European markets are trading higher this morning as traders are willing to continue the momentum of making the record highs. It appears that the focus has somewhat shifted from all the obstacles which the global economy is facing for example the slowdown in China. Having said that, we had the manufacturing data released which has shown some signs of life, but still no where close enough to protect its economy from hard landing.
To boost further growth in the country, the Chinese Central bank has shown that they are completely dedicated and utmost serious about their task in hand. The PBOC has cut the interest rate once again. The bank lowered the interest rate by 0.25% and brought the headline number to 5.35%.
One trend which has emerged extremely clearly this year is, central banks around the world cutting their interest and using this tool to their best ability to ignite the growth in the country. The PBOC has become the 17 central banks this year to take this route so far this year and we believe we could hear a few more central bank’s triggering their buttons as well.
Traders will remain focused towards the impact of falling oil prices and how other elements surrounding this will behave. We have European CPI data due later this morning and the forecast is for -0.5%, which is slightly better as compared to the previous reading. However, before that, the manufacturing PMI data will hit the wire first. France, Germany, Italy and Spain will release their readings. The Spanish manufacturing PMI came much lower despite the expectations were that we will see a strong reading.
Apart from data, Greek government will have their challenges to face despite securing 4 months extension and a strong approval rate from German Parliament. However, the problem may start at home, when the government will try to implement new reforms which country’s finance minister does not think it is a U turn. Investors will sniff every outcome under which the government will try to come up for with the loan repayment amount of 4 billion due at the end of this month.
Back in the UK, resilience is the key word when it comes to the outcome of Q1 as the manufacturing PMI data could also show robust reading for February. The forecast is for 53.5 while the previous reading was at 53. Net lending to individuals may have also improved as consumers have saved a little more thanks to falling oil prices. The net effect could be seen in the mortgage approval reading, which is set to show an uptick as well.