Original insights into market moving news

[PODCAST] US Open Rundown 15th April 2019

  • A relatively cautious start to the week for European equities [Euro Stoxx 50 U/C], as the overnight optimism faded.
  • On the trade front EU countries have agreed to begin negotiations with the US; separately, the US have reportedly softened subsidies demands with China
  • Looking ahead, highlights include New York Fed Manufacturing, Fed’s Evans, BoE’s Haskel
  • Earnings: M&T Bank Corp, Goldman Sachs, Citigroup, Charles Schwab



IMF stated that global expansion continues but at a weaker pace than anticipated in October last year, while it added that risks remain tilted to the downside but sees global growth firming next year. (Newswires)


Asian equity markets began the week mostly positive as the region took impetus from last Friday’s gains on Wall St. where sentiment was underpinned by a strong start to earnings season and encouraging Chinese data. Nonetheless, ASX 200 (U/C) was dampened amid tentativeness ahead of key earnings and underperformance in gold miners, as well as trade-related news including a further decline of Chinese imports and dispute at the WTO on Australia's restriction on Chinese 5G technology. The rest of the major Asia-Pac indices are mixed as recent advances in USD/JPY fuelled the upside in Nikkei 225 (+1.4%), while Hang Seng (-0.3%) and Shanghai Comp. (-0.3%) finished lower but were initially boosted as most of the recent Chinese data surpassed estimates including New Yuan Loans, Aggregate Financing, Trade Balance and Exports with the latter at a 5-month high. Furthermore, reports the US softened its demands on China for reducing state industrial subsidies and that both sides have agreed to measures to avoid China currency manipulation, added to the hopes for a looming trade deal. Finally, 10yr JGBs were softer as they tracked the recent losses in T-notes and with demand also dampened by gains in riskier assets as well as a lack of BoJ presence in the market today.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set CNY mid-point at 6.7112 (Prev. 6.7220)

US reportedly softened demands on China for reducing state industrial subsidies as condition for a trade deal according to sources. In related news, US Treasury Secretary Mnuchin commented that both US and China are making commitments and that they are close to the final round, while he also noted also noted that imbalances must be addresses across Europe. (Newswires)

China officials told the WTO that Australia's restriction on Chinese 5G technology is discriminative and appear to violate WTO rules. (Newswires)

Chinese Commerce Ministry says they will review anti-dumping and anti-subsidy measures on distiller grains form the US. (Newswires)


US President Trump tweeted that he agrees that his personal relationship with North Korea leader Kim remains very good and that a 3rd summit between the leaders would be good. (Newswires).


US President Trump suggested the stock market would have been higher by 5000-10000 points and GDP would be well above 4% instead of 3% if the Fed had done its job correctly, while he added quantitative tightening was a killer and the Fed should have done the opposite. (Twitter)

EU countries have agreed to start trade negotiations with the US. (Newswires)


UK Chancellor of the Exchequer Hammond reportedly hinted that PM May could stay on as PM until October. (Newswires/PoliticsHome)

Former Conservative Party leader Iain Duncan Smith has called on UK PM May to resign next month and said that her timetable to resign should stand even though she has so far failed to pass the withdrawal agreement. (Guardian) Subsequently, Former UK Foreign Secretary Johnson will not push for PM May to quit her position before Brexit, friends of the current frontrunner to become Britain's next PM have told Business Insider. (Twitter)

UK Foreign Secretary Hunt states that Brexit talks with the Labour Party are more in-depth and constructive than people expected. Prior to this, UK Cabinet Office Minister Lidington said would like government and Labour to agree on a binding mechanism for a way forward, while he added there is still a possibility for customs union compromises and that the government remains against a second referendum. Lidington adds that the two sides would ‘take stock’ in 10 days and that the process could not drag out. (Newswires/BBC) ’10 days’ would approximately align with April 23rd when MPs are to return from Easter Break.

40% of CFOs expect BoE to hike rates over next 12 months vs. Prev. 58% in the prior quarter, according to a Deloitte survey. (Newswires)

ECB's Villeroy said monetary policy must stay accommodative and that there is no global recession in sight. (Newswires)

ECB's nowcasting model signalled 0.2% growth in Q1 and a possible slight slowdown in Q2, according to sources. (Newswires)

Finland Social Democrats and Nationalist Finns Party are almost tied in first place following the final results of the general election with 17.7% and 17.5% of votes respectively. (Newswires)

UK Rightmove House Prices (Apr) M/M 1.1% (Prev. 0.4%). (Newswires) UK Rightmove House Prices (Apr) Y/Y -0.1% (Prev. -0.8%)


A tepid start to the week for European equities thus far (Eurostoxx 50 Unch) after the optimism seen in Asia somewhat waned, although Japan’s Nikkei 225 closed higher by almost 1.5% amid currency tailwind. In Europe, Italy’s FTSE MIB (+0.5%) bodes well as the bourse hit eight-month highs, bolstered by banking names amidst the optimism surrounding US banks’ earnings (ahead of Goldman Sachs and Citigroup earnings today). As such the banking sector in Europe outperforms (Stoxx 600 Banks +0.9%) whilst its peers remain mixed. In terms of individual movers, France’s Publicis Groupe (+3.2%) leads the gains in the CAC 40 (+0.1%) on the back of an optimistic revenue update, whilst also supporting its UK peer WPP (+1.3%) in tandem. Elsewhere, Covestro (-4.2%) is the marked laggard in the DAX (Unch) amid ex-dividend trade. Finally, IWG (+22.4%) rests at the top of the Stoxx 600 [Unch] after reports that Japan’s TKP are to acquire the Co.’s workspace leading unit for JPY 50bln coupled with a broker upgrade.


