Dax30, Ftse100, SP500, Market View

Financial markets will now be faced with two important events: the Dutch elections and the Fed meeting in the US. As a matter of curiosity, the longest record to form a government (208 days) was in Holland and dates from 1977.

In the foreign exchange market, the Euro is still appreciating agains the dollar after the impulse candle from Tuesday of more than 1%.

Construction permits declined 6.20% in February to 1.21 million, which may be a sign that higher interest rates are actually driving Americans to rethink their plans for housing.

As far as the banking sector is concerned, Deutsche Bank informed yesterday that it will start a capital increase of 8 000 M.€ after two consecutive years of losses. According to a press release issued by the institution, 687.5 million new shares will be issued, with a unit value of 11.65€, a value that represents a discount of 35.05% against the € 17.83 that the bank’s securities ended on Friday.

In the currency market, the Dollar depreciated against some currencies, after reinforced the perception that the Fed will not accelerate the pace of normalization of interest rates.

In the pre-opening, the European markets negotiated slightly higher, despite the uncertainty that stems from the terrorist attack in London. The Pound depreciated to the lowest of the last six days against the US Dollar. Investors, however, should monitor developments in the US political-economic landscape.

In March, the main US indices did not show any progress but also did not suffer any correction. After the sharp fall on the 21st March, some doubts seem to be emerging.

With regard to the real estate market, sales of new homes increased from 6.10% in February to 592,000, the highest of the last 7 Months. Estimates pointed to the 564,000 houses sold.

According to a study conducted by Bank of America in the week ending March 13, stock funds have been redeemed in the order of 8900 M.USD, the highest amount in the previous 38 weeks.

European markets closed higher, with concerns about US policy developments dwindling.

The financial sector, one of the most penalized in recent days, as well as the energy sector, helped by rising oil prices, helped to sustain market gains. Oil rose again, albeit mildly, after news of the collapse of production in Libya over conflicts with armed rebel factions. The Dollar recovered from recent declines that drove the US currency to a 4-month low over fears about the Trump Administration’s difficulty in delivering the anticipated, fiscal measures with an expected positive economic impact.

Asian stock markets closed lower, with investors showing some uncertainty over the Brexit process and its impact. The Yen appreciated affecting the main exporting companies.

Governor of the Bank of France, Villeroy de Galhau, said this week that the acceleration of inflation is not enough to remove Quantitative Easing and added that ECB policy will continue to evolve according to economic circumstances.

The number of weekly applications for unemployment benefits has decreased by 3000 to 258 000, thus maintaining the longest series since 1970 from a level of this indicator below 300 000.

Over the past month, European stock markets have reached a clear overperformance when compared to their US counterparts. In fact, during the month of March, the Eurostoxx50 appreciated 5.45%, the DAX 4.03%, while the S & P remained practically unchanged.

The Fed’s minutes have pointed out that the policy of reinvestment of the assets acquired under the Quantitative Easing programs will continue until the reference interest rates are at a standard level, possibly close to the level of Long-term equilibrium. The publication of the oil reserves (3.30 pm) which may still be an important point of the session.

Today’s session is expected to be somewhat defensive by investors who are preparing to monitor not only the Meeting between the US President and the Chinese counterpart, as well as the release of the minutes of the ECB Governing Council meeting at the meeting on 9 March, which should clarify further details on the next decisions of the Central Bank. It should be recalled that the rise in inflation, which reached 2.0% last month (the ECB target) triggered some expectation regarding the possibility of a faster withdrawal of stimulus from the Central Bank, as well as a change in the interest rates of reference. However, the ECB has not been confident of a sustained rise in prices, especially after data confirming that underlying inflation remained subdued. Investors will also take advantage of the speech by Mario Draghi, President of the ECB, to look at more details on the monetary policy conducted by the ECB.

April is a month marked by a seasonally negative period for American equities. By April 15, Americans will have to pay their IRS and many turn to the sale of shares or the rescue of investment funds to fund that charge. In the last 20 years, from the beginning of the month to that day, American markets have managed to achieve a positive return only 30% of the time. This is just an empirical data, does not mean that the American indices will repeat this pattern this year.

Investors are reacting to a mixed employment report, statements by Fed members as well as the geopolitical environment, after the US launched a military offensive against Syria. The employment report showed that only 98 000 jobs were created during the month of March, despite the unemployment rate falling to the lowest of the last 10 years, from 4.70% to 4.50%.

Politics begins to gain weight among the issues facing investors this Easter, as the first round of the French elections, scheduled for April 23, approaches. According to the latest polls the distance between Jean-Luc Mélenchon and Emmanuel Macron is narrowing.