Tuesday Morning Cheat Sheet: 3 Stories Moving Markets

Major markets were mixed in Asia on Tuesday. Japan’s Nikkei edged down 0.17 percent for the day, but closed out April up 11.8 percent. The yen strengthened to 97.5250 to the dollar. In Hong Kong, the Hang Seng index climbed 0.69 percent, while the S&P/ASX 200 climbed 1.28 percent in Australia.

Markets were also mixed in mid-day trading in Europe. Germany’s DAX climbed 0.53 percent, London’s FTSE 100 fell 0.09 percent, and the STOXX 50 index was off 0.17 percent.

U.S. futures at 8:50 a.m.: DJIA: 0.00%, S&P 500: -0.05%, NASDAQ: -0.03%.

Here are three stories to keep an eye on:

1) Unemployment Edges Higher in the Euro Zone: Data released on Tuesday morning suggests that the European Central Bank could cut the benchmark interest rate, adding fuel to a fire that began burning in earnest last week. Europe’s version of Mr. Market began to speculate that the ECB could cut the fixed refinancing operations rate (currently at 0.75 percent, which is historically low but still high relative to other central banks right now) last week, after a series of economic indicators showed in some cases economic conditions were getting worse.

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Confirming this, Eurostat reports that euro area (EA17) seasonally-adjusted unemployment edged up from 12.0 percent in February to 12.1 percent in March. In the EU27, the unemployment rate remained flat at 10.9 percent. The rate in both zones has climbed more than 1 percent on the year. Greece and Spain bear the marks of austerity with unemployment rates of 27.2 percent and 26.7 percent, respectively.

Meanwhile, annual inflation in the euro area is expected to clock in at an annual rate of 1.2 percent in April, down from 1.7 percent in March. This suggests that the ECB has some monetary wiggle room that it could use to further ease conditions.

2) The FOMC Meets: The U.S. Federal Open Market Committee is set to begin its third meeting on 2013 today. The committee meets eight times per year to determine the near-term direction of monetary policy and to formulate an outlook for economic growth. Analysts and economists are expecting the Fed to maintain near-zero interest rates and a $85 billion in monthly bond purchases each month.

3) Unemployment Edges Down in Japan: Japan’s Statistics Bureau reported on Tuesday that the number of unemployed persons in March fell 8.8 percent on the year to 2.8 million, or a seasonally-adjusted 4.1 percent. The nation’s labor force participation rate increased 0.2 points to 58.9 percent (for some context, the U.S. labor force participation rate for March fell 0.2 percent to 63.3 percent).

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A separate report showed that average monthly consumption expenditures per household climbed 5.2 percent on the year in March. Average monthly income per household increased 1.8 percent on the year.

Japanese Unemployment Rate

Source: Japanese Statistics Bureau

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