Market Overview

US

The S&P500 came down slightly below its opening level yesterday, to close at 1873.81, dropping 0.01%. Throughout the day however, the index rose to the highest levels it has seen this year. The slight drop will mostly relate to the developments in Ukraine as well as lower than expected data on payroll and services. The number was expected to read 155,000 by economists but this came in at 139,000 additional workers in February. Furthermore, the Labour Department is expected to publish its February jobs report tomorrow. The Dow Jones Industrial Average also fell slightly by 0.2%, to close at 16,360.18.

It is also interesting to highlight that investors have put in an additional $4.8 billion in US Equity ETFs over the last five days whilst withdrawing $5.8 billion from bond ETFs. This again could be signalling that a better return is expected in equity markets going forward.

Asia

The Hang Seng Index rose by 0.6% overnight as shipping and telecom company stocks increase. Japanese stocks also rose as the yen depreciated. The Shanghai Composite rose by 0.3% as a two-day drop in value came to an end. Japanese Premier Li Keqiang left annual growth targets unchanged at 7.5% for 2014. Meanwhile, Japan’s finance Minister added that actual economic growth coming in below the forecast is acceptable. However, there appears to be increased speculation in relation to Japan’s debt levels. It appears as though the $21 trillion debt may continue to increase.

UK

The BoE is expected to continue with their monetary stimulus programme today. If this materialises, the BoE will enter its sixth year of such stimulus. According to economists, the benchmark interest rate is expected to remain unchanged at 0.5%. Governor Mark Carney, successor to Mervyn King, said that there was “no rush” to remove the stimulus. This programme appears to have achieved its targets. Unemployment has been pushed towards 7% since 2007.

ECB

The European Central Bank will announce its decision on its key interest-rates this afternoon. Last month, Draghi said that policy makers within the ECB required more information to analyse the situation within the Euro Area. Today, this information may be at hand and we just have to wait for their decision. The recovery has been encouraging but still very sensitive to any changes that may occur. GDP grew by 0.3% in Q4 of 2013. This was more than economists’ expectation. Inflation has picked up since October where it was at its four-year low of 0.7%. Core inflation was 1% in February.

Venezuela

The country is currently paying tribute to Chavez, a year after he lost his fight against cancer. However, the political protests did not cease in different parts of the country. After securing finance from Russia and China, Maduro has announced the end of diplomatic relations with Panama. The reason given was that of ‘conspiracy’ against him.

Also to Look out for Today

• EU emergency summit on Ukraine. The summit is expected to discuss and consider repercussions for Russia if its army does not retreat from Crimea. News sources said that Ukraine’s acting Prime Minister, Arsenii Yatsenyuk, is expected to attend.

• ECB rate decision

Have a good Day!

Karl Cremona