[PODCAST] US Open Rundown 19th April 2021
- European bourses are contained this morning, Euro Stoxx 50 -0.1%, ahead of a handful of US earnings with US futures rangebound
- DXY has been pressured all morning moving ever closer to 91.00 to the benefit of major peers across the board, EUR/USD through 1.20 & USD/JPY testing 108.00
- US Senate Democrats are reportedly likely to settle on a corporate tax rate of 25%, according to Axios sources
- Iran’s government stated that drafting the text for reviving the JCPOA can begin; discussions are said to have made further progress but remain difficult
- Russia is reportedly bolstering its warship presence in the Black Sea, amid ongoing tensions with Ukraine
- Looking ahead highlights include ECB asset purchases and earnings from IBM, Coca-Cola and United Airlines
US CDC reported total COVID-19 cases rose by 60,947 to a total 31.44mln and total deaths rose by 694 to 563,980, while the number of people that received at least one vaccine dose rose to 131.25mln from 129.49mln the day before which means over half of all US adults have received a vaccine dose. (Newswires/Politico)
NIH's Dr Fauci stated that a decision on whether to resume administering the Johnson & Johnson (JNJ) COVID-19 vaccine could occur as soon as Friday and that he would not be surprised if it is resumed in some form. In relevant news, US health officials were reportedly on the verge of issuing a warning on the JNJ vaccine but then opted to suggest a pause and sources stated that limiting the use of the vaccine to older adults or incorporating warning language are options for the resumption of the vaccine use, while there were reports on Friday that Johnson & Johnson researchers stated that no causal link has yet been found between the Co’s vaccine and blood clots. (Newswires)
Ontario, Canada Premier announced they are closing all non-essential construction to slow the spread of COVID-19 and that a stay-at-home order has been extended to a total of six weeks, while it was also reported that Ontario will begin offering the AstraZeneca (AZN LN) vaccine on Tuesday to anyone turning 40 and above this year. (Newswires)
UK COVID-19 cases +1,882 (prev. +2,206) and deaths +10 (prev. +35), France cases +29,344 (prev. +35,861) and deaths +140 (prev. +189), Italy cases +12,694 (prev. +15,370) and deaths +251 (prev. +310). (Newswires/Worldometer)
Italy is reportedly seeking domestic output of mRNA vaccines and is said to have discussed this with Moderna (MRNA), Novartis (NOVN SW) and ReiThera, according to sources. (FT)
Osaka Governor said that they will ask the Japanese government to declare a state of emergency for Osaka and other reports noted that Tokyo could ask restaurants to shut during the next emergency. (Newswires/Twitter)
New Delhi, India will be imposing a 6-day lockdown for COVID-19, according to the Chief Minister. Given the COVID-19 situation, UK PM Johnson has cancelled his trip to meet with the Indian PM and following this journalists indicate that India might be placed on the UK's COVID-19 red-list. (Newswires)
Australia opened a travel bubble with New Zealand which means visitors no longer need to quarantine on arrival. (BBC)
The University of Oxford is to start its first study whereby individuals who have recovered from COVID-19 will be deliberately reinfected in a bid to develop more effective vaccines. (Newswires)
Asian equity markets began the week with mostly cautious gains and US equity futures marginally pulled back from record highs with participants tentative ahead of further earning updates this week, and as COVID-19 uncertainty lingered after the number of global cases last week increased by over 5.2mln, which was a record despite the ongoing vaccination drive. However, there were comments from NIH's Dr Fauci that a decision on whether to resume administering the Johnson & Johnson COVID-19 vaccine could occur as soon as Friday and that he would not be surprised if it is resumed in some form. ASX 200 (+0.2%) was positive with the kept afloat by outperformance in mining-related sectors and with M&A developments providing encouragement following news of a merger between Galaxy Resources and Orocobre, as well as reports that Crown Resorts received an unsolicited proposal on behalf of funds managed by Oaktree Capital. Nikkei 225 (+0.2%) initially swung between gains and losses as pressure from currency inflows was offset by stronger than expected trade data - including the largest increase in exports since November 2017 - and although Japanese stocks eventually improved, Toshiba shares were left in the lurch after CVC was said to plan a delay in submitting a formal proposal to acquire the Co. Hang Seng (+0.8%) and Shanghai Comp. (+1.3%) shrugged off the flat open and the continued US-China verbal jousting, to outperform their regional peers with the Hang Seng extending above the 29k level and strength seen in Chinese automakers after Huawei unveiled its intelligent driving system. There were also constructive comments regarding China Huarong Asset Management in which the CBIRC Vice Head stated the Co. is currently operating normally with ample liquidity and Chinese regulators were also said to have asked some banks not to withhold loans to the Co., while India's NIFTY (-2.4%) was heavily pressured amid ongoing rampant COVID-19 cases which hit a fresh record high and with the capital of New Delhi said to have less than 100 ICU beds available in the entire city. Finally, 10yr JGBs were slightly higher amid the mild gains in T-notes and a relatively tepid BoJ purchase announcement totalling JPY 500bln mostly concentrated in 3yr-5yr maturities, while Aussie yields were also relatively unmoved after the RBA announcement to purchase AUD 2bln of government bonds.
PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5233 vs exp. 6.5234 (prev. 6.5288)
PBoC Vice Governor Li Bo stated that they will widen digital CNY experiments and noted there is no specific timetable for a digital CNY launch, while Li added that they want proper reforms for fintech firms. (Newswires)
US called for China to implement measures to boost domestic demand and shift away from exports amid concerns that China’s recovery has been highly imbalanced and growth cannot be sustained without greater official support for household consumption. (Newswires)
US Secretary of State Blinken tweeted that sentences of Hong Kong's democracy activists on politically motivated charges are unacceptable and incompatible with the non-violent nature of their actions, while he added that we call for the release of those detained and imprisoned for exercising fundamental freedoms. This prompted a response from the Global Times Editor Hu Xijin who tweeted that those whom the US claims it stands with will be in trouble and a statement like this means the US is instigating those people to stand with the US, help it confront a country it doesn’t like and become cannon fodder for American interests. (Twitter)
Japanese PM Suga said US and Japan agreed to military base realignments and that he had serious discussions with US President Biden regarding China and North Korea, while they also discussed the situation in Taiwan and affirmed the importance of US-Japan alliance in the region. It was also reported that the Chinese Embassy in US said that China strongly opposes the remarks in the US-Japan joint statement regarding China’s internal affairs of East and South China Sea, Taiwan, Hong Kong & Xinjiang, while it added that the statements have gone beyond scope of bilateral relations and undermines peace & stability in the region. (Newswires/Global Times)
- Japanese Trade Balance (JPY)(Mar) 663.7B vs. Exp. 490.0B (Prev. 215.9B)
- Japanese Exports (JPY)Mar) 16.1% vs. Exp. 11.6% (Prev. -4.5%)
- Japanese Imports (JPY)(Mar) 5.7% vs. Exp. 4.7% (Prev. 11.8%)
Democratic senators are said to be concerned about raising the corporate tax rate to 28% and the rate is likely to land at 25%, according to sources. (Axios)
US Senator Cornyn suggested that GOP could back a smaller infrastructure bill valued around USD 800bln and are seeking a compromise as President Biden is set to discuss his USD 2.3tln plan with lawmakers on Monday. (Newswires/WSJ)
- UK Rightmove House Price Index (Apr) M/M 2.1% (Prev. 0.8%)
- UK Rightmove House Price Index (Apr) Y/Y 5.1% (Prev. 2.7%)
EU Commission VP Sefcovic called for a good faith approach in implementing trade rules to lessen tensions and believes solutions can be found to minimise the disruption of Brexit on Northern Ireland. (FT)
Italy is said to be at risk of missing the deadline at the end of the month for submitting its finalised Recovery Plan to the European Commission as Brussels is not satisfied with several aspects of the drafts presented so far, according to sources. However, this was refuted by a spokesman for Italian PM Draghi who stated that the plan will be presented on the last day of the month. (Newswires)
Annalena Baerbock is to run as the Chancellor candidate for the German Greens. (Newswires)
Iran’s government stated that drafting the text for reviving the JCPOA can begin, while it was later reported that discussions regarding the Iranian nuclear deal are said to have made further progress and Iran suggested that a “new understanding” was developing at the key talks in Vienna. (Newswires)
US National Security Adviser Sullivan warned that there will be consequences if Kremlin critic Navalny dies, while there were separate comments from UK Foreign Office spokesperson that UK is deeply concerned regarding reports of unacceptable treatment of Navalny and deterioration of his health, while the spokesperson stated that Navalny must be given access to independent medical care and reiterated calls to release him. Navalny's doctors say he "will die within the next few days" if not given urgent medical attention for acute back pain and leg numbness. Subsequently, Navalny has been moved to a medical facility and his condition is "satisfactory" according to IFX citing prison service(Newswires/BBC)
