Sverre Holbek, CFA
Danske Bank A/S
Market Movers
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In the euro area, Sentix investor confidence for April is due for release at 10:30 CET. While the index has been declining for three months, we expect it to have bottomed out and we look for a small increase due to the improved market sentiment.
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The euro area unemployment rate, which has been on a downward trend since mid- 2013, is released at 11:00 CET and we expect the figure was unchanged at 10.3% in February. Although this is a high level of unemployment, it is not that far from the European Commission’s estimate of the structural unemployment rate of 9.8%. When the unemployment rate reaches this level, the upward pressure on wages should start to pick up.
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ECB board member Peter Praet will be speaking at 10:30 CET on ‘The ECB’s fight against low inflation: reason and consequences’. Together with the speeches later in the week by fellow board members Danièlle Nouy, Vitor Constancio, Benoit Coeure and Yves Mersch, as well as the ECB minutes released on Thursday, this should provide further information about the monetary policy decisions on 10 March.
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In the afternoon, data on US factory orders, durable goods and capital goods orders are released (all at 16:00 CET).
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In Denmark, today brings unemployment figures for February (09:00 CET) and in the afternoon at 16:00 CET currency reserve data for March are released. See Scandi Markets.
Selected Market News
Global bourses ended the week on a mixed footing. Economic data released on Friday were generally encouraging; the job report for March showed 215,000 jobs added and above-trend growth in hourly earnings. Furthermore, the ISM manufacturing index rose more than expected and is now in expansionary territory for the first time since August 2015, clearly suggesting that the manufacturing cycle has turned (see US: Solid jobs growth continues and manufacturing cycle has turned, 1 April, for further details). In addition, last Tuesday’s dovish comments from Fed Chair Janet Yellen have limited expectations of near-term rate hikes. Taken together, these factors generally supported US equities on Friday. On the other hand, renewed weakness in the oil price following reports (link) that Saudi Arabia will not freeze its output without Iran and other major producers joining in weighed on the performance of shares in energy companies.
Leak suggests IMF considers exit from Greek bailout, pressuring Germany. Over the weekend, a transcript of a purported conversation taking place on 19 March published by WikiLeaks (link) indicates that IMF officials considered putting pressure on German Chancellor Angela Merkel to give Greece debt relief or the IMF would withdraw from the EUR86bn bailout programme. IMF views Greek debt restructuring as pivotal to achieve long-term sustainability. The German government, on the other hand, has so far been opposed to debt reliefs but has also repeatedly said that IMF involvement is crucial. Thus, the leak shows continued strains between Greece’s creditors, raising the stakes ahead of the next large debt repayment looming in July.
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