Daily Market Review - 04/08/2014

Market Overview

In the beginning of the trading week yesterday, the Nasdaq Composite suffered its worst three-session decline since November 2011 as Internet stocks tumbled, while the S&P 500′s three-day fall was its steepest since late January.

The main reason for yesterday decline was rising tensions in Ukraine after Pro-Moscow protesters in eastern Ukraine seized arms in one city and declared a separatist republic in another, moves Kiev described on Monday as part of a Russian-orchestrated plan to justify an invasion.

The Asian exchanges were initially affected by Wall Street overnight decline but risk appetite returned on back of an increase expectation that the Chinese government will introduce a fresh new stimulus to support their economy softness.

In Japan, an official data released showed some economic resilience, as Japan’s current account balance returned to a surplus in February for the first time in five months on stronger exports to Asia and rising income from overseas investments.

Despite the better than expected numbers, the Bank of Japan decided by a unanimous vote and as expected to keep its policy target steady and repeated that the economy will stay on a gradual recovery track despite swings in demand caused by a sales tax hike on April 1.

In Australia, National Australia Bank released its business conditions and confidence survey for March, showing business confidence eased further in March to below the long-run trend level, dragged by subdued business conditions.

Economic Calendar

The U.K is to publish data on its Industrial and manufacturing numbers while key speeches out of the U.S FOMC members are expected towards the end of the U.S session. Further geopolitical developments in Ukraine are expected to continue and dominant the headlines.

EUR/USD

The euro rose yesterday supported by comments out of 2 ECB members who said that while monetary authorities are working on plans to purchase assets to steer the euro zone away from deflationary purchases, such a program is not required yet.

These comments came after ECB President Mario Draghi said last week that unconventional monetary policy instruments may be necessary to avert the risk of ongoing low inflation becoming entrenched in the euro zone.

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