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US Market Open: Subdued European performance amid PMIs, COVID concerns and holiday closures

  • European bourses are lower across the board, Euro Stoxx 50 -1.60%, following a subdued APAC handover amid holiday-thinned conditions, soft data and COVID concerns.
  • German Final Manufacturing PMI; "The survey's output index is now in contraction territory for the first time since the initial COVID shutdowns in the first half of 2020, with a similar situation for new orders".
  • USD remains bid but has slipped from best levels and is yet to test last week's best for the index; EUR is hampered on PMIs while CAD and NOK are hit on oil.
  • WTI and Brent came under pressure alongside the PMI-induced equity price action with focus on a potential oil/gas embargo and Hungary's opposition.
  • Beijing is launching additional rounds of mass COVID testing while China's April PMIs printed below expectations.
  • Looking ahead, highlights include US ISM Manufacturing. Holidays in the UK and China.

As of 11:15BST/06:15ET


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  • US ISM Manufacturing. Holidays in the UK and China.




  • Russian Foreign Minister Lavrov said Ukrainian President Zelensky constantly changes his position and that the Ukrainians have sabotaged negotiations, while he said there are many foreign mercenaries on the western side of Ukraine and said that NATO is trying to interfere with reaching a political settlement to end the crisis in Ukraine. Lavrov also stated that Russia has never interrupted efforts towards an accord that will avoid a nuclear war and has developed ultrasonic weapons to counterattack against a possible attack from the west, according to Reuters.
    • Russian Foreign Minister Lavrov said the lifting of sanctions imposed on Russia is being discussed in peace talks with Ukraine, although Ukrainian negotiator Podolyak denied this and said that Lavrov had not attended a single negotiating round, according to Reuters.


  • Russia is reportedly already laying the groundwork for a takeover of Moldova, according to The Times.
  • Russian President Putin will reportedly undergo a cancer operation in the near future and will hand over power to a hardline former KGB chief while he is incapacitated, according to Daily Mail citing claims by an insider.
  • Russia said it hit 17 Ukrainian military facilities on Saturday which killed more than 200 Ukrainian troops, while it was separately reported that a Russian missile hit the runway at the airport in Odesa, according to Reuters.
  • Russia reported a fire at a military facility in the southern Belgorod region bordering Ukraine on Sunday
  • Ukrainian President Zelensky said they have begun the evacuation of civilians from Azovstal in Mariupol. Zelensky said Ukraine and the UN were working on the evacuation of other civilians from the plant, while the city council of Mariupol announced evacuations from other parts of Mariupol were postponed to 08:00 local time (06:00BST/01:00EDT) on Monday, according to Reuters.
  • Ukrainian Deputy PM said Ukraine exchanged prisoners with Russia on Saturday in which seven soldiers and seven civilians were returned to Ukraine, according to Reuters.
  • Ukrainian President Zelensky held a meeting with US House Speaker Pelosi in Kyiv, while Pelosi said the visit was to say thank you for Ukraine’s fight for freedom which is a fight for everyone and that they are committed to be there for Ukraine until the fight is done, according to Reuters citing a Twitter video.
  • UK PM Johnson reiterated in a call with Ukrainian President Zelensky that he is more committed than ever to reinforcing Ukraine and ensuring that Russian President Putin fails, while he added that Britain will continue to give additional military aid to provide Ukrainians with the equipment needed to defend themselves, according to Reuters citing PM Johnson’s office.
  • UK MoD said Russia has sought to legitimise its control of Kherson by installing a pro-Russian administration since seizing the city, while it added that recent statements from Russia likely indicate its intent to exert strong political and economic influence in Kherson over the long-term, according to Reuters.
  • US Rep. Kinzinger (R-IL) introduced a joint resolution that would authorize the use of US armed forces to defend the territorial integrity of Ukraine in the event Russia escalates the war and uses chemical, biological, or nuclear weapons against Ukraine, according to Kinzinger’s website.


