UBS economist Paul Donovan summarizes today’s biggest global market moving news in four succinct bullets. Here they are verbatim from UBS.com:
- Cyprus had the second round of its presidential election over the weekend, and as expected the “pro-bailout” candidate won. The question for markets is how strict the terms of the bailout will be, as these may act as a precedent for other bailouts in other countries in the Euro.
- Italy’s elections conclude today (it takes two days to vote in Italy). There is some nervousness form investors that the voting patterns may produce either a hung parliament or a weak government. This might limit Italy’s ability to help with Euro reform.
- One of the credit rating agencies downgraded the UK from AAA for some reason or another. The government responded with complete indifference, which will likely be the reaction of investors. The EU warned that France would fail to meet its deficit goals this year.
- Newswires report that Kuroda is to be nominated as the next BoJ governor. He is seen as dovish, though to be honest all the candidates were seen as dovish. Meanwhile the unofficial Chinese PMI weakened from a two year high (though lunar new year makes seasonal adjustment tricky).