UK and German trade numbers in focus this morning

Good morning all,

• Europe to open flat as investors proceed with caution;

• UK and German trade numbers in focus this morning;

• FOMC minutes headline quiet US session;

• Same old story with earnings as Alcoa tops earnings but falls short on revenue.

Europe is expected to open a little flat again on Wednesday, with the FTSE seen up 9 points at 6,599, the CAC down 2 points at 4,422 and the DAX down 4 points at 9,486.

I think it’s safe to say these marginal gains and losses seen in three of Europe’s major indices is quite reflective of the overall mood in the markets at the moment. Investors aren’t exactly feeling negative about the outlook for the global economy, or the markets for that matter, but they are being very cautious right now. There are a number of reasons to be cautious right now, whether that be corporate earnings season which people are fairly pessimistic about or the ongoing crisis in the Ukraine that has flared up again this week, to name only a couple. And this list seems to be growing every week. Unfortunately right now, there’s far less to be optimistic about so this may just have to accept this for now and hope that earnings provide that positivity.

The economic calendar certainly isn’t going to change the mood of investors too much this week, with it offering very little in terms of market moving data releases or events. Today for example, we have some trade balance data for both Germany and the UK being released. While this could have some impact on the markets, maybe currency markets more so, the impact is unlikely to be that significant. Even less so for the German data as traders are already looking ahead to the March and April data for signs that the flare up in tensions between Russia and the West has damaged trade between the two. Russia is a key trading partner for Germany so it is likely to have been hit harder than most.

The highlight of the US session later will be the release of the FOMC minutes from the last meeting in March, although even this may turn out to be something of a non-event. There’s not actually a huge amount we can learn from this meeting with the Fed having already made it perfectly clear that it doesn’t intend to slow the rate of tapering. While the numbers out of the US haven’t been as good as we hoped they would once the winter storms passed, they’ve been good enough to allow the Fed to continue along the path of tapering. People may be looking for more information on interest rates following Janet Yellen’s blunder in the press conference, but she moved quickly to clarify these comments so I don’t see much coming from this.

Alcoa got earnings season under way yesterday, topping earnings estimates while falling short on revenue, a familiar story for earnings season in recent years. Today is looking a little quiet for earnings but this will pick up later this week with JP Morgan and Wells Fargo kicking things off for the banks.