Tuesday, March 22: Five things the markets speak of
The stock market strong fluctuations have decreased significantly, leaving many to ask - what's next?
The major indices higher yesterday drifted a quiet trading session, as investors seemed reluctant to make paris "great" at the start of this trading week shortened holiday. With the almost complete winning season and Good Friday widely observed globally, there is little incentive for many to go out on the limb this week.
However, stock indices Euro trading lower on increased risk aversion after several terrorism-related explosions took place in Brussels during the morning session.
1. Markets react to attacks from Brussels
With two bombs explosions ripping the room from Brussels Airport a few hours ago has driven up demand refuge for different assets.
Investors are naturally drawn to safer assets in times of uncertainty or stress.
Bunds rally. The reference yield on 10-year German Bund was last down -0.03% to + 0.19%. Other assets also gaining historical paradise, with gold up 0.8% on the day at $ 1254.70 and USD / JPY down -0.5% to ¥ 111.55.
The dollar strengthened against most other currencies, up + 0.4% and + 0.7% against the EUR and GBP at 1.1197 and € 1.4260 respectively £ we are heading Stateside.
2. Japan manufacturing PMI back into contraction
Preliminary PMI in March in Japan fell to its lowest level in two years overnight (49.1 vs 50.5e), return to contraction for the first time in 12 months.
Disappointing PMI comes on the heels of an ongoing dispute over Japan's fiscal policy and the need to postpone the next round of sales tax of PM Abe.
The Minister of Finance Aso reiterated that he does not believe a fiscal action is necessary just yet and that the economic fundamentals in Japan remain strong.
However, all members of the government that are resolved. Cabinet Secretary Suga said last week that he has not ruled out any delay to the project increase in sales tax, saying the government should in fact delay the increase if revenues drop.
3. German data
composite German PMI came in unchanged for this month to 54 this morning, 1, mostly on the back of strong growth in the services sector, despite the lower production activity.
The PMI "services" rallied to a peak of 55.5 in three months, but its manufacturing equivalent fell to 50.4, 16-month low. This suggests that the German economic dynamics are a little slow. Analysts note that the new growth of about slow is accompanied by the "smallest increase in backlogs since last summer."
Yesterday, Eurozone consumer confidence weakened for the third consecutive month (-9.7 from -8.8 m / m). The consensus was looking for a rebound, instead, it was the lowest print since December 2014.
Weakening consumer confidence threatens to derail the recovery in the euro area, as household spending has been one of its mainstays since the return to growth in mid-2013.
A business climate index Ifo German March more than expected (106.7 against 105.7) using the bounce of the DAX higher from its intraday low as the market heads Stateside.
4. UK CPI in February improves, but miss expectations
UK data this morning showed annual inflation remained steady last month. This confirms the case of Governor Carney at the Bank of England (BoE) to keep interest rates pegged to the lowest.
consumer prices rose by 0.3% y / y in February against expectations of + 0.4% of the market. The details indicate that the rise in prices of alcohol and clothes were offset by lower transport prices and food costs.
Sterling traded lower early in the session to test its intraday low of 1.4255 £ that dealers have suggested that Brussels this morning's attack could support the campaign by U.K. to leave the EU.
Nevertheless, the book attempts to shake the CPI data missed expectations just before the morning from New York.
5. Canadian tax Budget
Later this afternoon the new Liberal Prime Minister of Canada Justin Trudeau will present its first Government fiscal budget.
Currently, the street expects Canada to have a deficit in the region of C $ 30-32B as PM Trudeau focuses on expenditures of the national infrastructure (C $ 15B) for help start an economy ravaged by a product falling 18 months.
So far, the proposed details seem to be well marked by the government and for this purpose the "expected" tax expenditures and the deficit is not expected to have a significant impact on the Canadian dollar (1.3065 C $) on the ad.
The immediate threat to CAD would be if the budget deficit today happens to deviate "too" far from the title already telegraphed. The loonie remained better bid late on the back of firmer commodity prices, particularly crude oil (WTI $ 41.03) break through the psychological $ 40 handle.
Do not expect the Bank of Canada (BoC) to act anytime soon. Today Governor should maintain budget Poloz on the sideline, that Canadian policy makers will want time to assess the impact of new measures proposed by PM Trudeau on Canadian economic data before being reactive.
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