Market commentary: ECB meeting on Thursday

The main event of the week is the European Central Bank meeting in Cyprus that is scheduled for next Thursday.  Equity markets continue to rally and yesterday marked an important day for US shares as the NASDAQ traded above the 5,000 level and both the S&P500 and the Dow Jones trading comfortably in the green.

Investors will be following President Draghi’s speech on Thursday as the ECB’s president will have the opportunity to add to details of the quantitative easing programme as announced in the last meeting. Recent data showed improving conditions in Europe over the past month as economic confidence rose in February. No one is saying that Draghi will change his bond buying programme but speculation has already started of how the programme may end eventually. Perhaps it is too soon to start debating this.

On the banking front, Barclays announced this morning that the lender has set a provision to the tune of 750 million pounds to cover the cost of settling the alleged currency rigging probe. Shares of Barclays opened lower this morning on the London Stock Exchange.

Glencore plc also reported results this morning. The commodity trader reported profits that were better than analysts’ expectations, fuelled by a strong performance from its marketing division. The company has however decided to suspend the share buyback program momentarily but will reconsider effecting further purchases when it announces half yearly results later on this year.

Politics continue to take the headlines, as the West continues to show their disapproval to the worsening climate in Russia. Following the death of prominent anti-Putin critic Boris Nemtsov, leaders from around the world including President Barack Obama condemned the act. On his part, Putin is insisting that the west is engaged in propaganda against him. Today, Russian Economy minister is scheduled to meet with European Trade Commissioner in Brussels.

Investors will continue to keep a close eye on oil prices. Yesterday, the price of oil fell on the back of a stronger US dollar and also helped by a rise in crude output from Libya as reported by Reuters. This decline in oil was not however enough to change the positive momentum as witnessed by equity markets over the course of yesterday.

In terms of earnings, Best Buy and Merck are expected to report today.

This article was issued by Darin Pace Treasury Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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