AM Analysis
Asian stocks traded in positive territory overnight
Asian stocks traded in positive territory overnight, with the benchmark rebounding from a five-week low as data showed an improving US factory output. Bargain hunters bought up cheap stock overnight as investors risk appetite improved. European futures however, are showing a negative open, with the FTSE opening down 12 points to 6558.
European markets are likely to remain tentative pending Ukraine events. The situation remains delicate after the European Union threatened to implement further sanctions if the standoff continues. This could unnerve markets further, as investors keep a sharp eye on developments.
A bulk of economic data will also play on investors’ minds. German ZEW Economic Sentiment which is due at 10:00 GMT could show a decrease in business confidence as the Ukraine situation takes its hold, with sanctions potentially disrupting exports of natural gas to Europe. Building Permits and Core CPI figures for the US are expected at 12:30 GMT.
Gilts may start mixed ahead of a speech from Mark Carney due after the close with the central bank's guidance policy on the minds of investors.
Gold was hit overnight by heavy selling pressure with the precious metal trading over $12 lower. With the US Federal Reserve’s meeting tomorrow, many expect the central bank will announce further tapering of its monthly bond-buying programme.
– Lee Mumford
PM Analysis
Equities are making a tentative move higher
Equities are making a tentative move higher on news that Mr Putin, for now, does not intend to carve up any more of Ukraine, putting both ease and money back into risk assets. Crucially, the market was most fearful of further escalation given that a lot of what happened on Sunday had been priced in the previous week. Now, with Russia pausing at Crimea, markets can at least turn back to more familiar matters, such as earnings surprise and changes in future cash flows.
It felt very much as though participants needed an excuse to book profits and rebalance against what has been an exceptional period of returns for risk assets. And the debacle in Ukraine and Crimea presented a compelling reason to take capital off the table. What we should see now is business as usual. The market will, while keeping an eye on further developments, turn to the Fed for their guidance on rates and asset purchases. And listen closely for any change in data points and the expected trajectory of the largest economies.
– David White
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