European stocks’ impressive first quarter - CNBC Comment

Saudi airstrikes in Yemen have boosted oil prices
DESPITE suffering their biggest weekly fall of the year last week, European markets have enjoyed a good first quarter. While Bank of America Merrill Lynch notes that US equity funds have seen $44bn worth of outflows in 2015, chalking up their worst start to the year since 2009, Europe’s equity markets have been benefitting.

The first quarter has seen the FTSE 100 punch through 7,000 (finally), up around 5 per cent so far this year. Germany’s Dax broke through 12,000 (so fast that we almost didn’t even notice 11,000), clocking up a gain of around 25 per cent this year. France’s Cac is up around 20 per cent, the Italian MIB more than 15 per cent, and the Spanish Ibex is up some 12 per cent.

Not too shabby if you’re long Europe – with much of the help, of course, coming from the euro, which dropped to a multi-year low of $1.0494 after the ECB’s bond-buying programme began. Wild card oil, which has fallen so much that it has been both stimulating economies and keeping inflation on the floor, suddenly bounced by $10. It seems that China has been filling up its oil reserves. The news of Saudi-led airstrikes on Yemen is also leading to a premium being priced into the commodity.

Regarding China, keep an eye on its central bank. Its governor gave a speech over the weekend in which he indicated that policy-makers had to fight possible disinflation, hinting that they could act again to support the world’s second largest economy.

EVENTS TO WATCH THIS WEEK
More Greek discussions will take place this week. While many of us may be quite out-Greeced, April will be important, as the country is said to run out of money on 20 April unless it secures new funds. Greece badly needs to stick to reforms, or it could face exit from the Eurozone (this time seriously).

As usual, minutes from the Fed and the ECB will be closely watched, with Janet Yellen set to speak before the big reveal of Friday’s non-farm payroll numbers. Capital Economics is looking for a gain of 290,000, following the average of the last six months, and it foresees a further slight drop in the unemployment rate to 5.4 per cent. Most economists still expect the Fed to hike rates in June (though the dovish Chicago Fed president Charles Evans reiterated last week that “there is no compelling reason for the Fed to tighten”).

In the UK, we’re in the run-up to May’s General Election. Look out for the debate of seven on Thursday, featuring the leaders of the Conservatives, Labour, the Lib Dems, the Greens, Ukip, the SNP and Plaid Cymru.

We get a reading on the Japanese economy too, with the release of the Japanese Tankan business survey.

Louisa Bojesen is the presenter of CNBC’s European Closing Bell. @louisabojesen

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