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Market News

Good Morning.

European stocks closed in positive territory yesterday with the Eurostoxx 50 adding 0.78% to close at 3,186.34. This level was last recorded in September 2008. The CAC 40 recorded a slightly better performance, rising 0.80%. The German Dax closed at 9,603.71, adding 0.5%.

Notwithstanding the influence Asian market performance could have had on the European performance from the night before, the positive show across European markets was also marginally due to encouraging French data together with the increased flow of Merger and Acquisition news which came in throughout the day. Such deals increase investor confidence within the market as companies show that they are willing to spend in order to undertake such activity. French manufacturing data beat estimates for growth in March reversing a long spell of declines over previous months.

In a wider European perspective however, manufacturing data in the Eurozone came in slightly below estimates, albeit this too, was in positive territory, showing overall growth. The manufacturing PMI reached 53.0 in March, slightly above the 50 mark whcih signals growth. This growth figures continued to add to the expansion recorded over the last nine months, however unemployment remained close to its record high at 12% (Eurostat). This soft positive result may be enough to dodge a deflationary situation. On the other hand, it is these soft results which are adding to expectation of more stimulus to come from the ECB. In turn, this expectation is having a positive effect across European markets.

At a press conference in Athens, ECB Vice president Vitor Constancio said that the prospects for inflation remain a cause for concern. Euro-Area inflation slowed to 0.5% in March, recording the lowest levels in more than four years. We must keep in mind that the ECB’s target for inflation is just below the 2% level.

Many will be waiting to see the outcome of today’s ECB meeting which is to discuss its monetary policy stance. Again, the meeting will be held in light of a slowdown in improving economic data.

In the US, markets also closed in positive territory yesterday. The Dow Jones Index added 0.46% to close at 16,532.61 whilst the S&P 500 and the Nasdaq both closed in positive territory, rising 0.70% and 1.64% respectively. Consumer stocks and technology stocks pushed the S&P to an all time high to close at 1,885.52.

Manufacturing data for the US also came in yesterday, showing that the number had accelerated throughout the last month; a sign that the US may be shrugging off effects of the cold weather it has been experiencing. The ISM Index increased to 53.7 over the benchmark of 50 which indicates growth. This came in slightly below analysts’ estimates of 54.

Stocks in Asian markets were also up overnight. The Asian regional index continued its positive performance, adding to its longest rally in seven weeks. The MSCI Asia Pacific Index rose by 0.5%, recording its sixth day of a positive close. The Hang Seng climbed 0.2%.

Have a Good Day,

Karl

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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