Riskier Asset Rebound as Trump’s Policies Remain in the Spotlight

European stock markets are narrowly mixed, with FTSE 100 underperforming as Sterling remains buoyed. The wider and less currency sensitive FTSE 250 is up on the session, and the DAX is higher as global stock markets continue to stabilize. U.S. markets started to come back late in the afternoon and Asian markets closed mostly in positive territory, with the Nikkei up 0.23% at the close, while the ASX managed 0.41% and the Hang Seng 0.03%. Investors remain cautious on Trump’s policies, however and gains are muted compared to recent losses. Oil prices are higher on the day and U.S. stock futures are narrowly mixed.

WTI crude is up 0.6% presently, at 48.33. The rebound marks a correction after prices touched a four-month low at 47.01 yesterday, though any approach toward the week’s high at 48.84 may elicit fresh selling with data this week showing global inventories are growing despite the OPEC-led effort to curb supply. Rising U.S. shale production and a lack of compliance among some of the non-OPEC oil producing signatories to the output cut accord have been driving the build-up in crude stockpiles.

BoE MPC’s Broadbent said sterling weakness has created a sweet spot for UK exports, though argued that this would only be temporary. He said that exiting from the EU will make exporting harder and costlier and that the currency needs to be cheaper to offset the lack of an agreement. He pointed out that a lot will depend on the final agreement with the EU in terms of longer term prospects, but with current arrangements remaining unchanged, with the pound weaker, and with the world economy looking better than for some time, conditions for the tradable sector are stable.

UK Retail Sales Were Better than Expected

UK February retail sales beat expectations, rising 1.7% month over month and by 3.7%, up on the respective median forecasts for 0.4% and 2.6% growth. A rebound had been expected following two consecutive months of sub-par sales, though the magnitude was even greater than foreseen. January data were revised lower, however, to -0.5% month over month from -0.3% month over month initially reported, and to 1.0% year over year growth from 1.5% year over year. The online sales component of the report rose 20.7% year over year.

German house price inflation continues to slow, per the Europace home price index, which shows that the annual rate fell back to 7.9% in February from 8.3% in January and 10.2% in December last year. Prices did pick up over the month, however after falling in January. Some signs of easing price pressures then, although annual rates remain at very high levels for Germany and especially in the large urban centers concerns about the emergence of bubbles amid very easy financing conditions remain.