  • Germany could end its dependence on Russian oil by the end of summer, according to the Economy Ministry’s latest energy security report as cited by Bloomberg.
  • Austria, Hungary and Slovakia have withdrawn their objection regarding an EU-wide embargo on Russian oil, according to ZDF. However, comments from a Hungarian Senior Minister state that Hungary would veto any proposal that would restrict oil imports from Russia.
  • Hungary opposes any EU embargo on Russian oil and gas imports, according to a gov't spokesperson; Politico Playbook suggests that a compromise could be sought which would seek some form of exemptions for Slovakia and Hungary.
  • EU diplomatic sources say discussions on banning Russian oil imports by end-2022 looks tricky, via BBC's Parker; cautious nations says a quick cut-off is not feasible; hard line states are already disgruntled re. potential compromises.
  • German Economy Minister says we are not there yet on a boycott on Russian gas as other nations are not as far when it comes to oil independence.
  • Russia’s Gazprom said it continues gas exports to Europe via Ukraine in line with customer requests with Sunday volume at 97.2mln cubic metres, while it said that natgas output was at 175.4 bcm in January-April and that exports to non-CIS countries for January-April fell 27% Y/Y to 50.1bcm, according to Reuters.
  • Russian Foreign Ministry said Beijing is ready to expand cooperation with Moscow but admits Chinese companies must be cautious of secondary sanctions risk, while Russia expects an increase in commodity flows from Russia to China and for trade with China to reach USD 200bln by 2024. Russian Foreign Ministry also stated that Moscow is prepared to continue contacts with the US, South Korea and Japan regarding North Korea, according to Ifax.
  • Russia is planning to withdraw from participation in the International Space Station due to economic sanctions, according to the Daily Mail.
  • Russian state Duma’s Chairman Volodin said Russia should respond symmetrically to asset freezes by ‘unfriendly countries’, according to Reuters citing a social media post.
  • US Senate Majority Leader Schumer said he will add provisions in the Ukraine aid bill to help target Russian oligarchs in which the provision would enable the US to seize the assets of oligarchs and send money to Ukraine, according to Reuters.


  • EU is reportedly looking to make a fresh push to revive the Iranian nuclear deal, according to WSJ.
  • North Korean Leader Kim said that North Korea could pre-emptively use its nuclear weapons if threatened and that they have a firm will to continue developing its nuclear military, according to a report in the Daily Mail.



  • European bourses are lower across the board, Euro Stoxx 50 -1.60%, following a subdued APAC handover amid holiday thinned conditions, soft data and COVID concerns.
  • US futures are firmer across the board, ES +0.3%, but relatively contained ahead of the FOMC and an expected 50bp hike.
  • US and Japan are to increase cooperation in constructing supply chains for cutting-edge semiconductors, via Nikkei.
  • Nasdaq has decided to call for stressed market conditions on all Swedish equity and index derivatives until further notice or at the longest until close of business as of May 2, 2022.

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  • Specs add to Buck longs before FOMC and NFP, but DXY slips a tad further from 103.930 peak into range above the round number - index meandering from 103.530-100.
  • Euro hampered by mixed Eurozone manufacturing PMIs and weaker than forecast sentiment indices as it retreats from 1.0550+ and 0.8400+ vs Dollar and Sterling respectively.
  • Recoil in oil undermines Loonie and Norwegian Crown, USD/CAD elevated mostly above 1.2850 and EUR/NOK 9.9000+.
  • Aussie underpinned ahead of anticipated RBA hike, AUD/USD straddling 0.7050 and AUD/NZD cross pivoting 1.0950.
  • Offshore Yuan weak amidst clean sweep of contractionary Chinese PMIs, USD/CNH not far from retest of 6.7000.

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Notable FX Expiries, NY Cut: Click here for more detail.


  • Holiday-thinned trading volumes compound choppy price action as bonds brace for big week to begin May.
  • Bunds whipsaw within 154.12-153.25 range, BTPs and Bonos undermined by sub-forecast Italian and Spanish PMIs with 10 year debt futures flattish between 130.71-129.71 and 143.05-140.50 parameters.
  • USTs mostly softer and curve steeper awaiting Fed and NFP following the final manufacturing PMI, ISM and construction spending; T-note just under 119-00 vs 119-01 high and 118-22+ low.

