Having seen the US markets set new record highs, most Asian indices followed the momentum. Many dealers said the euphoria can take us only so far, then we look for substance and they were hoping for that from tonight’s FED minutes release. The Nikkei retraced much of Wednesday strength but interestingly enough remained within the range. Late in US trading, the index lost ground after the reports that FED hike is edging closer to a done deal for March to hit the recovery. The JPY however, continues to play around the 113 level – the stronger end of the day’s range. Despite Toshiba shares rallying 22.45%, the Nikkei managed an almost unchanged close. The Hang Seng closed strong (+0.9%) as confidence support from large cap’s drifted eastward from the west, which also boosted Shanghai but only +0.2% firmer. Currency is the main driver for much of the US indices move which is confusing a lot of players around the globe. Why bonds and stocks are moving together is a recurring question we receive daily.
UK and European data was mildly better than expected today which helped sentiment, temporarily. The German IFO came in better than the 109.6 expected and printed at 111 instead. While in the UK the Q/Q GDP was released at 0.7% with expectations at +0.6%. However, the Y/Y figure came in at 1.8% rather than the expected 2%; which provided mixed messages. It did also push the UK back into second place within Europe, as Germany’s 1.9% manages a first. GBP understandably came under some pressure but held in reasonably well, for now, closing just 0.5% lower on the day (against the Euro). DAX, CACA and FTSE all closed around +0.3% firmer setting fresh yearly highs. Nerves and geopolitical uncertainty continue to weigh on peripheral markets and today IBEX lost ground as the government attempted to reissue 15yr paper. Interestingly, the Bund market traded higher (price terms) as flight to safety remains the name of the game especially as we see the Euro trades at six week lows (104.90). Nine weeks to go until the French elections, markets hate uncertainty.
A nervous equity market awaited the FED minutes only to rally into the close “after” further speculation the FED raises in March. Indices closed with little movement (DOW up just 20 points) but that was good considering oil dropped over 1.4% late in the day. Even after the 5yr note auction didn’t spur much action but prices were drifting anyway.
US 2yrs closed 1.22% (+1bp), 10’s closed 2.42% (-1bp) and Bunds at 0.28% (-2bp) – this closes the US/Bund spread at +214bp. Greece 10’s 7.09% (+10bp), France 10’s closed 1.01% (-7bp), Turkey 10.46% (-9bp), Portugal 3.92% (-5bp) and UK 10’s at 1.20% (-3bp).
Investment and financial consultancy services are offered on behalf of Armstrong Economics. PEI does NOT provide personal guided advice for any individuals regardless of residency or nationality. PEI provides forecasting based upon objective computer models in most leading financial centers worldwide through its affiliates and/or representative arrangements. The information provided is believed to be reliable, however accuracy and completeness are not guaranteed. This information is offered to professional investors and institutions. PEI does trade on a proprietary basis in selected markets around the world. PEI accepts NO managed accounts on behalf of any individuals no matter the country of residence or origin. PEI predominantly engages in hedging contracts and currency overlay business on behalf of business and institutions. Individuals seeking to use the forecasting services of PEI should seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content relative to their personal financial investment situation. Keep in mind that a forecast in the local currency of that instrument may prove to be correct but a swing in the underlying currency can make that same forecast dangerous to someone investing in a different currency.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.