Trading News and Views:  12  March 2010

Indices:

European markets:

Economic figures failed to impress the investors and adding to this spike in chinese inflation increased the prospects of interest rate hikes in the country and this took the shares in europe especially CAC to end on a lower note.  Gerhard Schwarz, head of global equity strategy at UniCredit said:  "We have a lack of drivers probably in the short term.  Chinese figures that came out this morning remind us that we will see a further tightening of conditions globally over the next couple of months."
(source: reuters.com).

UK’s FTSE 100, France’s CAC 40 and the Germany’s DAX ended lower between 0.1 to 0.4 percent.
(source: reuters.com).

US markets:

Inflation in China rose to the highest increasing worries about money tightening and adding to this US Jobless claims fell less-than expected, this news took the US stocks to a low note.  David Katz, chief investment officer at Matrix Asset Advisors in New York said:   "China is helping lead the global economy higher, and it would definitely slow growth if they were to tighten policy." (source:reuters.com).

Dow Jones  edged down 25.32 points to end at 10,541.  The S&P 500 index  decreased 3.14 points to 1,142.47. The Nasdaq Composite Index fell 5.46 points to 2,353.
(source:reuters.com).

Asian markets:  

Asian stocks were also seen following the path of US and European stocks. Stocks in  Asia fell as investors were worried over tighter monetary policy in China as the inflation is increasing rapidly.  Zheng Weigang, head of investment at Shanghai Securities said: "February new loans remained higher than the government intends it to be, so we expect another rise in bank reserve requirements to come very soon, almost certain in this month.  An interest rate hike will wait at least until the second quarter."
(source: reuters.com).

While the Shanghai stocks were also seen on dull note as investors were upset that strong loan expansion in February could prompt the authorities to soak up more cash from the financial system.  
(source: reuters.com).

Japan’s Nikkei 225 Stock Average rose 0.9 percent.
(source: reuters.com).

The euro was seen firm against the dollar and yen when strong chinese data increased expectations of possible monetary tightening in Beijing.  Tom Levinson, currency strategist at ING in London said:  "There was a bit of a risk aversion move earlier, with the dollar and the yen performing better due to the possibility of more tightening in China, but it's not really a durable trade.The market likes to see China acting in a responsible way to safeguard its long-term growth potential.
(source: reuters.com).

Carl Hammer, currency strategist at SEB in Stockholm said:   "As long as any measures out of China are implemented in a gradual manner then it is more likely to be a positive for risk appetite as Chinese growth is still healthy."
(source: reuters.com). 

Commodities:

Oil Trading:

Oil prices was seen constant in the midst of uncertainity about whether China would tighten monetary policy or not.  Andy Lebow, broker at MF Global in New York said: "There's a lot of uncertainty on what the next market move will be. It's consolidating at this point."
(source: reuters.com).

Peter McGuire, managing director of Commodity Warrants Australia in Sydney said:   "You are going to see $75 to $85 until OPEC changes their views. Given that the US dollar is appreciating, they are relatively content with what they are receiving for their oil."
(source: reuters.com).

US crude for April settled 2 cents higher at $82.11 a barrel.
(source: reuters.com).

Gold Trading:

Gold saw a flat day as there was a possiblility of monetary tightening by China and persistent currency volatility kept bullion investors on the unimportant side. Bruce Dunn, vice president of trading from New Jersey-based Auramet said:  "The crux of the matter is that China's economic data is very strong. There is a lot of talk that they will raise rates by the next month or two."  (source: reuters.com).

Bonds:

(Yields move inversely to bond prices)

US Bonds:

Treasuries ended on a fluctuating note as few US treasuries posted narrow losses but on the other hand, 30-year bond when Treasury's third auction drew investors to a longest term-security.   Investors are seeking higher interest rates on long-term loans to the government as President Barack Obama borrows record amounts to sustain the recovery.
(source: bloomberg.com).

Jim Barrett, senior market strategist at Lind-Waldock in Chicago said:  Markets were "relatively subdued" on Thursday.  The market is waiting for some kind of catalyst," he said. "In the meantime, it's trading in tight ranges. We're running in place."
(source: reuters.com).

European Bonds:

German government bonds saw a disappointing day yet again for a second day on optimism that the Greece's defiicit crisis has been controlled.  Kornelius Purps, a fixed-income strategist at Unicredit SpA in Munich said:   “Investors have become quite comfortable with Greece’s austerity plan. Bunds are trading substantially weaker after having a very quiet start.”
(source: bloomberg.com). 

The yield on the ten-year bond rose three basis points to 3.19 percent.
(source: bloomberg.com).

Economic Calendar 12 March 2010: