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2 May 2013
European markets cautiously higher ahead of the ECB
FXstreet.com (Barcelona) - The German DAX 30 (+0.26%), the French CAC 40 (+0.20%) and the Spanish IBEX 35 (+0.33%) are edging higher ahead of the ECB interest rate decision, while the Italian FTSE MIB is down by -0.44% despite the improvement in Markit manufacturing PMI. The British, Swiss, Norwegian and Swedish major indexes are down as well.
Market focus for today is the ECB interest rate decision, and while TD Securities analysts expect a 25bps refi rate cut, and this seems to have been well telegraphed by Draghi suggesting it was data dependent at last month’s press conference, it is still not a slam dunk decision: “We remain very uncomfortable, given when all is said and done, it will likely mean little for the economy so the ECB is actively looking for other options, which makes handicapping market reactions difficult”, wrote analyst Alvin Pontoh, adding that if the rate cut can improve sentiment, or via reduced LTRO funding costs create incentives to buy peripheral debt, “then we could see a peripheral rally, but core rates risk moving higher if there is no suggestion of a deposit rate cut or more action to come”.
The EMU PMI dropped slightly from 46.8 to 46.7, but analysts were expecting 46.5. The German figure eased from 49.0 to 48.3, instead of 47.9. The Italian number rose from 44.5 to 45.5, above 44.8 expected. The Spanish PMI came in higher, from 44.2 to 44.7 in April, beating 44.5 consensus. The Greek manufacturing figure rose from 42.1 to 45.
Futures for the American S&P 500, Nasdaq 100 and Dow Jones 30 are signaling a higher opening by +0.25% ahead of the NY session with US trade balance and ISM New York data. The widely expected NFP report will be released tomorrow.
Market focus for today is the ECB interest rate decision, and while TD Securities analysts expect a 25bps refi rate cut, and this seems to have been well telegraphed by Draghi suggesting it was data dependent at last month’s press conference, it is still not a slam dunk decision: “We remain very uncomfortable, given when all is said and done, it will likely mean little for the economy so the ECB is actively looking for other options, which makes handicapping market reactions difficult”, wrote analyst Alvin Pontoh, adding that if the rate cut can improve sentiment, or via reduced LTRO funding costs create incentives to buy peripheral debt, “then we could see a peripheral rally, but core rates risk moving higher if there is no suggestion of a deposit rate cut or more action to come”.
The EMU PMI dropped slightly from 46.8 to 46.7, but analysts were expecting 46.5. The German figure eased from 49.0 to 48.3, instead of 47.9. The Italian number rose from 44.5 to 45.5, above 44.8 expected. The Spanish PMI came in higher, from 44.2 to 44.7 in April, beating 44.5 consensus. The Greek manufacturing figure rose from 42.1 to 45.
Futures for the American S&P 500, Nasdaq 100 and Dow Jones 30 are signaling a higher opening by +0.25% ahead of the NY session with US trade balance and ISM New York data. The widely expected NFP report will be released tomorrow.