Financial market research and analysis

The sun is shining over equity markets all over the globe. Money is pumping into stocks on expectations that Mario Draghi’s brilliant incentive to inundate the market with extra cash will certainly not leave the other central bankers stock-still.

The central bank fever continues this week with decisions by the Fed, the BoE, the BoJ, Norges Bank and the SNB all lined up to keep the market busy, and surely optimistic, before the Easter holiday. Norges Bank is expected to cut the deposit rate by 25 basis points. Other central banks are expected to maintain the status quo. The market gives less than 5% probability for a Fed rate hike at next week’s meeting. Nevertheless, the US dollar is a better bid against the majority of its G10 counterparts.

The euro remains a good bid despite the ECB’s decision to hit the bottom on its rate policy and to splurge on more QE. The DAX couldn’t care less about Merkel’s CDU losing support in local elections in Germany over the weekend.

The FTSE opened the week on a rise as investors are moving toward more stock buying on improved risk sentiment, all sectors in the UK trade in the green. Of course, UK miners are taking advantage of the global improvement in risk sentiment to extend gains. Glencore (+4.16%) and Anglo American (+3.84%), while Fresnillo (-0.75%) is slightly lower on cheapening gold.

UK homebuilders, Persimmon (+1.66%) and Taylor Wimpey (+1.30%), are higher on a significant rise in demand from buy-to-let investors before the government tax increase on ownership of secondary homes scheduled for April. Clearly, the mortgage market is in better shape on rising expectations that the Bank of England will keep the bank rate at current historical low levels for a prolonged period.

Royal Dutch (+0.08%) and BP (+1.10%) are retracing early gains as news that Iran will increase its output to 4 million barrel per day dragged the Brent 1.50% lower; WTI lost 2% so far.

LSE (+0.01%) is moving back toward the historical high (2930p) as a merger with Deutsche Boerse could hit the wires as soon as today.

Nikkei and Topix gained 1.52% and 1.74% in Tokyo, although the BoJ is expected to maintain its monetary policy unchanged at this week’s meeting. Analysts expect a further rate cut into the negative territory but not just yet. Net longs in Japanese yen advanced to their highest since March 2008.


Franc remains cheap before the SNB

The Swiss franc remains cheap before the SNB’s monetary policy meeting on Thursday. Mr Jordan certainly had a more-relaxing-than expected weekend amid the surprise appreciation in the euro last week. The Swiss National Bank is expected to keep its rates unchanged. After all, the euro-franc is edging the very reasonable level of 1.10, even though the total sight deposits continue inflating the SNB’s book. On March 11th, total deposits have pushed the balance sheet to a new record high of 481.3 billion francs.

Euro-swiss futures trade at 100.750, endorsing a low level of stress regarding a potential rate cut at this week’s meeting.