Global Markets This Morning In early trading today, we saw a gap emerge between US indices and US crude oil on one side and European indices and UK crude oil on the other. US stocks were unable to build on yesterday’s supportive comments from the Fed and a generally positive flurry of economic indicators and slumped into the afternoon. This suggests that no region is immune from the impact of the botched Cyprus bailout on financial market confidence, particularly with negotiations ongoing and the results still up in the air. Rumours flying today have focused on what kind of money could be coming from Russia and whether in the form of a loan or an investment in assets. There has also been speculation that one of more of Cyprus’s banks may be forced out of business. For now Cypriot banks remain closed, likely well into next week. Flash PMI numbers out of Europe didn’t help sentiment either, indicating that even the core European economies have been struggling with German manufacturing dropping back under 50 into contraction territory. This has caused traders to rethink their expectations for resource demand driving commodities such as crude oil lower and causing copper to give back the gains it made on yesterday’s positive Chinese flash PMI. Natural gas has also come under pressure following a disappointing storage report. With a light economic calendar today, traders may continue to dwell on Cyprus with a lack of anything else to think about. Given what happened with the deposits tax last weekend and the ongoing uncertainty, we could see traders more interested in taking money off the table before this weekend. This has already impacted copper and could impact markets that have posted gains this week such as China/HongKong indices and the Aussie and Kiwi Dollars. Economic News Highlights of overnight announcements include: US existing home sales 0.8% vs street 1.6% US Philadelphia Fed 2.0 vs street (3.0) vs previous (12.5) US leading indicators 0.5% vs street 0.4% US natural gas storage (62 BCF) vs street (71 BCF) vs previous (145 BCF) Canada retail sales 1.0% vs street 0.9% US flash PMI 54.9 vs street 54.8 US house prices 0.6% vs street 0.7% US jobless claims 336K vs 340K vs previous 332K China flash PMI 51.7 vs street 50.8 France flash manuf PMI 43.9 vs street 44.2 France flash service PMI 41.9 vs street 44.0 Germany flash manuf PMI 48.9 vs street 50.5 Germany flash service PMI 51.6 vs street 55.0 Eurozone flash manuf PMI 46.6 vs street 48.2 Eurozone flash service PMI 46.5 vs street 48.2 UK retail sales 2.6% vs street 0.5% vs previous (0.6%) UK public finances (£1.5B) vs street (£12.0B) UK public sector borrowing £4.4B vs street £8.2B Upcoming significant announcements include: 10:00 am AEDT Australia leading indicator street (0.1%) 9:00 am GMT Germany IFO business climate street 107 8 9:00 am GMT Germany IFO current assessment street 110.5 9:00 am GMT Germany IFO expectations street 105.0 There are no major releases scheduled for North America tomorrow.