Tuesday Morning Cheat Sheet: 3 Stories Moving Markets

The markets were mixed in Asia on Monday. Japan’s Nikkei closed down 1.08 percent after Prime Minister Shinzo Abe told a parliamentary committee that achieving 2.0 percent inflation in two years would at minimum be challenging, and may not be met consistently. The Hang Seng was up 0.31 percent and the S&P/ASX 200 was up 0.38 percent.

The situation was much more positive in Europe, despite ostensibly bad labor market news and a continued worsening of the region’s manufacturing sector. Investors are optimistic that Cyprus will successfully petition for more lenient bailout terms.

U.S. futures at  8:35 a.m.: DJIA: +0.41%, S&P 500: +0.45%, NASDAQ: +0.69%.

Here are three stories to keep an eye on:

1) “The Eurozone manufacturing sector looks likely to have acted as a drag on the economy in the first quarter, with an acceleration in the rate of decline in March raising the risk that the downturn may also intensify in the second quarter,” commented Chris Williamson, chief economist at Markit, in a report on euro zone manufacturing PMI released on Tuesday.

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The overall business conditions index fell from 47.9 in February to 46.8, a three-month low and reflecting broadly deteriorating conditions. Any reading below 50 indicates contraction. Williamson continued: “The surveys paint a very disappointing picture across the region, with all countries either seeing sharper rates of decline or – in the cases of Germany and Ireland – sliding back into contraction.”

2) Unemployment across the 27-member European Union was 10.9 percent in February, a fractional increase from 10.8 percent in January, according to Eurostat, the statistical office of the European Union. Across the euro area 17, unemployment was flat at 12.0 percent.

Greece’s unemployment rate increased from 21.4 percent to 26.4 percent, one of the largest year-over-year jumps of any nation in the bloc. Cyprus’s unemployment increased from 10.2 to 14.0 percent (this report is for February and does not include the most-recent fallout from the nation’s bailout), while Spain’s rate increased from 23.9 to 26.3 percent. Germany’s unemployment remained relatively low at 5.4 percent.

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3) Prime Minister Shinzo Abe may have spent 2012 fostering enthusiasm for his plan to stimulate Japan’s beleaguered economy through aggressive monetary easing, but the electoral honeymoon is over and reality prescribes some backpedaling.

Speaking before a parliamentary committee, he said that “we are not calling on the BOJ to act recklessly. Since the economy has a life of its own and nobody can predict what will happen in the future, there may be cases in which the BOJ can’t achieve the target.”

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