No weak data seen to spook markets: UniCredit

Global markets were calm today morning as there was no fresh weak data to spook them, says Marco Valli of UniCredit. The US stocks rebounded more than 1 percent as big companies such as Coca-Cola and Johnson & Johnson posted strong earnings results. European markets had a positive opening ahead of the release of key employment data in the UK.

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Valli feels the market will focus on the UK, which will release the minutes of its Monetary Policy Committee (MPC) meet and "Then there will be the release of the Beige Book by the Fed, which is expected to signal moderate growth," he told CNBC-TV18. Below is the verbatim transcript of Marco Valli’s interview on CNBC-TV18 Q: We saw quite a bit of rally in the US market and now the European markets have opened with strength as well, what are the markets factoring in now?
A: The market is relatively quiet and there are no weak data releases in the morning in the Eurozone. The focus will be in the UK where we have the release of the Monetary Policy Committee (MPC) minutes, which is important and later on, in the evening, we will have the release of the Beige Book by the Fed, which is expected to signal moderate growth. Overall, no big data releases and the markets seem to be calm for the time being. Q: What would you watch out for with respect to Cyprus and Italy?
A: Cyprus now seems to have been dealt; we had problematic handling of the crisis, which also involved the bailing of insured depositors that was corrected. Now, it is clear to the rest of the Europe and also to investors that Cyprus was an exceptional case. This is because we have a very large banking sector compared to the size of the economy and this banking side, we are mostly deposited with a clearer money laundering problems involving Russia. So, this is an exceptional factor within the eurozone landscape.
If you look at all other countries, there is no country having such a big exposure to the financial sector like in Cyprus. This reassures the market, spreads on senior bank bond has come down significantly of-late.
In Italy, we have seen good absorption by the market of the BTP Italy, which tells you that the demand before sovereign government bonds in Italy remains quite healthy although all these political uncertainties continue to linger, but the implicit backup by the European Central Bank (ECB) is doing an excellent job to encore market expectation.