Europe stocks firm as tech wobble fades

Market Review

As per usual after the release of the US Non-Farm Payrolls we were expecting Monday blues in the market with little or no volatility, sideways direction and absolutely zero volume. We were half way right in regards to the momentum and volume, though most assets seemed to have chosen a direction. EURUSD was stubborn to the upside, treasury notes tested the high from 27th February whilst equities continued their move lower. Crude oil had a big pop higher just after NYMEX open, but this was retraced the next couple of hours and the day as a whole ended only a couple of cents down, thought he strategy was stopped on the move up. As a whole we can sum the day up as a non-event. There were no big data releases, no comments of note that would change any view point and nor did we have quick moves. The strategy ended slightly down as crude was stopped, but the losses were contained as the US10Y position yielded 2 whole ticks.

Today's Fundamental View

This morning saw the release of manufacturing and industrial production numbers from the United Kingdom which saw a much bigger growth than analyst consensus was suggesting. Traders had been somewhat more bullish on cable though and started buying cable as soon as the dawn of a new morning set in, almost leading us to believe the UK had had gone all German on the market; leaking the number before the release. The move upward have been sustained in sterling, and in cable it is currently trading around the spike high level with a small retracement almost hitting the 38.2% handle as the most significant to get involved with. This afternoon is likely to be quiet in terms of scheduled news, but there are some monetary policy speakers scheduled, although only after 1700BST. In other words traders should brace themselves for a quiet day ahead where we can pick ranges. We are still convinced that treasuries are overbought at current levels and will be looking to short it, though as Russia continues to support the up-rise in Ukraine we will need to monitor this situation carefully and go risk off should Russia again send forces over the border before a potential annexation of the area. Equities are still trending lower and we are not looking to go against this, though we find it difficult in the FX sector as the euro has been relatively strong. Due to recent geo-political developments today’s crude strategy is long.

Alternative View

Adverse comments from central bankers may adversely affect the markets, as will any developments in Ukraine.