Markets Mark Time

The economic data stream is picking up, but there is an uneasy calm in the markets

Sterling has been weakened by two developments, one political and one economic

Markit reported softer eurozone flash February PMI

The focus in North America will be on the performance of US equities

Korea reported trade data for the first 20 days of February; South Africa January CPI rose 4.4% y/y, as expected

The dollar is broadly firmer against the majors as markets await fresh drivers.

Stockie and Kiwi are outperforming, while sterling and Aussie are underperforming.

EM currencies are mostly softer. TWD and PHP are outperforming, while KRW and ZAR are underperforming.

MSCI Asia Pacific was up 0.4%, with the Nikkei rising 0.2%.

MSCI EM is up 1% on the day, with Chinese markets closed until Thursday.

Euro Stoxx 600 is down 0.6% near midday, while futures are pointing to a lower open for US markets.

The 10-year US yield is flat at 2.89% ahead of another day of heavy debt issuance.

Commodity prices are mostly lower, with WTI oil down nearly 1%, copper down 0.5%, and gold flat.

The economic data stream is picking up, but there is an uneasy calm in the markets. It is almost as if the dramatic drop in stocks has left many with a sense of incompleteness, like waiting for another shoe to drop. The price action has not clarified the situation very much. The equity markets are stalling in front of important chart points as are yields and the dollar.

The MSCI Emerging Market Index is up nearly one percent, rebounding from yesterday’s 0.55% loss. However, it is struggling to get a toehold above the 50% retracement of the drop earlier this month. MSCI Asia Pacific Index rose a milder 0.4% but is stalled at a similar retracement objective. Of note, foreign investors continue to sell South Korean and Philippines, while buying Taiwan shares as local markets re-opened, and small in buying in Indonesia. Taiwan’s Taiex jumped 2.8%, while Hong Kong bounced back 1.8%, and the A-shares index rose 2.3%.

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