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  • WTI and Brent are pressured with downside occurring alongside the pressure in equities; downside was exacerbated by the loss of multiple psychological support levels.
  • Newsflow has been heavily focused on a potential Russian oil/gas embargo, with Hungary remaining heavily opposed; however, Politico reports of a potential compromise for such member nations.
  • A missile attack on an oil refinery in Iraq's Erbil hit an oil tank and caused a fire although the fire was put under control, according to Reuters citing security forces.
  • Iraq’s oil exports reached a total of 101mln bbls in April which raised USD 10.55bln in revenues, while exports averaged 3.4mln bpd. It was also reported that Iraq’s Basra Oil Company said a third oil pipeline at the Khor Al-Amaya oil terminal in southern Iraq will be operational by end-2023 with a capacity of 600k bpd, according to Reuters.
  • Libya’s NOC announced a temporary resumption of work and lifting of the force majeure at the Zueitina oil terminal to reduce stock and free up storage capacity, according to Reuters.
  • Spot gold has lost the USD 1900/oz mark, as yields continue to climb ahead of the FOMC.

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  • EU S&P Global Manufacturing Final PMI (Apr) 55.5 vs. Exp. 55.3 (Prev. 55.3)
  • German S&P Global/BME Manufacturing PMI (Apr) 54.6 vs. Exp. 54.1 (Prev. 54.1); "The survey's output index is now in contraction territory for the first time since the initial COVID shutdowns in the first half of 2020, with a similar situation for new orders hinting that this not just a supply problem but also evidence of slowing demand for goods."


  • UK PM Johnson is reportedly planning to bring back the Right to Buy scheme that would allow tenants to purchase their housing association homes, according to The Telegraph.
  • UK Chancellor Sunak has been called on by Cabinet to cut taxes to reduce the cost of living crisis burden facing households, according to the Telegraph.
  • Union of Shop, Distributive and Allied Workers in the UK supported a call for a minimum wage of at least GBP 12/hour, according to Reuters.
  • ECB Vice President de Guindos said that a rate increase in July is possible but not likely, according to Bloomberg.


  • Chinese President Xi said China will strengthen anti-monopoly efforts, according to Reuters.
  • Beijing is to launch two more rounds of mass nucleic acid testing from May 1st-4th, according to Global Times. Beijing also tightened restrictions with restaurants closing dining in services and other venues operating at half capacity during the Labour Day holiday.
  • Shanghai will conduct a new round of city-wide nucleic acid and antigen testing from May 1st until May 7th and it reined in its COVID transmissions risks at the community level, while it noted 6 of its 16 districts attained zero-COVID status and a city official said 5 of the districts will be permitted to resume public transport but didn’t state when, according to Reuters.
  • US reportedly held high-level talks with the UK for the first time to explore conflict contingency plans over China’s threat to Taiwan, according to FT.
  • Click here for the US Early Morning note.


  • Bitcoin prices are marginally higher and rebounded from beneath the 38,500 level.



  • APAC stocks declined amid mass holiday closures, weak Chinese PMIs and upcoming key risk events including central bank meetings.
  • ASX 200 underperformed with all sectors pressured as yields edged higher ahead of an expected rate lift-off by the RBA tomorrow.
  • Nikkei 225 was subdued after stalling on approach to the 27,000 level and with participants tentative ahead of a three-day closure.
  • Hang Seng and Shanghai Comp remained shut due to Labour Day holidays but will reopen on Tuesday and Thursday, respectively.


  • Chinese Manufacturing PMI (Apr) 47.4 vs Exp. 48.0 (Prev. 49.5)
  • Chinese Non-Manufacturing PMI (Apr) 41.9 vs Exp. 46.7 (Prev. 48.4)
  • Chinese Composite PMI (Apr) 42.7 (Prev. 48.8)
  • Chinese Caixin Manufacturing PMI (Apr) 46.0 vs Exp. 47.0 (Prev. 48.1)