GBP - Sterling remains underpinned and relatively optimistic after another Article 50 extension to avoid a no deal Brexit and amidst reports that talks between the Conservative and Labour Parties have been more detailed and constructive than some expected, per UK Foreign Secretary Hunt. Cable is eyeing 1.3100 again, albeit with a hefty helping hand from a broadly soft Dollar, as Eur/Gbp trades largely sideways within a 0.8633-50 range. Technically, 1.3132 (last Friday’s high) forms nearest resistance, but data could become pivotal as the week unfolds given jobs and earnings on tap tomorrow, then CPI on Wednesday and retail sales ahead of the long Easter break.

EUR - As noted above, the single currency is also firm and outperforming the Greenback as the DXY slips a bit further below 97.000 to just under 96.800. Eur/Usd is inching towards 1.1300+ upside chart levels, like a 50% Fib circa 1.1324 and the 200 WMA around 1.1341. Note also, 2 banks are long of the headline pair and looking for sizeable rallies to 1.1650 and even 1.1800.

NZD/AUD/JPY/CHF/CAD - All narrowly mixed vs the Usd with the Kiwi and Aussie both deriving some support from reports overnight suggesting the US has relaxed some demands over Chinese industrial subsidies in ongoing trade negotiations, as Nzd/Usd hovers between 0.6763-82 and Aud/Usd in a 0.7164-80 range. However, Usd/Jpy has not advanced as much as risk-on sentiment might have suggested overnight with the pair fading just shy of the 2019 peak (112.14) amidst supply from Japanese exporters according to market contacts and now revisiting the 200 WMA (111.98). Meanwhile, the Franc is sitting tight within 1.0010-28 parameters and Loonie between 1.3320-47 ahead of the BoC’s Business Outlook Survey and against the backdrop of softer oil prices that are also undermining the NOK (sub-9.6100 vs the Eur as SEK holds above 10.4700).

EM - The Try has been hit hard again and got closer to recent lows vs the Usd in wake of latest Turkish jobs data revealing a spike in the rolling 3 month average unemployment rate to 14.7% vs 13.5% previously. The Lira has nursed some losses since on the aforementioned Buck weakness, but remains on the backfoot in a 5.7600-8115 band in stark contrast to the Rand that has extended gains through 14.0000 even though one institution is anticipating a reversal in the Zar’s fortunes and rebound to 14.2700.

SNB Chairman Jordan said he sees no reason to alter monetary policy but added that they are still willing to intervene if required. (Newswires)


The psychological 127.00 level is still capping 10yr Gilt futures with the UK benchmark extending its retreat from Liffe highs just under the aforementioned big figure (126.99) and slipping to a low of 126.69 at worst. The pull-back saw continuation trend support at 126.76 briefly breached, as positive risk sentiment pressures fixed income, and with stops noted next on the downside at 126.43. Core Eurozone debt is also hanging near lows of the day, with the German 10 yr another victim of the Chinese data driven downturn, and 164.32 highlighted as a key support level should more constructive US-China trade vibes emerge through the session.

Turning to the States, bonds and price movement has been relatively uneventful, with contracts essentially at the same level they closed at on Friday across the curve even though activity in 10 yr put options has been fairly substantial (several big blocks going through in May19 and Jun19 expiries). Ahead, traders will be keeping an eye on potential comments from Fed’s Evans for direction on a slow start to the week with only NY Fed manufacturing on the docket.


Subdued trade in the energy complex as WTI (-0.8%) and Brent (-0.8%) futures gave up some of Friday’s gains, with the latter now straddling around the psychological USD 71.00/bbl level. Friday’s CFTC data showed that hedge funds raise bullish ICE WTI crude bets by 30.7k to 281.7k lots, whilst speculators increased net long positions in Brent crude (for a fifth consecutive week) by almost 9.5k to just over 358k in the week to April 9th. Over the weekend, Russia’s Finance Minister stated that OPEC+ could decide to raise production (at the June 25/26 meeting) to fight for market share with the US. Currently OPEC+ have agreed to curb output by 1.2mln BPD until June 2019, with IFX noting that Russia’s April production fell by 150k BPD vs the benchmark October level. Back in December, Russia committed to reducing output by 228k BPD from October levels of 11.4mln BPD in a gradual manner which would take place over several months.

Elsewhere, the precious metals sector is mostly in the red with gold (-0.4%) edging lower and breaching its 100 DMA (USD 1288/oz) to the downside as last week’s Chinese data somewhat eases fears of a global growth slowdown. Meanwhile, copper (-0.3%) gave up its overnight gains as the risk sentiment became more cautious during early EU trade. Finally, Shanghai steel futures hit a seven-and-a-half year high as the alloy is supported by firm demand, whilst its base metal, Dalian iron ore futures remained near record highs on dwindling Chinese stockpiles which declined the most since 2015, according to SteelHome data.

Platts Associate Director Hickin sees Brent crude averaging close to USD 70/bbl this year, according to Business Standard. (Business Standard)

Kazakh oil output stands at 215.3K tonnes per day vs. 241.5K tonnes per day on Friday, according to sources. (Newswires)

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