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The chances of the European Central Bank cutting interest rates later this month have all but disappeared after Eurozone inflation soared to the highest level for almost 16 years.

According to some analysts, the Japanese economy could be headed for a mild recession this year, following the release of a survey showing sentiment among big Japanese manufacturers has sunk to a four-year low.

As expected Australian shares had their worst performance in 20 years in the March quarter

There’s been a marked change in tone from the hard line of the February statement, the rise of 0.25%, the subsequent minutes which showed the bank flirted with a 0.50% rise to the small softening in March and now the much milder tone of the commentary in yesterday’s statement.

The Reserve Bank left rates on hold yesterday at 7.25% for its cash rate, so now we face a month of the usual breathless will they won’t they move them in May after the March quarter Consumer Price Index is released on April 23.

The market bounced nicely today following a positive lead from Wall Street overnight.

Despite the TD Securities/Melbourne Institute Inflation gauge showing another month of 4% inflation in March, the more interesting figures were the end of month credit numbers for February from the Reserve Bank.

Food price inflation shows no sign of easing with the world’s most important staple, rice, swept up into the maw of falling stocks, rising demand and soaring prices.

It won’t be a good day in Australia today for investors.

According to the AMP’s Dr Shane Oliver, shares appear to be setting up a base for a decent rally over the next few weeks or months.

Commodities took a pounding on Friday with gold down heavily, copper slumping in late trading, oil off and major agriculturals weaker as an important market update on plantings in the US market is set to be released tonight.

With the subprime crisis and credit crunch still hurting US economic growth and damaging financial markets confidence, there are finally some meaningful ideas from the US Government on revamping regulation of the country’s financial markets.

The focus for markets this week will be in Australia tomorrow with the monthly board meeting of the RBA; and in the US on Friday night (our time) with the March jobs figures and unemployment rate.

The share market remained stable today, with the benchmark ASX/S&P 200 Index finishing 4.6 points higher at 5355.70, while the All Ordinaries added 8.5 points to 5409.70.

The Reserve Bank’s latest Financial Stability Review is good news for the country and for everyone who has a loan, an account or is a shareholder.

The AMP’s Dr Shane Oliver, the group’s chief strategist, says a winning trade over the last few years and particularly since the sub-prime mortgage crisis really hit, has been to be overweight commodities and related trades such as resources shares and underweight financial shares, such as banks and listed property securities.

Aussie stocks finished lower today pulled down by US stocks, which fell overnight on worries about the finance sector and US economy.

US shares fell, along with Europe but Asia held up, a situation that looks like being reversed judging by the futures quotes this morning.

Next Tuesday’s Tankan survey of Japanese business from the Bank of Japan is shaping up as an interest test of just how resilient the country’s corporate sector is, and if we can believe official data from the country’s various ministries and regulators.

Aussie shares were weaker today, with investor sentiment turning sour on the retail and finance sectors.