Scoreboard: Forward march

Solid data out of Europe and the US saw equities rally on both sides of the pond despite the escalating situation in Crimea.

Most of the excitement last night was in equity markets, with price action comparatively subdued elsewhere (generally). But stocks were bid and that largely stems from positive economic data on both sides of the pond. In the US for instance, new home sales may have dipped 3.3 per cent in February, fully offsetting January’s gain. Yet house price accelerated in January according to the S&PCaseShiller index -- up 0.9 per cent in January compared to December’s 0.7 per cent lift. Annually, prices are still surging more than 13 per cent -- 13.24 per cent to be exact.

Similarly, consumer confidence pushed higher (March data), the index rising to 82.3 from 78.3. Over in Europe, most of the excitement was caused by the German IFO index which slipped a bit to 110.7 in March from 111.3. The important thing to note is that the index didn’t fall further, or even slump, given events in the Ukraine.

What the survey tells you is that German industrialists, like the market, are taking things in their stride, notwithstanding efforts by the US and Europe to escalate Crimea into a full blown regional crisis. I would have thought de-escalation is the key. Instead, the rhetoric is increasingly hostile, with talk of war -- and this is from the US. We saw another example of that last night where -- and despite no threat actually being made to any NATO member, indeed Russia has given assurances that its sole concern is Crimea -- the US said it would use military force to defend NATO members.

Global equities put in a good performance. Over in Europe, the Dax surged 1.6 per cent, nearly offsetting the fall of the previous session in what was the biggest gain in three weeks. The CaC similarly rose 1.6 per cent, while the FTSE100 was up 1.3 per cent. Over on Wall Street gains were a little more modest. The S&P500 is currently up 0.5 per cent (1866), the Dow is 107 points higher (16,383) and the Nasdaq is 0.2 per cent higher (4235).

Commodity markets were mixed: gold was flat at $1311, silver then fell 0.4 per cent, while copper was up 1.8 per cent. In the crude space prices were also mixed. WTI slipped 0.4 per cent to $99.23, while Brent was up 0.3 per cent to $106.8.

Forex markets saw the Australian dollar up over 40 pips or so to 0.9163, with a session high of 0.9174. The euro is unchanged at 1.3827 as I write. The British pound in turn is 40 pips or so higher at 1.6532, while the yen is at 102.29.

Rates did little overnight. The US 10-year treasury yield is up 2 bps to 2.74 per cent (2.76 per cent at the high), with the five-year yield at 1.73 per cent and the two-year at 0.3 per cent. Aussie futures were then up 0- 1.5 ticks on the threes (96.96) and the tens to 95.885.

Elsewhere, inflation in Britain accelerated in February, rising 0.5 per cent in the month after a 0.6 per cent fall the month prior. Annually, CPI inflation is 1.7 per cent higher although the retail price index is 1.7 per cent higher. Still in Britain, producer prices fell 0.4 per cent in February and are 5.7 per cent lower over the year.

In markets today, there is very little Australian data of note and there’s not much out for the rest of the region either. The key focus will be a speech from the Reserve Bank governor at 1430 AEDT. The deputy governor also gives introductory comments at 0935 AEDT, and the RBA’s Financial Stability Review is also out, at 1130 AEDT. Tonight the key data out of the US includes durable goods orders. That’s it. Only one or two bits and pieces otherwise, like house prices in the UK and the Fed’s capital analysis and review results.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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