German trade balance for February may show some softness in exports

Market movers today

• Another quiet day on the global agenda. FOMC minutes tonight might be interesting given the upward adjustment to the Fed rate projections at the March meeting. This was also when the 6.5% threshold was skipped. Fed members are likely to express continued optimism about the US economy and see weakness in Q1 as temporary as reflected in the FOMC statement.

• German trade balance for February may show some softness in exports, as both the US and emerging markets have been weak in early 2014.

• More ECB members are on tap today with Lautenschläger speaking at 11:30 CET and Costa and Coeuré both speaking at 16:00 CET.

• In Sweden Riksbanken will most likely keep its leading interest rate unchanged but a rate cut cannot be ruled out completely – see page 2 for more information.

Selected market news

Risk sentiment remains positive albeit with no major market moving news overnight. The US stock market closed higher driven by a rebound in IT-related stock after it had dropped markedly recently on the back of valuation concerns. Alcoa kicked off the Q1 reporting season by reporting better-than-expected Q1 earnings after market close in the US. Despite the positive risk sentiment bond yields are largely lower.

With the exception of Japan Asian stock markets are mostly higher this morning. The JPY has continued to strengthen after Bank of Japan yesterday signalled that it is not in a hurry to ease monetary further. USD/JPY is this morning trading 101.98. The stronger yen weighs substantially on the Japanese stock market with Nikkei down more than 2%. Yesterday’s relatively hawkish comments from Kuroda look like a self-inflicted wound.

Despite the renewed geopolitical uncertainty in Ukraine emerging market shares and currencies continue to perform strongly. Currently the increasing belief that China will soon stabilise appears to be more important than the geopolitical uncertainty in Ukraine. The situation remains tense as Ukraine moves to assert control in the eastern part of the country and Russia has warned against the use of force to dislodge demonstrators. How Russia handles gas supplies to Ukraine could be a major focus in the coming days, as termination of gas supplies to Ukraine could also disrupt gas supplies to the rest of Europe.

In Italy Prime Minister Matteo Renzi in connection with the government’s annual financial and economic review said that Italy will still be able to keep the budget deficit below 3% of GDP in 2014 despite planned tax cuts and weaker-than-expected growth.