0.18% Hang Seng 23,033.00 +0.08%
ASX 5,353.60 -1.29%
As European indexes struggled to avoid the losses posted in both Asia and the US last week European futures are expected to open lower.
Major news from the ECB this weekend in Washington underlined the European Central Bank's intentions. Speaking at the IMF conference, Mario Draghi, the ECB President confirmed that QE was going to be the way forward if inflation refused to get back inline. This re-iterated previous comments made and should help investors gauge how to play the current situation within the Eurozone. The European Parliament was busy this weekend announcing several new strategies as it heads to its annual break in May. On Tuesday the EU Parliament will sign off on two major reforms that will make it easier for banks in the EU to be closed down, avoiding costly bailouts and the need for tax-payer funds to prop up failing banks. The reforms are aimed to speed up the process of closing down banks that are or have failed. Two other announcements of interest were that for the first time commodity trading would come under regulation to fall in line with stock trading and that the EU Parliament will set up a commission to look into High Frequency Trading, similar to the FBI's current investigation in the US. This week will be the last session before the May break. With elections being fielded in Europe for many of the prestigious positions available in the European Parliament it is fair to say that it will take some time to get the new batch of EMP's together and functioning. Considering that all existing rules will be up for review at least twice in the next Parliament the new commission will probably not be effective until November and this should see new policy changes delayed until early 2015.
European Markets as of 14th April 2014
FTSE 6,522.24 -0.14% Dax 9,262.97 -0.56% CAC40 4,353.54 -0.28%
BEL20 3,050.94 -0.28% Zurich SMI 8,257.27 -0.50% MICEX 1,364.58 -0.22%
US markets ended the week in negative territory after a horrendous week for the local indexes. With all three of the major local bourses posting substantial losses the concerns over many of the tech and biotech stock being over valued continued to plague investors. As earnings season kicked off little late in the week we still saw major sell offs and this saw the NASDAQ down 4.7% month to date. The Dow and S&P 500 didn't fair much better posting losses of 2.6% and 3% respectively for the same period. As with China there are a slew of economic data out of the US this week and the S&P 500 has 54 companies reporting earning this week alone. We will see US Retail sales figures today, CPI Tuesday, Housing and Industrial Output on Wednesday and the Federal Reserve Bank of Philadelphia's Business Activity Index and Initial Jobless Claims late on Thursday. With a short week due to the Easter Holidays and a ton of economic and financial data out this week the local markets could see some serious movement. The one saving grace is that the money coming out of tech and biotech stocks looked to have found a home with more solid "Blue Chips" however as earnings start to be reported this week there could be another tentative week ahead for investors.
US Markets as of 14th April 2014:
S&P500 1,815.69 -0.95% Dow Jones 16,026.75 -0.89% NASDAQ 3,999.73 -1.34%
A short week and almost too much data to fully digest could see less volume than normal in the markets as we head to Easter weekend. China and the US will be the drivers this week and so long as the situation in the Ukraine does not worsen, we should be in a position soon to see some positive moves in the markets.
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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 Thungen Financial Advisors. All market data within this release is for your general information and enjoys indicative status only. Thungen 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.