The JPY is also stronger against the USD by about 0.7%

Market Movers

• No major data releases today but financial markets will be digesting the impact of the failed oil talks in Doha and whether this will give rise to a renewed downward trend in the oil price that could weigh on commodity producing countries and risk assets in general.

• Markets will also be looking forward to this week’s ECB meeting on Thursday. We do not expect any policy changes but we believe Draghi will sound dovish as inflation expectations are still very low and the effective EUR is stronger. Specifically we expect Draghi to re-open the door for rates cuts.

Selected Market News

While it is relatively quiet on economic releases, it has been quite an eventful weekend in terms of international meetings (OPEC/non-OPEC in Doha and the IMF spring meetings in Washington DC). In relation to the Doha talks, OPEC and non-OPEC producers on Sunday failed to reach a production freeze accord. The striking point looks to have been the absence of Iran at the meeting and reluctance of Saudi Arabia to go ahead without Iran participating in the deal. Brent crude opened USD3/bl lower this morning at USD40/bl following the disappointing outcome but recovered later in today’s trading session. Despite the failed Doha talks, we still expect the price of Brent crude to recover to USD46/bl in Q4 16 and to USD52/bbl in 2017 on the back of a lower USD, stronger global economic activity and a decline in non-OPEC oil output.

Adding to the general negative sentiment in the market was a relatively pessimistic view on global growth potential at the weekend’s IMF spring meetings. The communiqué calls for member countries to rigorously pursue structural reforms and growth-friendly fiscal policies (although IMF staff notes that fiscal trends have worsened in many countries, not least emerging markets). Furthermore, the meeting highlighted a potential Brexit as an important global economic risk.

Following the events over the weekend, Asian markets opened on a sour note this morning with the Nikkei index down almost 3% and the Chinese CSI 300 index falling 1% despite relative strong Chinese property price increases, indicating that the prices rose in 62 major cities in March, up from 47 in February, which shows that the rebound in the property market is taking hold, which supports our call of a rebound in the Chinese construction sector. The JPY is also stronger against the USD by about 0.7%, despite IMM positioning data showing that long Japanese speculative bets reached new highs last week.

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