US stocks closed ‘flat’ overnight, for the most part hugging the flat line. This is a welcome respite, especially after last week’s gyrations. Whether this is only a consolidation of the primary trends, or simply an opportunity to take profit and close books early to lock in a good first quarter remains to be seen. Heading into this week, there are key data points to trade off. PMI flash reports from China, Japan, Germany, France and the US may offer markets a catalyst for direction. The US will announce fourth quarter 2014 GDP on Friday. Global trading themes this March have centred on the ECB’s start of QE and also the possibility of an earlier Fed hike. This has fuelled an ‘unintended rally’ amongst European equities, with the DAX CAC and MIB up roughly 20% year to date. International investors into European stock markets, however, have not enjoyed the complete benefit of these outstanding quarterly numbers, largely due to the slippage of the EUR, in particular the eurodollar. It may also be interesting to note that major stock markets in Asia have not been left behind, chalking up nice gains this year to date. In fact, with relatively stable local currencies throughout this period, an international investor into Asia would have had better traction with their returns in Asian stocks. For example, the China A50 has rallied as much as 15% over the past 12 trading days, or since the ECB began its bond-buying program. Similarly, the Nikkei225 has also added almost 6% since then. Compelling as it may seem, the ECB’s QE looks like it’s adding to the domestic stimulus programs of these Asian giants, giving local stocks there a double advantage for a higher move.
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