Global stock markets fell and bonds rallied on Monday

Good Morning,

- Global stock markets fell and bonds rallied on Monday as worries over conflicts in the Gaza and Ukraine raised uncertainty. The dollar trade in a narrow range, as currencies lost some momentum on a slight reduction in geopolitically-inspired risk aversion.

- Asian shares: Japan's Nikkei 0.84%, Hong Kong's Hang Seng 1.45% (07:00 GMT), Korea's Kospi 0.52%, Australia's ASX 200 0.10% and China's Shanghai 0.99%.

- Israeli jets, tanks and artillery continued to pound Gaza as the death toll from a two-week conflict topped 550.

- Germany and other European Union members have taken a more cautious line on moves against Russia than the United States, mindful of the damage an exchange of sanctions with one of their main energy providers could do to Europe's economy. The Bundesbank said on Monday the German economy probably stagnated in the second quarter.

- SocGen on EUR/USD: Last Friday's current account data, which continue to show vast inflows of money into European bond and equity markets, adding to the inflow of cash from the current account surplus, explain why short positions are frustrated so much of the time, and perhaps also why they are inevitable, notes SocGen. "We really thought that we had a chance of breaking below 1.35 and holding there last week, but the briefest of flirtations with life in the 1.34s merely served to flush stops and increase the frustration. Still, model valuations show that as shorter-term rate differentials move inexorably in the dollar's favour, so the tide is still slowly turning against the Euro. With peripheral yields so low, and after a good run for European equities, the flood of money pouring in to Europe will surely slow and the currency eventually fall," SocGen argues. "Maybe 1.35 goes this week. But even if it does, shorting Euros will still feel like running uphill in mud,"

- The Japanese government has slightly lowered its economic growth forecast for the current fiscal year to March 2015 due to sluggish exports and a larger-than-expected pullback in demand after the April sales-tax hike, Cabinet Office estimates show. The government now sees real gross domestic product growth at 1.2 percent in fiscal 2014/15, versus 1.4 percent in its prior forecast issued earlier this year. Growth is expected to accelerate to 1.4 percent in the following year, according to the Cabinet Office estimates. The estimates are broadly in line with projections made by the Bank of Japan, which last week cut its economic growth forecast for the current fiscal year to 1.0 percent.

- BOJ Governor Haruhiko Kuroda reiterated that the central bank's quantitative easing is working well so far and that the BOJ will continue its efforts to meet its 2 percent inflation target in the coming fiscal year.

- Japan finance minister Aso: Japan exports not growing as much as expected. Cut in GDP forecast mostly due to effect of foreign demand. Want to reduce Japan new bond issuance in 2015.

- The Australian dollar bounced slightly after Reserve Bank of Australia Governor Glenn Stevens largely refrained from pushing a dovish line on policy that some in the market had braced for. Stevens said record low rates were working as intended and he was content with the current state of policy, though further action would be considered if it could "reasonably" be expected to do more.

- Safe-haven gold prices rose again above $1,300 an ounce as the market focused on increased turmoil in the Middle East and tensions over Ukraine.

- Watch today: UK industry, US CPI & Home Sales.

Have a nice Day!