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Another trading week with a positive balance

 
31.03.2014

Global developments. Global equity markets ended the week on a positive note aided by speculation of upcoming policy stimulus by the ECB and hints from the Chinese PM that there might be fresh measures to underpin the 7.5% official growth target. Over the week, the S&P500 actually fell 0.5% and is now 1.1% off its recent record high. European equities rose 1.9% on the week and the Nikkei225 rose 3.3% ahead of the Japanese fiscal year-end. The MSCI EM index rose an impressive 4.2% on the week. In FX, EUR fell 0.3% on the week to 1.3752 just above our end-quarter forecast of 1.3500. EM currencies recovered with RUB firmer, TRL rose 1.7% and the INR rose 1.8% (Indian election voting starts 7 April). AUD rose 1.9% to a four-month high. RMB fell to 6.21. The US 10-year Treasury yield fell 2bp on the week at 2.72%. Brent crude rose USD 1.15 on the week at USD 108.07.

The US equity market (S&P500 index) is still in an uptrend, though in recent weeks there has been a loss of upward momentum. Nevertheless, the market has been remarkably resilient in the light of recent developments in Ukraine as well as mixed global economic data. However, market corrections remain mild and brief and for the S&P500, the 100-day moving average has tended to provide downside support over the past 12–18 months. EM markets, equities and currencies, are recovering too as investors downplay geo-political risk and take advantage of technically oversold markets.

Russia (RTSI +0.6% / +4.4% WoW @1,186, RUB -0.3% / +1.4% WoW @35.74). On Friday, Russian equities edged higher, as a positive tone prevailed on global equity markets.

Alexey Zabotkin, Neil MacKinnon, Akin Tuzun, Digvijay Singh, Sergey Galkin, Ilya Piterskiy
VTB Capital analyst

Tags:
FX market, ECB

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