Original insights into market moving news

[PODCAST] European Open Rundown 27th April 2021

  • Asia-Pac stocks failed to take impetus from the mostly positive close and fresh record levels stateside
  • BoJ kept policy settings unchanged, reduced inflation forecasts for the current fiscal year and upgraded growth projections
  • In FX, the DXY remains supported and eyes 91.00 to the upside, EUR/USD and GBP/USD remain sub-1.21 and 1.39 respectively
  • Tesla was lower in after-hours trade despite Q1 earnings beating on top and bottom lines with the Co. profiting from its Bitcoin holdings
  • Looking ahead, highlights include Riksbank rate decision, US consumer confidence, supply from Italy, Germany & US
  • Earnings from Alphabet, Microsoft, General Electric, Raytheon, UPS, 3M, Starbucks, Eli Lilly, Visa, ABB, BP, HSBC, Novartis, UBS


US COVID-19 cases +34,641 (prev. +52,957), deaths +294 (prev. +630), total vaccines administered 230.77mln (prev. 230.65mln), fully vaccinated 95.9mln (prev. 95.8mln), while there were comments from NIH’s Fauci that Americans should begin to see a turning point in the pandemic “within a few weeks”. (Newswires/CNBC)

New York Governor Cuomo said from May 15th, office capacity can increase to 75% from 50% and gyms outside NYC can increase capacity to 50% from 33%, while casinos can increase capacity to 50% from 25%. (Newswires)

USTR Tai reportedly met with AstraZeneca's (AZN LN) US chief in which they discussed increased production and a proposed waiver of intellectual property rights under the WTO. It was previously reported that the White House stated the US will not require the AstraZeneca COVID vaccines over the next couple of months and that the FDA will confirm AstraZeneca doses meet quality standards before any shipments. Furthermore, the US will reportedly begin sharing up to 60mln AstraZeneca vaccines with the world after the federal safety review and the White House also noted that an additional 50mln AstraZeneca COVID vaccine doses are in various stages of production. (Newswires)

Senior US administration official said the US is diverting its own order for raw materials to India's Serum Institute for COVID-19 vaccine production and is pursuing options to provide oxygen generations systems to India, while, there were separate comments from the US Chamber of Commerce that it sees risk of a downturn in India's economy due to the virus surge and a possible drag on the global economy. (Newswires)

Germany will open vaccinations to all adults by early June at the latest, while German Chancellor Merkel said that we do not yet have sufficient information on Russia's Sputnik V vaccine to give approval but added that if it is approved, they would buy it. (Newswires)

WHO Assistant Director-General expects a decision on the emergency use listing on China's Sinopharm COVID-19 vaccine before the end of the week and a decision on the Sinovac vaccine by the end of next week. (Newswires)


Asia-Pac stocks failed to take impetus from the mostly positive close and fresh record levels stateside, whereby the regional bourses remained cautious heading into the looming risk events and amid ongoing COVID-19 concerns. ASX 200 (-0.2%) was pressured with the index dragged lower by underperformance in tech and industrials but with losses stemmed as the mining-related sectors were kept afloat by the recent surge in copper and iron ore prices, while M&A newsflow provided some support with Bingo Industries underpinned after it entered into scheme implementation deed regarding the AUD 2.3bln buyout offer from MIRA and Tabcorp was also lifted after it received a proposal valued at AUD 3.5bln from Entain. Nikkei 225 (-0.2%) was subdued amid the ongoing state of emergency for key areas and unsurprising BoJ policy announcement although the downside was cushioned by a softer currency. Hang Seng (-0.1%) and Shanghai Comp. (-0.6%) conformed to the uninspired mood despite a surge in Industrial Profits for March which was likely due to base effects and with sentiment also dampened by crackdown concerns for the tech sector after China’s market regulator launched an anti-monopoly investigation into Meituan. However, HSBC shares were a notable mover with gains of around 2% following strong Q1 earnings. Finally, 10yr JGBs languished after the prior day’s retreat beneath the 151.50 level, with demand hampered after T-note futures slightly pulled back and following the lack of fireworks at the BoJ policy announcement where the central bank refrained from any policy tweaks but lowered the current fiscal year Core CPI estimate, as expected.

