Mid Week Market Update

We're half way through the week and global equity markets have been broadly flat over this period. 

There was initial optimism following the announcement a bailout agreement had been reached. However, as markets digested the exact agreements of the terms this optimism faded and markets dipped lower as a result. The problems with Cyprus have not simply been resolved with this bailout and it is clear there could be years of pain ahead for the small Euro nation. Consumers may have experienced a hit to their savings and will now be faced with increased taxes and austerity, which will not be supportive of consumer spending. We may also see unemployment increase as businesses could face liquidity issues due to the closure of Popular bank and the banking sector shrinks.

So onto the good news! Well, not for the first time U.S. data surprised on the upside with Tuesday's Durable Goods Orders data increasing to 5.7% (consensus was 3.9%). This helped raise the S&P 500 to near all time highs, although it did fall slightly from this peak. 

Wednesday so far has disappointed in the UK, with the FTSE 100 initially rising but gains have since disappeared. UK GDP data for Q4 showed it had increased by 0.2% year on year, which was slightly below market expectations and may have caused the market to reevaluate their views on the UK recovery. 

French GDP data for Q4 showed the country had contracted by 0.3% year on year, a worrying trend for the Eurozone's 2nd largest economy. 

Our regular feature The Week Ahead should hopefully provide a 'heads-up' of some of the global data being released that week.