Original insights into market moving news

[PODCAST] EU Open Rundown 16th April 2019

  • Asian indices are marginally firmer as the region eventually shrugged off the lacklustre sentiment from Wall St. following mixed earnings
  • In FX, AUD declined on dovish RBA minutes while DXY attempted to reclaim the 97.00 level
  • Looking ahead, highlights include UK Jobs report, German ZEW, US Industrial Production, APIs, ECB’s Lane, Fed’s Kaplan, supply from the UK
  • Earnings: IBM, Johnson & Johnson, Netflix, UnitedHealth Group, CSX, Bank of America, BlackRock



Asian equity markets were mostly higher after the region eventually shrugged off the lacklustre lead from the US where mixed earnings from the large banks dampened risk appetite. ASX 200 (+0.4%) and Nikkei 225 (+0.2%) were initially cautious although sentiment gradually improved with Australia supported amid dovish views on the RBA and with Rio Tinto shares unfazed by weaker production numbers, while the Japanese benchmark just about remained afloat as several telecom names outperformed following reports NTT DoCoMo is to reduce mobile phone rates by as much as 40%. Hang Seng (+0.7%) and Shanghai Comp. (+1.1%) opened lower amid the early cautious tone across the region and tentativeness ahead of key Chinese data including GDP, Industrial Production and Retail Sales which are all due out tomorrow, although Chinese markets steadily improved to outperform their peers in the aftermath of the PBoC’s first liquidity injection in almost a month. Finally, 10yr JGBs were flat amid the indecisiveness in the region and uneventful price action in T-notes, while mixed results at the 20yr auction also failed to spur demand.

PBoC injected CNY 40bln via 7-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.7097 (Prev. 6.7112)

Chinese House Prices (Mar) Y/Y 10.6% (Prev. 10.4%). (Newswires)


Cross-party talks between the UK government and Labour to solve the Brexit deadlock will continue throughout the Easter recess. (Independent)

ECB's Villeroy said the Euro area is facing domestic and global headwinds that should gradually fade, while he also commented that Euro area inflation is expected to fall over course of 2019 on the back of crude price drop and that he is committed to keep ample monetary accommodation for as long as is necessary to reach inflation target. (Newswires)


The DXY attempted to reclaim the 97.00 level to the upside as it benefitted from the initial weakness across its major counterparts including EUR/USD which briefly slipped below near-term support and its 50DMA around 1.1300, while GBP/USD retreated from resistance at 1.3100 although a large option expiry of GBP 1.6bln at the aforementioned level helped limit the downside. USD/JPY mirrored the early indecision and CAD was pressured after the Business Outlook Survey indicator slipped into negative territory, while AUD/USDgradually declined following the RBA minutes which reiterated the board saw no strong case for a near term move in rates but was downbeat on inflation and suggested that a rate cut would be appropriate if inflation stayed low and unemployment trended up. In addition, Westpac reiterated its call for August as the most likely time for RBA rate cut and RBNZ Governor Orr also affirmed that a monetary policy easing bias remains in place, while Barclays was sceptical and maintained its view for no rate cuts from both central banks as it sees this week’s New Zealand inflation data and Australian employment figures unlikely to support the case for lower rates.

RBA Minutes from April 2nd meeting stated the board saw no strong case for near term move in rates but added that a rate cut would be appropriate if inflation stayed low and unemployment trended up, while the likelihood of a near-term rate hike was low given subdued inflation. The board also agreed inflation likely to stay muted for some time and expects further gradual progress on unemployment and inflation. (Newswires)


Commodity prices were uneventful amid the mostly indecisive risk tone seen during Asia hours with WTI crude future subdued as participants look ahead to the latest API inventory numbers for want of a better catalyst, while the EIA was also reported to see shale oil output rising by 80k bpd to 8.46mln bpd. Gold prices remained dispirited from its recent fall from USD 1300/oz and copper prices conformed to the lacklustre tone seen across the complex ahead of looming GDP and Industrial Production data from China.  


Yields started the week off higher on US/China trade deal optimism, but the rise was modest and after testing fresh 3.5 week highs, in quiet conditions in a holiday-shortened week, yields drifted lower for the TPLEX to finish slightly higher by settle. US T-note futures (M9) settled 2 ticks higher at 123-05.

Fed's Evans (voter, neutral) said risks from downside scenarios currently loom larger than those from the upside. (Newswires)

Fed's Rosengren (voter, hawk) said the Fed is waiting to see evidence inflation will reach 2% target and commented that the combination of low inflation and low interest rates means Fed has little room to respond during a downturn. Rosengren also commented we are likely to reach 0% interest rates in a ‘garden-variety’ recession and that the Fed should not use negative interest rates as policy tool in the next downturn. (Newswires)

EU movers: Swatch +0.9% Atlantia +0.7% Carnival -3.5% Infineon -3.5% Dialog Semiconductor -3.5% SAP -3.5% Ocado -1.6%