Japan has been hit by a large earthquake in the early hours of the morning, which has triggered tsunami warnings, and it will be interesting to see how the markets react to the news. Natural disasters tend to knock confidence around a fair bit. Obviously, the welfare of Japanese citizens is paramount, but purely from a market point of view, disasters have a tendency to make markets jittery. This is because markets tend to see disasters causing disruptions in economic activity and economic output. With Japan already suffering from weak growth, events such as these only makes things more difficult for the Japanese government and its Central Bank to maintain their plans for economic growth.

As far as announcements are concerned, the UK and US dominate proceedings.

The UK are releasing Public Sector Net Borrowing and CBI (Confederation of British Industry) Industrial Order Expectations data. The net borrowing data reflects the borrowing undertaken by the public sector (local governments etc), which can translate into infrastructure spending. That then leads to job creation. Industrial Order Expectations reflects the strength of the industrial sector and the demand for manufactured products. MPC (Monetary Policy Committee) Member Kristin Forbes is also set to speak later tonight.

In the early hours of tomorrow morning, the US is releasing Existing Home Sales and its Richmond Manufacturing Index data. Home Sales data gives us an indication for demand in the housing sector. Home sales is important as it means consumers are willing to spend money, reflecting confidence in the economy. This also ensures that money continues to flow through the economy. The manufacturing index reflects the strength of manufacturing, particularly in the Richmond area.

Elsewhere, the Swiss are releasing Trade Balance figures, Canada are releasing Retail Sales & Core Retail Sales data, while Europe is releasing Consumer Confidence data. Japan also has a bank holiday tomorrow.