Russia is reportedly bolstering its warship presence in the Black Sea amid ongoing tensions with Ukraine, while it was also reported that British warships will be heading to the Black Sea next month. (Sunday Times)
The Czech Republic expelled 18 Russian diplomats due to suspicion that Russian security services may have been involved in explosions at a Czech ammunition storage facility that occurred in 2014. Furthermore, Russia retaliated by expelling 20 Czech diplomats and its Foreign Ministry stated that the allegations are invented and not based on evidence, while it instead suggested US involvement. (Newswires)
There was a rocket strike at an Iraqi military base at Balad, Iraq which hosts US contractors, while no casualties were reported although 2 Iraqi soldiers were wounded. (Newswires)
Taiwan is seeking to acquire long-range and air-launched cruise missiles from the US, according to a defence official. (Newswires)
Turkish President Erdogan was much more willing to improve relations with Greece, according to government sources cited by Greek City Times Bureau Chief. (Twitter)
European equities kick off the trading week with another mixed/directionless session thus far (Euro Stoxx 50 -0.1%) despite the positive APAC handover, and amidst a lack of fresh catalysts as participants continue to ponder over the rising COVID cases globally alongside the broader recovery with the vast fiscal and monetary support present. US equity futures meanwhile are somewhat varied and have a negative bias, with the ES and NQ flat whilst the cyclically-driven RTY narrowly lags. Analysts at JPM noted that some technical and sentiment indicators are becoming stretched after the recent run higher across stocks. That being said, the analysts say they would not be reducing stocks exposure on a six-to-nine month horizon whilst acknowledging the potential for a technical correction - JPM continue to see dips as buys. Back to Europe, cash markets see no major outlier in terms of performance whilst sectors are similarly mixed, with outperformance seen Travel & Leisure whilst the early gains in the Auto sector, following the 2021 Shanghai Motor Show, faded with the sector now the laggard. Overall the sectors do now portray and over-arching theme. In terms of individual movers, ABN AMRO (+1.4%) trades firmer after the Co. has accepted the payment of EUR 480mln to settle an anti-money laundering investigation. Bayer (+1.4%) is also supported as the US FDA granted Orphan Drug status for Co's Aliqopa for chronic lymphocytic leukaemia and small lymphocytic lymphoma. Conversely, CNH Industrial (-5.1%) sits at the foot of the Stoxx after it terminated discussions with FAW Jiefang around the On-Highway business, but will still continue with plans to spin-off the unit from 2022 onwards.
DXY - The Dollar and index have extended declines across the board as US Treasury yields maintain a mild bull-flattening bias, but also on increasingly bearish technical momentum as several Buck/major pairings breach key and psychological levels and the DXY itself breaches 91.500 to probe support around 91.300 within a 91.748-125 band. However, the index and Greenback in general may benefit from underlying bids into 91.000 given that the 100 DMA is in very close proximity at 91.019 today.
JPY/NZD/AUD - Better than expected Japanese trade data could be helping the Yen compound gains vs its US counterpart, and at this stage 108.00 appears far more achievable than a rebound towards 108.50 where the base of decent option expiry interest resides (1.9 bn from the half round number up to 109.65 to be precise). Meanwhile, the Kiwi and Aussie are taking advantage of their US peer’s predicament to form firmer bases above 0.7150 and 0.7750 respectively ahead of RBA minutes and NZ Q1 CPI on Tuesday.
