S&P 500 dropped as the Cypriot Parliament rejected the levy plan. There were 36 votes against the proposal and 19 abstentions. The Abstentions were from the President's centre right party DISY supporting a revised version of the plan. Wall Street was mixed with the DJIA adding +0.03% and the S&P 500 indices losing -0.24% during the day. In the commodity sector, crude oil prices slumped amid rejection of Cyrpus’ bailout deal. The front-month contract for WTI crude oil reversed initial gain to 94.09 and plunged -1.69% while the Brent crude contract plummeted -1.88% during the day. In the Asian session today, stocks climbed higher as led by Chinese share which rose the most in 2 weeks as driven by automakers and banks.
The Cypriot Parliament rejected the bank levy although the Eurogroup released a statement granting concessions on small deposit holders. The Eurogroup stressed that the levy on deposits is a one-off measure and small depositors would be treated differently from large depositors and “reaffirms the importance of fully guaranteeing deposits below 100.000 euro”. The rejection raised uncertainty as it is unsure when/if the bailout would be approved. This would affect the liquidity of its banking sector. In the near-term, risks for the euro is to downside.
On the dataflow, the US housing starts increased to 917K in February from an upwardly revised 910K a month ago. Building permits rose to 946K from a downwardly revised 904K in January. The market today awaits the FOMC meeting which is expected to leave the Fed funds rate and the QE measures unchanged. The BOE minutes will also be released today. UK’s jobless claims probably slipped -5K in February, improving from a -12K contraction a month ago. The 3-month ILO unemployment rate should have stayed unchanged at 7.8% in January. The Claimant count rate will also be released.
The industry-sponsored API estimated that crude inventory slipped -0.41 mmb in the week ended March 15. For fuels, gasoline gained +0.28 mmb while distillate slipped -1.3 mmb. The DOE/EIA’s official report might report that crude inventory added +2 mmb during the week. Gasoline and distillate stockpiles might have fell -2.5 mmb and -1.5 mmb respectively.
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