Stocks start the week on a weaker footing

European markets are trading lower with the Euro Stoxx 600 down around 0.50% as of this writing after an initial surge following earlier news that China’s decline in foreign-exchange reserves slowed last month as the nation’s currency stabilized.

The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February indicating clear policy signals to stabilize the currency. Premier Li Keqiang’s work report delivered Saturday at the start of the annual National People’s Congress in Beijing showed the government will give top priority to development by boosting innovation, urbanizing more and cutting excess capacity in industries like coal and steel. He also outlined a 6.5 percent to 7 percent target range for economic growth, with 6.5 percent as the baseline through 2020. Last year’s expansion was 6.9 percent. To reach the new target, China plans to permit a record high fiscal deficit and has raised its money supply expansion target.

This week the spotlight will be on Mario Draghi on Thursday as he is expected to deliver further policy responses to the lack of inflation and sluggish growth in Europe. The ECB president and his colleagues have taken policy action at 10 of the 47 monetary-policy meetings since he took the helm, only to see the region slapped as recently as last week with a negative inflation rate. Market expectations are for a broadening of quantitative easing as well as a deposit rate cut to minus 0.4 percent. There is a real risk of a backlash should the ECB disappoint or not convince investors he’s still able to revive inflation.

Commodities have continued their recovery with WTI Crude trading up to $36.52 as of this writing as news of further cooperation between OPEC and non-OPEC countries contributed to the upsurge. Gold prices are continuing their recovery, trading up to $1267, up almost 20% since the beginning of the year.

In the US Presidential race, the Republican battle continues with Ted Cruz pick up two victories in Kansas and Maine, with Trump taking Louisiana and Kentucky. Importantly, the victories for Cruz have seen him solidify his role as the main challenger to Trump in the Republican race in what’s looking now like a two-horse race.

Data from the US over the past week has contrasted greatly with the performance of its European counterparts. US non-farm payrolls and unemployment figures handsomely beat market expectations while further deflation and declines in manufacturing data highlighted the disparity between the world economies. This divergence has resulted in the Euro falling against the US dollar, currently trading at 1.095 level compared to the 1.12 earlier in February.

Looking ahead this week apart from the ECB meeting on Thursday, we expect Chinese inflation and manufacturing data as well as further trade data from Germany and France. This afternoon there is an emergency meeting between EU leaders on the refugee crisis. In the US on Thursday we expect initial jobless claims figures.