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Equity traders make positive return to markets

European equities, revived after a long weekend, start the short week with an aggressive 'risk-on' mindset. 

London
Source: Bloomberg

Travel firms struggle over surge in oil prices

Following a long weekend European equity traders have returned to the office with renewed optimism and have retrospectively viewed Friday’s weak US non-farm data as merely a blip. Across the region today's Service PMI data has either been stable or improving with the UK being the standout performer. Tomorrow morning will see the release of last month’s retail sales for the eurozone and it will be interesting to see whether the improving confidence figures are translated into greater spending from the European retail customer. 

Travel firms such as easyJet, Carnival and British Airways owners IAG struggled with Monday's spike in oil prices but as the day has progressed the focus has shifted to those who stand to benefit from this latest swing in sentiment. It might be difficult to believe now but there was a time when airline passengers were disenchanted with the service they received from certain Irish airlines.

But judging by today's 28% increase in March passenger numbers that Ryanair has posted, the stigma from those dark days is long gone.

Trader speculation that Glencore could once again be on a shopping trip with Rio Tinto as the target has helped ease the mining company's shares higher by almost 4%. Of course the conversion from fiction to fact is far from complete.

Alcoa to kick off US earnings season

We might have been having a bit of a lull in M&A activity but the $4.8 billion deal for FedEx Corp to acquire European delivery firm TNT Express has shaken the markets.

Although UPS’s effort to acquire TNT was blocked by European regulators the different makeup of these two company's focuses should give this a far greater chance of success. Could this FedEx/TNT deal have an explosive effect on the rest of the year's M&A activity? The greater spending power of the dollar and the safety net of eurozone QE under European equities has increased its allure, and this could well be the first of many transatlantic shopping trips to materialise over the rest of the year.

Tomorrow night after the markets close we will see Alcoa officially ring the bell for the latest round of the US reporting season. Might this be the quarter where 'currency headwinds', the excuse of choice for many European equities over the last couple of years, begin to appear more frequently in the US corporate vocabulary? Tomorrow evening will see the release of the latest Federal Open Market Committee minutes as the warm up act before the spotlight shifts onto the corporate arena.

Iran the focus of traders' minds

As the debate surrounding Iran’s willingness to meet the West’s requirements of its nuclear power experiments has reached a climax, oil prices have been unable to reach a conclusion as to their bullish or bearish reading into this.

The last week has seen both crude and US light oil squeeze higher as they have oscillated around the 50- and 100-day moving averages. Considering Iran would be the third-largest producing member of OPEC and arguably even bigger, these talks have preoccupied traders' thoughts.

Gold’s efforts to hang onto the ground it made last week is beginning to look unattainable as the gravitational pull of the $1200 level looks destined to ultimately succeed.

AUD/USD reaction questioned

Once again the combination of the 50-day moving average and the $1.100 level has thumped EUR/USD lower. The validity of the dollar story might have come under a little more scrutiny following last week’s US non-farm payrolls figures but the momentum of the US interest rate rising story has hardly been dented.

Cynicism of FX traders is understandably high at the moment and following today’s inaction from the Royal Bank of Australia, questions are being asked about the way in which AUD/USD reacted.   

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