CHF/EUR/GBP/CAD - Little sign of Franc buyers getting twitchy about a relatively big rise in Swiss sight deposit balances at domestic banks, as Usd/Chf tests 0.9150 and Eur/Chf eyes 1.1000 even though the single currency has made light work of breaching supposed option barriers at 1.2000 against the Dollar. Elsewhere, Cable is approaching 1.3900 after holding just above the big figure below and the Pound is starting the new week in a much better position vs the Euro after the cross reached circa 0.8719 last Friday, with Eur/Gbp now pivoting 0.8650. Similarly, the Loonie has turned the tables on its US rival to regain 1.2500+ status in advance of Canada’s first Federal Budget since 2019 then CPI and the BoC on Wednesday.
SCANDI/EM/PM - The Nok and Sek have picked up where they left off last week, on the front foot, with the former outperforming through 10.0000 vs the Eur and latter straddling 10.1000, while most EM currencies are benefiting from Usd weakness bar the Rub that remains below 76.0000 amidst ongoing investor jitters about Russia’s deteriorating international relations and stand-off with Ukraine. Turning to commodities, Xau has taken a bit of a breather before continuing its march to just over Usd 1788/oz with bullish chart impulses embellished by China reportedly allowing banks to import some 150 tonnes of Gold this month and in May.
Canada's Budget is said to propose a sales tax for online platforms and e-commerce warehouses from July 1st and digital services tax from 2022, while it will not include a wealth tax but will have a luxury tax for cars, yachts and private planes from 2022. Furthermore, the budget will include a tax on residential property owned by non-resident and non-Canadian owners beginning next year, according to government sources. (Newswires)
Turkish Finance Minister says the central bank has not conducted FX transactions since November and would be useful to announce data regarding prior FX sales. (Newswires)
UK Chancellor Sunak says the UK is launching a new task force on BoE Central Bank Digital Currency. (Newswires)
Gilts are still edging it in core bond land, with the latest bounce on Liffe lifting prices to 128.70 for a 26 gain on the day and 8 ticks beyond last Friday’s best, whereas Bunds are hovering beneath 171.00 between 171.07-170.81 bounds and the 10 year T-note is just under its 132-18 overnight session high. However, turnover remains relatively light and the agenda quite sparse apart from the Buba monthly report, weekly APP and PEPP updates from the ECB before a pick-up in data and events from tomorrow and prelim PMIs round of the week on Friday.
Yet another choppy European morning for WTI and Brent front-month futures and within relatively tight ranges as markets await a concrete fundamental catalyst to latch onto. Participants in the interim will continue to balance the geopolitics with vaccination hurdles and rising COVID cases across some economies - with India and Canada recently telegraphing a worsening situation, with the former cancelling UK PM Johnson's visit whilst its capital New Delhi announce fresh lockdown measures alongside some speculation pointing to India being put on the UK's travel red list. Note that this comes ahead of next week's JMMC/OPEC+ meeting in which eyes will be on any need to alter the output quotas set through July, with production set to steadily increase amid a projected rise in summer demand. The geopolitical landscape meanwhile remains mixed but fluid as ever, with sanguine rhetoric initially emanating from the Iranian JCPOA talks, although Tehran later suggested that negotiations still remain difficult. Elsewhere, developments regarding Russia have been abundant with Kremlin-critic Navalny now seemingly attended to by doctors after US has warned Russia there will be "consequences" if the opposition activist Alexei Navalny dies in jail, whilst EU expressed concern regarding Navalny's health. Further, Russia is reportedly bolstering its warship presence in the Black Sea amid ongoing tensions with Ukraine and Moscow is also poised to announce a US sanctions list. WTI trades on either side of USD 63/bbl (62.67-63.42/bbl range) whilst its Brent counterpart holds its head above USD 66.50/bbl (66.17-95/bbl range). Spot gold and silver meanwhile glean support from the deteriorating Buck with the former now north of USD 1,775/oz (vs low 1,773/oz) whilst spot silver reclaimed USD 26/oz. In terms of base metals, LME copper has been bolstered further above USD 9,000/t amid the softer Buck, reaching a current peak of USD 9,430/t. Overnight, Singapore iron ore futures surged overnight with traders citing demand from the Chinese steel sector.
Islamic State has claimed responsibility for an attack on 2 wells at Iraq's Bay Hassan oilfield on Saturday. (Newswires)