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 6.4924 vs exp. 6.4930 (prev. 6.4913)

  • Chinese Industrial Profits (Mar) Y/Y 92.3% (Prev. 20.1%)
  • Chinese Industrial Profits (Mar) Y/Y 137.0% (Prev. 178.9%)

MSCI said that in the absence of guidance published by May 17th from the Office of Foreign Assets Control, it will delete CGN Power (2826 HK), China National Chemical Engineering (601117 CH), China Shipbuilding Industry Co (601989 CH) and Inspur International (596 HK) from the MSCI China All Share Indexes. (Newswires)

BoJ kept policy settings unchanged, as expected, with rates kept at -0.10% and QQE with YCC maintained to target 10yr JGB yields at 0.0%. BoJ stated that Japan's economy is likely to improve as a trend but the pace of rebound is to remain moderate and it noted high uncertainties regarding consequences of COVID-19 with large uncertainty on the outlook. BoJ suggested that risks to the economic outlook are currently skewed to the downside with downside risks larger for the price outlook although it noted that exports and output continue to increase, while capex is showing some weakness but is picking up. Furthermore, the BoJ lowered its Core CPI forecasts for the current fiscal year to 0.1% from 0.5% but raised fiscal 2022 Core CPI forecast to 0.8% from 0.7% and also upgraded its Real GDP growth forecast through to fiscal 2022. (Newswires)


German Finance Minister Scholz and French Finance Minister Le Maire will jointly present the German and French recovery and resilience plans today at 1330BST. (Newswires)

A group of MEPs have written a letter to European Commission President von der Leyen expressing concerns that Hungary's recovery plan proposal could "result in 20% of the funding to disappear in opaque funding structures which are exempt from budgetary control standards". (Politico)


In FX markets, the USD held on to yesterday’s gains with the cautious risk tone in Asia helping keep the DXY in proximity to the 91.00 level but with price action tempered ahead of the approaching risk events in US including the FOMC meeting and US GDP data, as well as month-end with Citi’s month-end FX hedging index pointing to USD selling. EUR/USD was subdued after its recent pullback from the 1.2100 territory, while GBP/USD was uneventful amid a lack of pertinent newsflow and with the pair constrained by resistance around 1.3900. USD/JPY rebounded and JPY-crosses were higher despite the cautious mood with JPY pressure attributed to the state of emergency although some of the moves were pared in the aftermath of the BoJ policy decision in which the central bank kept policy settings unchanged and reduced inflation forecasts for the current fiscal year but also upgraded Real GDP estimates through to 2022, while antipodeans were slightly weaker amid headwinds from a steadfast greenback and the lacklustre sentiment across the region.

S&P affirmed Canada at AAA; Outlook Stable and stated that this year's Budget commitment to extend support measures amid the pandemic will contribute to fiscal deficits, but added that it expects Canada's economy to post a strong recovery this year. (Newswires)


WTI crude futures marginally extended above the USD 62.00/bbl level in what was a calm session for the energy complex following yesterday's whipsawing amid ongoing global COVID-19 concerns and as participants await the latest OPEC meeting. Energy Intelligence says that the JMMC meeting will be taking place today at 13:00BST/08:00EDT. Elsewhere, gold prices were flat as the greenback held steady overnight and copper continued to gain after Chilean port workers recently called a strike in protest against President Pinera's move to block early withdrawals from pension funds.

