Another quiet day is in prospect for markets as traders wind down for Easter. With little on the economic calendar until next week, markets appear content to linger around current levels. Investors have been given little reason to change their outlook in recent days.
The loss of upside momentum in markets is itself a potential concern for traders at the moment. Markets this year have been characterised by consistent directional trends. Once underway, these trends year have been underpinned by solid momentum. However, buyers appear to have run out of steam in both equity and commodity markets at the moment. The recent up trend is beginning to drift and showing signs of faltering. Traders are waiting for underlying fundamentals to catch up with current pricing in commodity markets and there is scope for retracement if this does not happen soon.
Investors now assume the unfortunate reality that sporadic acts of terrorism are part of the world geopolitical landscape. Markets do not see the tragic events in Brussels as an escalation in the constant threat of terrorism which is already high. This explains the lack of macro response to Brussels outside directly impacted stocks like airlines.
The Brussels bombing has been seen by currency markets as increasing the likelihood of Brexit. It gives UK citizens another reason to insulate themselves from the perceived risks of open borders and immigration. The British Pound fell significantly in response to the Brussels bombing but interestingly did not have the same impact on the UK stock market which closed with little change.