Share markets around the globe remain under pressure despite the Cyprus bail out agreement. Although headlines are pointing to (since retracted) comments from the Dutch finance minister as a cause of the pressure, it’s quite possible that the latest European shenanigans are simply triggering “the pullback shares had to have”. Ultimately, the bank re-structure in Cyprus may get a market tick of approval. Losses are largely borne by investors in the bank that failed, with some protection for small depositors. This could be seen as an economically more rational approach than having the ECB guarantee every single bank. After all, what is the point of differing credit ratings for European banks if all losses are underwritten by tax payers? US markets traded quietly, with major indices falling between a quarter and a half per cent. Asian shares fell hard as they reversed yesterday’s positive reaction to the news from Cyprus. Shares comprising the CSI 300 index in China recorded the largest falls in three weeks, hit by local concerns of further tightening measures, and dropping on average one and a half per cent. In contrast to shares, currency markets are calm. The Euro has recovered somewhat from the lows seen in late European / early US trading, making ground against both the USD and JPY. Risk currencies AUD and CAD are modestly higher, and EUR/GBP is dead in the water, trading in a 16 pip range throughout the Asia Pacific trading session. FX traders point to the coming March 31 year end in Japan as a possible source of Yen support in the lead up, and potential subsequent weakness as further planks are added to the stimulus program. Durable goods order released in the US tonight may have a USD impact, with expectations they will show overall growth of 3.9% for February. Oil maintained a firm tone, holding on to US session gains for both Brent and West Texas. Gold, however, is again under pressure, slipping back towards the U$1,600 mark, and dragging down other precious metals. Industrial metals are buoyed by support for Aluminium and Copper, despite China growth concerns. Futures markets are pointing to small gains across the continent, with the UK 100 tipped to open two and a half points higher. Financial stocks may remain in focus, after deals involving RBS, Cazenove, and Schroders, and a substantial increase in Funds Under Management for Aberdeen. With no major European data releases, stock specific factors could dominate, although the potential for further ill-considered political announcements remains a significant market risk.

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