\n\tBy Greg Peel<\/p>\n
\n\tWall Street's March quarter ended under the influence of some more positive US economic data. Personal spending rose by 0.8% in February to reach the fastest pace of growth in seven months, beating estimates of 0.7%. Then in March, consumer sentiment rose to 76.2 from 75.3 to reach the highest level in eleven months. This is good news for America's consumer-driven economy.<\/p>\n
\n\tThe only concern in these numbers is that personal incomes rose by only 0.2% in February when 0.4% was expected. The gap between increased spending and increased income means America's savings rate has now fallen to 3.7% compared to 4.7% at the end of 2011.<\/p>\n
\n\tThe data nevertheless provided some positive impetus on Friday night, but then index movements had book-squaring written all over them. The Dow rose 66 points or 0.5% but the Nasdaq<\/span> fell 0.1%, leaving the broad market S&P 500 with a 0.4% gain to 1408. The S&P finished up 12% for the quarter for the best result since 1998 but the Nasdaq<\/span> finished up 20% to the highest level since 2000. For that we can thank Apple, up 48% in the quarter.<\/p>\n \n\tWhat do fund managers who have been underweight equities do before the quarter-end? Buy some blue chips. What do fund managers who've made extraordinary gains in tech stocks do? Take a bit off the table. Now we can wait and see what happens this week – a short week for the Easter break – to determine where Wall Street feels like going next. Before too long we will be seeing March corporate earnings results to help set the tone.<\/p>\n \n\tWhile Wall Street was trading away on Friday, the finance ministers and central bank chiefs of the 27 EU nations were meeting in Copenhagen to discuss what is now being known as the European “firewall”. We recall that to date the EU\/ECB<\/span>\/IMF troika has extended E200bn<\/span> in net loans to Greece, Portugal and Ireland. A European Financial Stability Fund (EFSF<\/span>) has also been established, and the plan has been for that to morph into a permanent European Stability Mechanism (ESM<\/span>) in 2013. The level of funds extended by the IMF (which is funded by global contributions, with the US up for the biggest slice) is dependent on the extent to which the eurozone<\/span>\/EU is prepared to fund its own mess. No one outside Europe is keen to give money to those inside Europe if contributions just become handouts.<\/p>\n \n\tIt seems we can now move away from the tongue twister acronyms and just consider the EU contribution as the “firewall”. On Friday during northern market hours the EU announced it would increase the size of the firewall to E700bn<\/span>. The news was well received in European markets, where the French and German stock indices rose 1%. On Saturday the EU entreated the IMF to now promptly reach a decision on its own contribution to the wider fund. A number of countries, including Japan, China and Brazil, had indicated they would be willing to tip in but only if the EU was prepared to bite the bullet sufficiently first.<\/p>\n \n\tThe problem is that at the most recent G20<\/span> meeting – and the G20<\/span> represents most of the IMF funding – it was agreed that a total figure of E1<\/span> trillion as the EU contribution would be acceptable. Hence the E700bn<\/span> in theory falls short, and E200bn<\/span> of that already represents established bail-outs. So what will the IMF decide? That will no doubt be something we can all worry about in April, to add to our worry about what might happen when the Greek election is held, either by end-month or in early May.<\/p>\n \n\tTraders in London reported a book-squaring affected market in base metals on Friday night as well. Movements were mostly to the upside, with the ever volatile nickel up 3%. The oil markets were relatively quiet, with Brent closing up US74c<\/span> to US$122.88\/bbl<\/span> and West Texas up US24c<\/span> to US$103.02\/bbl<\/span>.<\/p>\n \n\tThe euro rose so the US dollar index was a little weaker at 78.99, allowing gold to close a tumultuous month up US$8.10 to US$1668.70\/oz. The Aussie has slipped a bit, down 0.2% to US$1.0358. It appears fund managers were also keen to offload a few more US Treasuries on Friday, given the ten-year yield rose 6 basis points to 2.22%.<\/p>\n \n\tTraders of the Aussie market seemed a bit fired up, with the SPI<\/span> Overnight closing up 28 points or 0.6%.<\/p>\n \n\tAs far as the opening response in the local market today is concerned, the downunder<\/span> markets will be first to react to the Chinese manufacturing PMI data released yesterday. HSBC confirmed its earlier “flash” result by posting 48.3 for March, down from 49.6 in February, for its more small business-weighted (and seasonally adjusted) measure. However Beijing's official (not seasonally adjusted) result, on a measure more weighted to larger state-owned enterprises, showed a jump to 53.1 from 51.0. What should we do? Split the difference and say Chinese manufacturing neither expanded nor contracted in March?<\/p>\n \n\tThere is little doubt April will also see continued focus on a slowing China, with the world holding its breath for some fresh monetary easing from Beijing. The problem, however, is that Chinese property prices remain too high for Beijing's liking.<\/p>\n \n\tIf we want to get a handle on how the global economy is performing, then this short week will provide plenty of economic grist for the mill.<\/p>\n \n\tWe begin today with the rest of the major regional manufacturing PMI results, as Australia today is followed by the eurozone<\/span>, UK, and US tonight. China then releases its services PMI tomorrow, and everyone else follows on Wednesday. HSBC releases its independent Chinese measure on Thursday.<\/p>\n \n\tIt's a busy week in Australia outside the PMIs<\/span>, with building approvals, the RP Data-Rismark<\/span> house price index and the TD Securities inflation gauge<\/span> all due today. Tomorrow it's retail sales, and Wednesday it's the trade balance. Calendars have the construction PMI coming out on Good Friday.<\/p>\n \n\tThe RBA<\/span> will make a rate decision tomorrow. Those looking for a cut have pointed to seemingly more dovish<\/span> commentary from the central bank in its recent Stability Review but the other half of the market believes Stevens will stay on hold, preferring to wait for the March quarter CPI data to be posted ahead of the May meeting.<\/p>\n \n\tThe ECB<\/span> will update its monetary policy on Wednesday and the Bank of England will follow suit on Thursday.<\/p>\n \n\tOn Tuesday the minutes of the last Fed meeting will be released. QE3<\/span> seemed suddenly to be off the table in the statement from that meeting but Ben Bernanke has since revived its rhetorical possibilities. Many in the US still believe QE3<\/span> is inevitable.<\/p>\n \n\tOther than PMIs<\/span>, the US will see construction spending tonight, factory orders and vehicle sales on Tuesday, and chain store sales on Thursday. It's also employment week, with the ADP private sector jobs number out on Wednesday and non-farm payrolls scheduled for Good Friday.<\/p>\n \n\tFriday will see financial markets closed in Australia and New Zealand, the UK, Europe and the US.<\/p>\n \n\tA reminder that from tomorrow morning the NYSE will close at 6am<\/span> Sydney time.<\/p>\n