Global Cues Point Toward A Positive Open For The Week

The markets seem to be on a tear. Hinging on the slightest of positive news emanating from any economic corner, they have had a marvelous end to the week that went by. The US has been the flag bearer of this rally of sorts. Market behavior out there, has had a kind of domino effect globally. The Dow Jones Industrial Average is inching up to scale newer records every passing day while the S&P is very close to scaling a record high itself. Jobless rate in the US was seen declining and markets rejoiced this fact on Friday. To put things in perspective, reportedly, 236,000 jobs were added resulting in the unemployment coming down to 7.7% in the month of February from 7.9% in the month earlier.

Coming to the domino effect, European markets followed the US closely and took cues from the positive jobs data that emerged. Benchmark indices out there ended up for the third straight week. Market voices believe that the Feds bond buying (of close to USD 85 billion a month) will continue until the labour market improves substantially. Now, this is possibly going to take a whole lot of time. So in sum, the asset purchase exercise as initiated by the Federal Reserve is likely to continue for some more time and not end sooner than expect4ed – a concern that had come to spook markets very recently. All this is keeping the European markets in good stead and this is visible from the way markets have been trading in that region of the world. The FTSE 100 closed at its five-year high on Friday and this indicates the positivity surrounding markets in the European region.

On Asian shores, it seems to be a mixed opening to the new week. In Japan declining machinery orders were being watched very closely. However, weaker economic data is being read as a call for a more easier monetary policy. This has been sending the markets higher over the past three to four months. China on the other hand saw its consumer inflation rising. It was significantly up in the month of February despite industrial output and retail sales going down. Fears of the Chinese Central Banker tightening its monetary policy following higher inflation are now setting in.

So how are Asian markets reacting this morning? Most of them seem to be fence sitting as of now. Except for Korea, Malaysia and China, all others are trading in the green. But the reds too are just about on the border of crossing over to the green and vice versa. Japan continues to trade decisively higher followed by Hong Kong.

Back home, the way Indian markets have closed on Friday there seems to be a sure opening in the green for today. Markets gained almost 4 per cent over the last week and this is likely to lend some strength to its performance this week. Lack of triggers had been keeping markets volatile over the past two weeks or so. But this week will be different. There are a whole lot of touch points for the markets this week. The IIP Data (coming out on Tuesday, March 12^th), inflation numbers (coming out on Thursday, March 14^th) and tax collection data will provide a starting point for the markets to take cues on the macro front. All these pieces of data will pave the way for the ultimately important event over the next week or so which is the RBIs policy meet scheduled for the 19^th of March 2013. All this means that we are sure to have an action packed week ahead.