9 things that could rock n roll the market today

[caption id=“attachment_2463” align=“alignleft” width=“380” caption=“Is the era of cheap money over? Jianan Yu / Reuters”]  [/caption]

• Drawing strength from US market buoyancy overnight, Asian stock markets were higher out of their blocks. Japan’s Nikkei index is up 1.32%, Hang Seng has shot up by 150 points or 0.63% while Shanghai is up by 0.53% or 15.58 points.

• US equities surged overnight, boosted by good corporate earnings and a report that suggested consumer confidence was surprisingly higher. The Dow Jones Industrial Average was up 115 points, closing just shy of 12600, the highest since June 2008.

• US consumer confidence, a key barometer of consumer mood in the world’s largest economy, edged up to 65.4 in April from 63.8 in March. But that has to be seen in perspective. Wells Fargo senior Economist Mark Vitner notes that while the index reading is “technically an improvement, the level of consumer confidence remains quite low by historical standards.” In his view, until fuel prices and unemployment come down substantially, confidence isn’t about to go up meaningfully.

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• Over in Europe, though, the news is about to turn decidedly gri****m. Greece and Spain reported higher-than-estimated deficits, sending debt yields soaring: Greece’s two-year debt yields are at over 24%, which signals that markets are pricing in the risk of a sovereign default. More proof, if any was needed, that imposing austerity measures too soon doesn’t work. A heightened default risk in Europe could induce greater risk aversion, which would be negative for global equities.

• Gold and silver fell back sharply, breaking an eight-day hot streak, as investors took profits off the table. The precious metals market was also wary ahead of a policy meeting of the US Federal Reserve Board: their worry is that the era of ‘cheap money’, which drove up gold and silver prices, may be near an end.

• Back home, ratings agency Crisil has flagged the risk that corporate profits will fall this fiscal year because of rising input costs and high interest rates. Sectors that are particularly vulnerable include real estate, cement, textiles and shipping.

• Legendary investor Jim Rogers says he is currently short on emerging market equities, but continues to remain bullish on his commodities and precious metals portfolio. That ties in with the general theme of higher input costs and lower profitability.

• At a closed-door meeting with chiefs of public sector banks and finance ministry officials, the RBI rapped banks’ “usurious” lending margins and prodded them to trim their margins. A squeeze on margins would be negative for bank stocks.

• Sales of the world’s cheapest car, Nano, haven’t picked up steam. Tata Motors acknowledges that the demand for Nano is subdued. “The company has a huge inventory (of the Nano) at its factor, and its dealerships,” the Wall Street Journal quotes a vendor as saying. Nano sales are flat at about 8,000 a month, and the company may not raise monthly production to the targeted 15,000 units a month. Given the wafer-thin margins on the low-cost car, high volumes are particularly important.