US markets couldn't add to the gains seen by Asia and Europe

European markets are set to be pretty much unchanged as we approach the open this morning, after a pretty uninspiring session on Asia saw major markets struggle for any real direction. US markets couldn’t add to the gains seen by Asia and Europe in their sessions, only managing to post modest gains. Yesterday’s session was one of the quieter of the week on the economic calendar, so if the markets have started off with a whimper we are expecting much more fireworks in the next couple of days. Yet again it will be a mixture of geo political and economic news stories that dominate the market flow, but with some high level readings due out of the Eurozone we should be looking at a session with much more for traders to get their teeth into.

As is the theme for this week overnight saw data released from Asia, and while last night’s figures were not the headliners of the week, Chinese money supply, Australian housing data and Japanese industrial production would of all been closely watched by anyone trading any Asian crosses, or indices. As is evident by the lack of market movement on the Nikkei, or ASX overnight the majority of these figures came out in line with expectation. The numbers will build with importance as the week marches on with numbers out overnight tonight undoubtedly the biggest in Asia this week as the BOJ monetary policy meeting minutes are released along with Japanese GDP readings for Q2 and Chinese retails sales and industrial production.

Europe is the headline act for Tuesday’s session however and despite the figures being released not being the major numbers of the week, the outcome will likely give us some invaluable information about the state of the Eurozone economy. Mid-morning sees the ZEW economic sentiment figures released for Germany and the Eurozone as a whole. Lately German economic data has been awful, with GDP, CPI and unemployment numbers all struggling. The issue the EZ has is that without a strong German it has no chance of real economic recovery. Mario Draghi has thrown everything by the QE labelled kitchen sink at the boosting dragging inflation to the upside and kick starting growth but all of these measures will worthless should Germany not show signs of strength. Today’s reading will tell us just how well people think the plans by the ECB are working. The ZEW survey recently has been falling as numbers have gradually got worse and Russian threats to Europe haven increased. Today’s readings are expected to fall to 41.3 from 48.1 in the Eurozone as a whole and to a lowly 18.2 from 27.1 in Germany. These terrible predictions not only show you how negatively people see the ECB measures and the economic outlook as a whole, but they also show you the level of fear that retaliatory Russian sanctions are causing to Germany. Only last week Vladimir Putin moved to ban certain foods from western Europe being exported into Russia. With farmers now having to find another buyer for almost 10% of their produce, we could be looking at another real problem in terms of inflation as food prices will start to fall on bigger the usual stockpiles and start to cause a huge issue for not only farmers but the overall inflation figure. All this of course happening as the ECB fights with everything it’s got to pull the inflation figure away from the very real fear of deflation.

Ahead of the open we expect to see the FTSE 100 open pretty flat, higher by 4 points with the German DAX pretty much the same, lower by 3 points.