Global markets experience severe sell offs with European indices slumping due to the Ukraine crisis

Mar 4 • Morning Roll Call • 2230 Views • Comments Off on Global markets experience severe sell offs with European indices slumping due to the Ukraine crisis

shutterstock_922310The high impact news landscape deferred to the crisis developing in Ukraine. However, as events moved quickly, the USA published some encouraging data in the afternoon session particularly in the form of reports from various quarters with regards to the overall strength of the USA manufacturing base.

“Sharpest improvement in manufacturing business conditions since May 2010” was the title of the report from Markit economics as the PMI rose to 57.1. However, despite this positive news, combined with positive news regarding USA construction, the DJIA and other indices were dragged down by the poor sentiment that the Ukraine crisis had caused. And until the situation has stabilised the selloff across many bourses, particularly those in the emerging economics, could continue for some time.

February 2014 Manufacturing ISM Report On Business

Economic activity in the manufacturing sector expanded in February for the ninth consecutive month, and the overall economy grew for the 57th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. “The February PMI registered 53.2 percent, an increase of 1.9 percentage points from January’s reading of 51.3 percent indicating expansion in manufacturing for the ninth consecutive month. The New Orders Index registered 54.5.

January construction spending rises 0.1%

Outlays for U.S. construction projects rose 0.1% in January to a seasonally adjusted annual rate of $943.1 billion, led by private projects, the U.S. Commerce Department reported Monday. Economists polled by MarketWatch had expected a 0.4% decrease in January. Private-construction spending rose 0.5% in January, with a 1.1% increase for residential projects and a 0.2% decline for non-residential projects. Meanwhile, public-construction spending fell 0.8% in January.

US: Sharpest improvement in manufacturing business conditions since May 2010

Key points: Robust upturn in manufacturing sector performance. Faster output and new order growth. Job creation hits 11-month high Summary At 57.1 in February, up from 53.7 in January, the final seasonally adjusted U.S. Manufacturing Purchasing Managers’ Index (PMI) 1 signalled the strongest improvement in business conditions for 45 months. The headline index was much higher than the three-month low posted in January, and indicated a robust overall manufacturing sector performance. The earlier ‘flash’ reading for February was 56.7.

Market overview at 10:00 PM UK time March 3rd

The DJIA closed down 0.94%, the SPX 0.74%, the NASDAQ down 0.72%. Euro STOXX slipped by 3.02%, CAC by 2.66%, DAX by 3.44%, FTSE by 1.49%. The DJIA equity index future is down 0.96%, the SPX down 0.74%, the NASDAQ future down 0.68%. The euro STOXX is down 2.61%, DAX future down 3.02%, CAC future down 2.43% with the UK FTSE future down 1.31%.

NYMEX WTI oil finished the day’s sessions up 2.10% at $104.74, NYMEX nat gas down 2.23% at $4.51%, COMEX gold was up 2.29% at $1351.50 per ounce with silver up 0.96% at $21.44 per ounce.

Forex focus

The yen climbed 0.4 percent to 101.38 per dollar mid-afternoon in New York after reaching 101.20, the strongest level since Feb. 5th. It added 0.9 percent to 139.20 per euro, reaching the biggest increase since Jan. 31st. The 18-nation currency slid 0.5 percent to $1.3730. The yen increased to its strongest level in almost a month versus the dollar after Russia took control of Crimea, intensifying concern of a conflict with Ukraine’s government and boosting demand for haven assets.

The Swiss franc gained 0.2 percent to 1.21296 per euro after appreciating to 1.21044, the strongest level since Jan. 10th, 2013. To safeguard the economy from deflation and a recession, the Swiss National Bank, the Zurich-based central bank, set a cap of 1.20 per euro on the franc in September 2011.

The rouble weakened 1.6 percent to 42.7032 against Bank Rossii’s target basket of dollars and euros after touching a record-low 42.754. Russia’s central bank raised its benchmark one-week auction rate to 7 percent from 5.5 percent effective 11 a.m. Moscow time.

Australia’s dollar was little changed at 89.25 U.S. cents after falling to 88.91, the lowest since Feb. 5th. New Zealand’s currency dropped 0.3 percent to 83.62 U.S. cents. China’s yuan extended its biggest monthly loss on record as weaker-than-forecast manufacturing data added to signs of a slowdown in the world’s second-largest economy. The currency weakened 0.02 percent to close at 6.1462 per dollar in Shanghai, according to China Foreign Exchange Trade system prices, after falling as much as 0.2 percent.

Bonds briefing

The U.S. 10-year yield dropped five basis points, or 0.05 percentage points, to 2.60 percent at late in New York after falling to 2.59 percent, the lowest since Feb. 4th. The 2.75 percent note due February 2024 rose 3/8, or $3.75 per $1,000 face amount, to 101 1/4. Yields (USGG10YR) on German 10-year bunds, perceived to be among Europe’s safest government securities, fell seven basis points to 1.56 percent after declining to 1.55 percent on Feb. 27th, the least since July 24th. Japan’s 10-year yields slid to as low as to 0.57 percent, a level not seen since May 7th U.K. 10-year gilt yields dropped seven basis points to 2.65 percent. Government bonds rose around the world after Russia seized control of Ukraine’s Black Sea region of Crimea, spurring demand for haven assets.

Fundamental policy decisions and high impact news events for March 4th

Tuesday witnesses the data on Australia’s building approvals, expected in at 0.7%+, with the current account predicted to have fallen to -$10.1 billion. Australia’s base rate decision is excepted to see the rate stay at 2.5%, the accompanying statement from the RBA will deliver the reasons as to why.

In Europe Spain’s unemployment count is anticipated to show a fall to a rise of circa 74K for latest month available. PPI month on month for Europe is expected to be flat. In the UK the Halifax house price index is expected to show a 0.6% rise, with construction PMI coming in at 63.6.

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