Original insights into market moving news

[PODCAST] EU Open Rundown 4th April 2019

  • Asian indices were mixed with sentiment kept afloat by US-China trade optimism; notably, speculation around an imminent sign-off date for a deal
  • MPs narrowly approved a bill to prevent a no-deal Brexit, but rejected restricting extension date to before May 22nd & further indicative votes
  • Looking ahead, highlights include German Industrial Orders, ECB Minutes, US Initial Jobless Claims, RBI Rate Decision, Fed's Williams, Mester & Harker, supply from Spain & France



Asian equity markets traded cautiously with the region tentative ahead of looming risk events and after a positive lead from Wall St. where US-China trade optimism kept stocks afloat despite poor ISM & ADP data. ASX 200 (-0.9%) and Nikkei 225 (Unch.) were subdued with broad weakness seen across all sectors in Australia as the post-budget euphoria faded and profit-taking set in following a 7-day win streak, while the Japanese benchmark was indecisive amid a choppy currency. Chinese markets were mixed ahead of an extended weekend in which the Hang Seng (-0.4%) stalled after it briefly rose above 30k for the first time since June last year, while the Shanghai Comp. (+0.6%) was boosted on hopes US and China are nearing a trade deal and with reports also suggesting a Trump-Xi meeting date to sign off on a deal could be announced as early as today. Finally, 10yr JGBs were lower as prices tracked the recent weakness in T-notes and as Japanese stock markets held above water for most the session, while mixed results at the 30yr auction also failed to spur demand.

PBoC skipped open market operations and are net neutral for the week vs. last week's CNY 110bln net drain. (Newswires) PBoC set CNY mid-point at 6.7055 (Prev. 6.7194)

Chinese Vice Premier Liu He will meet with US President Trump after the trade discussions today, while it was also reported that US and Chinese officials are still discussing when their leaders can meet to sign off on a trade deal and that a meeting date could be announced as soon as Thursday according to sources familiar with the plans. (Newswires/WSJ)

US Agriculture Secretary Perdue says US-China trade talks are down to the last few days. Perdue also commented that the US wants binding China pledges which are enforced by tariffs with a target of 2025 for China to meet trade pledges, while the US also wants a timetable for China purchases and market access. (Newswires)


UK lawmakers voted (313 ayes vs. 312 noes) to approve the EU Withdrawal Bill which requires UK PM May to seek an extension of Article 50 to prevent a no-deal Brexit. In terms of the key amendments, UK parliament rejected the Benn Amendment which would have held indicative votes on Monday after a tie of (310 vs. 310) and rejected Amendment 1 (123 ayes vs. 488 noes) which was tabled by Brexiteers and would have seeked to ensure Brexit occurs before May 22. (Newswires)

UK PM May will reportedly pave the way for a longer extension next week in the event she cannot secure her deal and the UK would participate in European Parliament elections in that scenario, according to a Telegraph reporter. (Telegraph) UK PM May could request a 9-month extension to Brexit during upcoming EU summit according to The Sun. In addition, it was also reported that 15 more Brexiteer Ministers including 5 from the Cabinet are said to be on the edge of resigning in a mass protest against PM May's softer Brexit bid, according to The Sun's Political Editor Tom Newton Dunn. (Newswires/The Sun)

UK Chancellor Hammond said Brexit delay will inevitably be long and UK will have to prepare to take part in European elections, while he added that the Cabinet is hoping UK will be allowed to leave the EU earlier if a deal is passed in the coming months. Furthermore, Hammond said there is a credible case for a confirmatory referendum which deserves to be voted on in Parliament but added that he is unsure if there is a majority for a second referendum, according to ITV's Peston. (Newswires/ITV)

There were initial reports that UK opposition Labour leader Corbyn said talks with PM May went "very well" and expects more talks with the PM soon according to Daily Mirror's Pippa Crerar. However, there were later reports citing UK government sources that talks with Labour were not as productive as previously stated in which one source suggested it "did not go well". (Twitter/BuzzFeed)

DUP MP Donaldson seemed to hold out the prospect of the DUP backing a customs union, according to BBC's Northern Ireland correspondent. (BBC)

BoE Governor Carney said the risk of a no-deal is alarmingly high in which he warned could happen by accident and said that suggestions a no-deal could be managed are absolute nonsense. Furthermore, BoE's Carney said he will do everything to support the economy in the event of a no-deal Brexit but suggested the financial sector was not among the worries in a no-deal scenario, while he added that he would absolutely not stay in his post past the planned January 2020 departure. (Newswires/Sky News) 


In FX markets, the DXY was softer and eyed the 97.00 level to the downside in the wake of the prior day’s double whammy of poor data including a 19-month low US ISM Non-Manufacturing and with ADP Employment falling short of estimates ahead of the upcoming Non-Farm Payrolls. The subdued USD benefitted its major counterparts, although upside was limited by a lack of fresh catalysts in which EUR/USD oscillated within the prior day’s tight range, while GBP/USD was mildly supported after MPs voted to approve the Cooper-Letwin bill. Elsewhere, risk sensitive currencies AUD, NZD and JPY were indecisive amid a similar overnight sentiment and due to lack of data releases, while the PBoC took a swipe at the greenback and strengthened its fix accordingly.


Commodities trade was lacklustre amid the indecisive overnight risk tone which saw WTI crude futures remain flat throughout the session, while this week’s bearish inventory data including a surprise build of over 7.2mln barrels in headline DoE crude stockpiles ensured a breather from oil’s recent hot streak. Elsewhere, gold prices were uneventful with only minimal gains seen amid a softer greenback and copper trade was also uninspiring as it largely reflected the cautious risk sentiment.

CME lowered NatGas Henry Hub futures margins by 10.8% to USD 1650/contract. (Newswires) 


The constructive risk environment resulted in higher yields. The usual suspects -- optimism about the prospects of a China/US trade deal, less chance of no deal Brexit, decent services PMIs out of china and Europe, and a decent retail sales report out of the latter -- were cited, and the TPLEX was happy to look through a sub-par ADP report, and a mixed non-manufacturing ISM. Indeed, growth concerns have ebbed slightly, which is also reflected in the 3m/10yr spread remaining positive. Major curve spreads were a touch steeper. US T-note futures (M9) settled 8+ lower at 123-16.

US administration officials are said to have studied border closing options regarding the US/Mexico border in which options include a partial shutdown, while there were comments from White House spokeswoman Schlapp that progress has been made on the Mexico border issue. (Newswires)

Some on Special Counsel Mueller's team reportedly view their findings as more damaging for President Trump than Attorney General Barr revealed according to New York Times. Elsewhere, there were also reports that US House Ways and Means Committee Chairman Neal sent a letter to the IRS seeking President Trump's tax returns. (Newswires/NYT)

Fed's Kashkari (non-voter, dove) said he doesn't believe US economy is overheating or that the Fed needs to tap the brakes, while he added that the Fed should not react to noisy data by cutting interest rates now. (Newswires)

European Equity Movers this Morning: Persimmon (PSN LN) +14.0% RBS (RBS LN) +11.0% Peugeot (UG FP) +2.6% Airbus (AI…