09:30 AM

Good Morning!

European shares are trading slightly slower this morning holding up pretty well despite weaker markets across Asia and the US overnight.

Main reason for Europe outperforming the US and Asia this morning is that most investors prefer to stay on the side-lines for now until after today’s ECB and BOE meetings. Furthermore there are plenty of data out in Europe and individual countries like Germany and the UK this morning.

As European data has regularly beaten estimates over the past few weeks and things in general are looking up in Europe traders are also rather hesitant for now at this stage to dump stocks instead most of them are taking a wait and see attitude. Especially markets in Asia are suffered hefty losses after inflation and producer prices in China fell more than expected stirring renewed worries that the current economic slowdown could be more severe and prolonged than previously anticipated. Should the situation worsen in China a spill over into Europe and especially onto countries like Germany who rely on exports to China will be hard to avoid. In the US FOMC minutes released last night not necessarily delivered exactly what traders had hoped for and expected.

As reasons mentioned for tapering 10 Billion USD a month were because buying bonds over a long period of time might cause financial instability and furthermore buying bonds seems to have had less of a positive effect on the economy compared to before. However traders had hoped that any tapering would mainly be the result of an expected acceleration in growth in the months ahead, at same time while more tapering is expected any rise in interest rate seems to be a long way off. Tonight Alcoa will be releasing earnings unofficially kicking off the US earnings season, with investors keen to see in the days ahead how US companies are likely to fare in the next few quarters and if earnings growth indeed is set for another slowdown.

Thank you.

Kind regards

Markus Huber | Senior Sales-Trader/Senior Analyst
Peregrine & Black
www.peregrineblack.com

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