Daily Analysis: Markets Jittery Over Italy And Cyprus Concerns

Investors jittery over Cyprus and Italy. Italian leader Pier Luigi Bersani unable to create a coalition government after talks on Wednesday with rival leaders finished with no agreement. He made the markets jittery with his comment that only an “insane person” would now want to run Italy.

The European Commission meanwhile released figures for its economic sentiment indicator which showed a fall from 91.1 last month to 90.0 in March. Investors had anticipated a drop to just 90.4

Cyprus banks to reopen today after 2 weeks of closure. The banks have been heavily guarded by police and GS4 ahead of the opening. To control savers making runs on the banks, the banks have incorporated rigid controls once the banks open including maximum withdrawals of 300 Euros and they have banned all cheques.

Retails sales data from Japan was very poor with the figure dropping to -2.3 per cent from this time last year and dropping by -1.1 since January. Investors had expected a slight fall of -1.2 per cent.

Daily Analysis Assets:
Stocks
Asian stocks mostly lower as consumer sentiment drops with pessimism from retail data in Japan, chaos with capital measures in Cyprus and a downgrade of the growth outlook for South Korea. The Japanese Nikkei 225 declined by 1.56 per cent as the USDJPY also declined. Biggest losers were car manufacturing and banks. The Hang Seng in Hong Kong dropped by 1.05 per cent and the Shangahi Composite shed 2.27 per cent. This came after China’s lawmakers revealed new measures to control wealth management products sold by Chinese Banks which introduces unknown risky elements in the banking sector. Australian ASX 200 dropped 0.30 per cent following the RBA announcement that the private sector credit in the country which gained by 2 per cent (same as the previous months reading) was below analyst expectations of a 0.3 per cent rise.

European stocks inched higher today in European session even while concerns are rife over Cyprus banks reopening and over political stalemate in Italy. The EURO STOXX 50 gained by 0.19 per cent, the French CAC 40 also added a little with a 0.13 per cent increase and the German DAX 30 gained 0.21 per cent.

US stocks closed down yesterday as traders moved away from the risky assets like stocks. The DJIA closed down 0.23 per cent , the S&P 500 was down 0.06 per cent and the NASDAQ ended p 0.12 per cent.

Forex
The USD was down against the JPY today as the USD/JPY stay in a narrow range as investors await the announcements from the next BOJ meeting minutes. The pair touched 93.99 in overnight trading which was the lowest level for the pair in 3 days. The dollar is expected to hold steady against the YEN at near 3 year highs as market participants continue to expect tighter easing policies from the Bank of Japan. The Banks Governor Kuroda commented at the beginning of the week that Japan’s lawmakers would perhaps do away with a law that minimizes the banks’ ability to purchase government bonds.

The JPY was up against the EUR while the EUR is put under pressure by Italy and Cyprus concerns, with the pair creeping down by 0.08 per cent to hit 120.60. The single currency was up against the greenback today after German retail sales data surprised analysts. The figure which had been expected to decline to -1.0 per cent instead rose to 0.4 per cent. The EUR/USD pair were up 0.20 per cent in European early session to 1.2806. The EUR dropped against the GBP though with the EUR/GBP losing 0.02 per cent and touching 0.8446.

Commodities
Gold moved slightly lower today although gold may become a safe haven asset for investors later in the day as they move away from jittery currencies and stocks. The precious metal declined 0.13 per cent. Oil was slightly up in overnight session regaining Wednesday’s losses. The commodity gained 0.10 per cent to trade at $96.67. Supplies of the oil far exceeded analyst expectations. Natural gas meanwhile was almost at 1 ½ year highs yesterday as temperature forecasts for the beginning of April will be colder than normal for this time of the year.

Today
The US will release the weekly initial Jobless Claims numbers and revised figures on Q4 economic growth.