Global stocks markets are showing some resiliency as investors look for
bargains and look past poor economic data. Even though European bourses may
open slightly lower on Tuesday, markets could improve later. European
government bond markets are seen under pressure, with the euro up, oil lower
and gold little changed.

STOCKS:
======
European stock markets may start slightly lower on Tuesday, as investors
take a break from the recent multisession rally. But markets may turn higher
later.

“The news flow has improved in the sense that no land mines have gone off in
the last ten days,” said David Evans, analyst at BetOnMarkets.com. “But
investors are now willing to put a positive spin on the news,” he added.

Anthony Grech, Market Strategist at IG Index, said, “The real test for the
current rally – which should help figure out if this is just another false
dawn – will be how it reacts to the next batch of gloomy economic data. This
week sees figures due out of the USA on inflation and housing – if the
market manages to keep its head in the face of what are expected to be
fairly downbeat numbers, investors can start to hope that the first building
blocks of a recovery could well be in place.”

US stock futures are slightly higher on Tuesday, after markets swung lower
in late selling Monday, ending a four-day bull run based on cautious
optimism that the economy would begin to recover from recession.

“The widespread pursuit of profits acted as a virtual vortex during the
final hour of trading, leading the major market indices to finish lower for
the first time in five sessions,” said Andrea Kramer of Schaeffer’s
Investment Research.

Asian shares are mostly higher Tuesday despite a slight pullback on Wall
Street, with financials solid for another day in many markets amid hopes
governments would take further action to deal with the toxic debt still
plaguing the sector.

FOREX:
======
The euro is slightly higher in quiet activity with the Federal Open Market
Committee starting its two-day meeting later Tuesday, though it isn’t
expected to move on interest rates.

Traders said the higher Asian share markets were boosting short-term
investor appetite for the higher-yielding euro, which is considered a
riskier currency.

The euro needs to hold above $1.2925, or ideally $1.2980, to make a move on
$1.3250 or beyond, said a foreign exchange trader at a major Australian
bank.

BONDS:
=====
European government bond markets are seen starting lower on Tuesday, as
investors track stock markets for trading clues.

Markets are waiting to see whether initiatives implemented by central banks
and governments will stabilize the financial sector.

The European Central Bank has some room to cut its policy rate below the
current level of 1.5%, ECB executive board member and chief economist
Juergen Stark told the German daily newspaper Handelsblatt in an interview
for its Tuesday edition.

Treasury prices are lower on Tuesday, after markets declined Monday, as
Federal Reserve chief Ben Bernanke’s comment that the recession could end
this year supported global equity markets.

“The flight-to-quality trade is waning,” said Andrew Brenner, co-head of
structured products and emerging markets at MF Global.

Also on bond traders’ radar screens, the Federal Open Market Committee meets
Tuesday and Wednesday, when policy makers will release their official
forecast for the economy.

Traders will key in particular on any comments about whether the U.S.
central bank is moving closer to actually buying Treasurys directly from the
market in order to lower borrowing costs and stimulate economic activity, an
idea first floated in December.

After its last meeting on Jan. 28, the FOMC said it stood “prepared to
purchase longer-term Treasury securities if evolving circumstances indicate
that such transactions would be particularly effective in improving
conditions in private credit markets.”

Analysts at Wrightson ICAP said the committee is likely to “keep the option
alive in its policy statement in the same terms that it used in January,
which means that the market will continue to speculate about the
possibility.”

In Japan on Tuesday, government bonds and futures fell with traders
attributing the weakness to dealer hedging before the day’s 20-year note
auction.

“Investors would like to see first how the JGB auction result will be, and
the Bank of Japan and FOMC policy meeting results won’t be available until
tomorrow. So, I think a wait-and-see mood is dominant,” said Mitsubishi UFJ
Securities strategist Naomi Hasegawa.

ENERGY:
=======
Oil prices are lower Tuesday as investors continued to react to the
Organization of Petroleum Exporting Countries’ decision to maintain current
production levels, dealers said.

New York’s main futures contract, light sweet crude for delivery in April,
shed 32 cents to $47.03 a barrel.

Brent North Sea crude for May delivery fell 56 cents to $45.90.

Head of commodities research at financial services firm JPMorgan Chase
Lawrence Eagles said OPEC would have to adhere strictly to planned cuts to
curtail massive energy stockpiles worldwide.

“With world oil stocks at 61 days – including floating storage – OPEC will
have to move to full compliance to make a significant dent in these
inventories during the weak spring demand period,” he said.

METALS:
======
Spot gold is down 60 cents at $922.50 Tuesday. Investec head of trading
Darren Heathcote said that should equities remain steady for a sustained
period, the improving risk appetite may undermine gold and could leave
prices “in the doldrums” for the short term.

London Metal Exchange copper settled up $165 at $3,830 at Monday’s afternoon
kerb. The market received extra impetus from the jump in Chinese refined
imports, stronger equities, and the weaker dollar, said Standard Bank.

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