The onset of the Easter holiday encouraged investors to take a well-deserved breather. It has been one ugly quarter for stock markets. VSTOXX, the popular measure of European stock market volatility, dropped back below 20 after spiking above it earlier this week. Some improved economic data from Germany helped quell some concerns of a cool down in the first quarter. German inflation rose while unemployment hit another record low.
It has been a quarter of extremes. There has been record high market volatility coupled with record high levels of M&A activity. US stocks experienced the largest daily points drop on record as well as the biggest one-day gain in two-and-a-half years. On Thursday, CME Group (NASDAQ:CME) confirmed its purchase of the UK’s NEX exchange. The interpretation of what higher M&A means for markets often depends on the circumstances. Ten years into an economic recovery with interest rates edging back higher, this splurge in M&A looks like classic end-of-cycle activity.