- Financial markets' response to possible terrorist attack in Boston has been calm
- Commodity prices markedly lower across the board on concerns about global growth
- Equity markets are lower but have stabilised during Asian trade
- JPY markedly stronger and commodity currencies under pressure but stabilisation overnight
- Focus today is on ZEW, US housing starts and speeches by Draghi and FOMC-members
Financial markets have responded relatively calmly to what appears to be a terrorist attack in Boston in connection with the annual Marathon
. A least three people were killed in connection with two explosions and more than 100 people have been injured.
Otherwise the main driver in the financial markets continues to be concern about global growth after the weaker-than-expected Q1 GDP growth in China and a weak regional manufacturing survey in the U.S. Commodities yesterday sold off sharply across the board with crude oil prices down and industrial metal prices down close to 3%. Gold prices plunged close to 10% as concern that central banks might cut their gold stocks added to the downward pressure on gold prices.
Greece finally reached a deal with the troika (EU-commission, ECB and IMF) that paves the way for the disbursement of a EUR2.8bn aid tranche next month that has been delayed since March, see Financial Times. In the deal Greece promises to cut public payrolls and curb tax evasion. In a statement the troika said that Greece was now on track to meet its fiscal targets for this year.
The U.S. stock market closed markedly lower with S&P 500 finishing yesterday’s session down 2.3%. Selling pressure accelerated in late trade on the back of the reports of a possible terrorist attack in Boston. However, we have seen stabilisation in Asian trade where U.S. stock futures have recovered markedly. Asian stock markets are only modestly lower this morning after having recovered gradually during Asian trade.
This morning the Nikkei is down only 0.1% and Hong Kong’s Hang Seng is down 0.6%.
In the FX market JPY strengthened substantially but USD/JPY has again been moving higher in Asian trade and is only down 0.4% since market close in Europe yesterday. USD/JPY this morning is trading 97.7. USD strengthened on the back of news of the attack in Boston but has again weakened in Asian trade and EUR/USD is trading largely unchanged at 1.308. Commodity currencies have also recovered slightly in Asian trade.
In the U.S. bond market overall no big impact. 10-year U.S. bond yields are down about 2bp to 1.70% since market close in Europe.
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