High oil prices boost oil stocks

Economics

This week we expect US industrial production growth in March to accelerate while growth in underlying retail sales remains robust. The trade deficit for February is expected to deteriorate slightly.

In Europe we expect French industrial production growth for February to fall back after recent strong rates. French consumer price inflation should remain stable for March.

On the political front the meeting of European finance ministers will focus on the fiscal situation across countries. In Japan we expect consumer confidence in March to remain steady.

Foreign exchange

Euro/Dollar: The euro is close to a test of its long-term support line at 1.2730. The fact that this level corresponds with the previous low recorded in February makes this an important support level.

Euro/Yen: The dollar broke out of its long term downtrend channel suggesting further gains with 110.00 and 111.50 as next resistance levels.

Fixed Income

Globally yields were quite stable over the past week. A slight rebound was seen at the end of the week after some Federal reserve members commented on inflation pressures or the need to 'lift rates more vigorously'. In Europe, the ECB left rates unchanged as largely expected.

Even though there are no major inflation pressures at the moment, medium-term risks remain due to the high growth rates of monetary aggregates. German industrial production fell in February reinforcing the worries about weak growth in Europe.

Equities

It was quiet on the stock markets with no major oil price movements or company news. On both sides of the ocean, indices went up slightly. In the US, all indices were remarkably higher four days in a row, albeit at limited pace.

High oil price levels still benefited oil stocks with the healthcare sector being another winner in the aftermath of massive restructurings and a better outlook for Pfizer. Most investors were awaiting the start of the new earnings season that really kicks off next week.