OPEC and its allies appear set to press on with raising crude production, despite the COVID crisis in key oil consumer India, although they'll have another couple of days to pore over market data and forecasts, according to delegates. (S&P Global Platts)

The JMMC meeting will be taking place today at 13:00BST/08:00EDT in what was a last minute change, according to EnergyIntel's Bakr. (Twitter)


White House is working on details of an increasingly likely summit between US President Biden and Russian President Putin which could occur as soon as early summer, the Biden administration is preparing to send US Secretary of State Blinken to Ukraine next month. (CNN)

Turkey President Erdogan commented on US recognition of Armenian Genocide in which he said the US should look at itself in the mirror, while he added that the statement was a 'wrong step' and will hinder ties. Furthermore, Erdogan said that Turkey and the US need to put aside disagreements and focus on future steps and that he will discuss disagreements with President Biden in June. (Newswires)

A group of boats from Iran’s elite Islamic Revolutionary Guard Corps harassed two US Coast Guard ships earlier this month in the Persian Gulf which was the first such incident in a year, according to Navy officials. (WSJ)


The TPLEX bear-flattened modestly after a disappointing 2-year note auction saw the front-end suffer after duration catching an earlier bid on disappointing data. By settlement, 2s +1.5bps at 0.172%, 5s +1.7bps at 0.833%, 7s +1.1bps at 1.262%, 10s +0.3bps at 1.570%, and 30s -0.7bps at 2.245%; volumes were very low. Real yields were a couple of bps lower, seeing inflation breakevens widen slightly. Fed bought USD 3.601bln 7-20yr Treasuries concentrated mostly in the 20yr bucket. US sold USD 60bln of 6-month bills at 3.5bps, covered 3.32x; USD 63bln of 3-month bills at 2bps, covered 2.99x; USD 61bln in 5-year notes, on the screws; USD 60bln in 2-year notes, tailed 0.4bps. NY Fed RRP demand at USD 100.916bln across 26 bidders (prev. USD 73.794bln across 18 bidders). SOFR unch. at 1bps. Govvies were on the defensive in APAC, with approaching US supply and reflationary themes at play amid the latest surge in copper and iron ore prices. Those selling pressures accelerated in the Europe/US handover as the US belly led yields higher ahead of the 2s and 5s auctions today, and 7s on Tuesday - not to mention the USD 30bln expected corporate IG dollar issuance this week. A weaker than expected March Durable Goods print saw yields recede off their highs bringing the curve unchanged into the NY cash equity open. The bull-flattener soon turned into a bear-flattener after the sloppy 2-year auction (tailed 0.4bps, covered less than average, and large dealer participation amid a big fall in indirects) - the 5-year auction later today was average and had little sway on price action. Yields were sideways into the close. T-note (M1) futures settled 2 ticks lower at 131-12.

US President Biden is committed to raising capital gains taxes for the rich when they die, before passing wealth to their heirs, according to reports citing people familiar with the matter. (Axios)

White House Economic Adviser Deese stated President Biden will present changes to capital gains tax for those who make over USD 1mln, while Deese added that Biden intends to treat capital gains as wages for top earners and looks to equalize treatment of ordinary income and capital gains. (Newswires)

US Senator Manchin (Democrat) reportedly wants the infrastructure bill split into two parts to raise the chances of obtaining bipartisan support, according to CNN's Manu Raju. (Twitter)

US census showed Texas will gain two seats in the House of Representatives, while Florida, North Carolina, Montana, Colorado and Oregon will pick up one House seat each. Conversely, reports noted that California, Illinois, Michigan, New York, Ohio, Pennsylvania, and West Virginia will lose one seat each. (Newswires)

Tesla Inc (TSLA) - Q1 2021 (USD): Adj. EPS 0.93 (exp. 0.79), Revenue 10.39bln (exp. 10.29bln). FCF of 293mln. Debt and finance lease reduction of 1.2bln. Net cash outflow of 1.2bln related to Bitcoin. In total, 2.2bln decrease in cash and cash equivalents to 17.1bln. Click here for the full earnings summary. (Newswires) Shares fell 2.5% after hours