Arne Lohmann Rasmussen
Danske Bank A/S
Market Movers
There are few key releases today in the US. Existing home sales is expected to continue the positive development seen in 2015 but the market impact should be small. We will also keep an eye on the speeches from Fed’s Lockhart and Lacker. Lacker is viewed as a hawk at the FOMC so interesting to hear his comments after the latest FOMC meeting.
The two most important US data releases this week will be Markit manufacturing PMI and durable goods orders due tomorrow and Thursday respectively.
ECB’s Constancio speaks in London, otherwise there is little on the agenda in the euro zone today. Later this week the ZEW, IFO and PMI business surveys for March will attract attention after all three figures declined in January and February, with the financial uncertainty having a negative effect on economic sentiment.
Selected Market News
We have seen a strong recovery over the past month in oil and during the Friday session the Brent front-contract traded above USD42.5 for the first time since November last year. However, overnight oil has once again drifted lower as the USD has strengthened slightly and as oil rig count data on Friday showed that US oil producers for the first time this year added news rig – though the rise was very small.
US equity markets ended Friday and the week in positive territory and both the Dow Jones and the S&P 500 are now in green for the year. Especially commodity-related stocks and financials had a good day, supported by the general dovish sentiment among major central banks witnessed recently. The view that the Fed is ready to do ‘whatever it takes’ is also visible in markets for inflation: 5Y5Y inflation forward swaps have moved to 2.05% after trading below 1.80% a month ago.
After a negative opening in Asia the positive sentiment has also gained momentum in Asia. Note that Japan is closed for holiday today.
We had some interesting news from Chinese policy makers over the weekend. People’s Bank of China Governor Zhou underlined his concern about a surge in Chinese debt leverage. The warning comes just weeks after the national legislature said that the top priority is to secure at least 6.5% annual growth for years to come. The comment shows that the Chinese authorities are aware that a target growth rate of 6.5% comes with a risk of creating an unsustainable overhang of debt. However, note that the comments come after the Chinese authorities loosened rules on margin trading for securities firms, adding renewed support to the Chinese stock market.
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