EUROPEAN EQUITY OPEN: NVDA requires US licenses for H20 chip exports; ASML NA orders disappoint; HEI NA sales top forecasts slightly; RIO LN reports lower iron ore output; final EZ inflation, BoC, US retail sales, Fed's Powell ahead

• 
  EUROPEAN OPEN: European equities are opening in the red, amid risk-off driven by global trade policy concerns. APAC trading was downbeat after US President Trump's probe into critical minerals triggered fears of an expanding trade war, prompting a retreat from equities and a flight to haven assets. Chinese stocks in Hong Kong ended a six-day winning streak amid growing concerns over the US-China trade war. Tech stocks came under pressure after Nvidia (NVDA) announced that the US would require a license to export its H20 chips to China, escalating existing restrictions and highlights how the US-China trade war extends beyond tariffs. The developments overshadowed a better-than-expected Q1 GDP report out of China (recap below). Elsewhere, in Europe, data out today showed UK inflation cooled by slightly more than expected in March, however, analysts said that the data may already be somewhat stale given the significant trade/tariff updates that have occurred in recent days and weeks (see recap below). There have also been key corporates reporting in Europe, which include Heineken (HEI NA) and ASML (ASML NA), which we recap on below. Today's docket features final EZ inflation figures, a BoC policy announcement (see below), US retail sales data (see below), and remarks from the Fed Chair Powell (see below).


• 
  STOCK SPECIFICS: Of note for tech names, Nvidia (NVDA) shares fell 6.3% afterhours following an announcement that it expects Q1 FY26 charges of up to USD 5.5bln related to H20 products, following new indefinite US export restrictions to China and D:5 countries; the US now requires licences for products meeting H20 performance levels due to supercomputing risks, affecting inventory, purchase commitments, and related reserves, it said. ASML (ASML NA) Q1 net income slightly beat expectations, while revenue was a little short; bookings missed the consensus amid weak demand in the chip sector; it raised its annual dividend +4.9%; sees tariff uncertainties ahead. In consumer sectors, Heineken (HEI NA) reported a 0.9% increase in Q1 organic net revenues, exceeding expectations despite a 2.1% decline in beer volumes, driven by fewer trading days and timing of events; maintains FY profit growth guidance of +4-8% amid ongoing global trade uncertainty. In materials, Rio Tinto (RIO LN) reported Q1 Pilbara iron ore output of 69.8Mt, down 10% Y/Y due to extreme weather; Bauxite output rose 12% to 15.0Mt; aluminium was flat at 830kt; copper rose 16% to 210kt; FY25 guidance for all key commodities was affirmed, and it said major projects remain on track. Antofagasta (ANTO LN) reported Q1 copper production of 183.9kt, +20% Y/Y; gold output rose 29% to 42.9koz; FY25 copper guidance was maintained at 660–700kt and capex at USD 3.9bln; Zaldivar mine remains operational through May pending EIA approval for extension; FY25 guidance assumes uninterrupted Zaldivar operations. In energy, TotalEnergies (TTE FP) is maintaining its strategy of growing oil and gas output to fund a USD 4bln annual investment in its integrated power division, diverging from BP (BP/ LN) and Shell’s (SHEL LN) retreat from clean energy targets, FT reports.


• 
  UK INFLATION: UK CPI cooled to 2.6% Y/Y in March (exp. 2.7%, prev. 2.8%), and the core rate eased to 3.4% Y/Y (exp. 3.4%, prev. 3.5%); the services CPI measure was up +0.4% M/M (exp. 0.5%, prev. 0.5%), though the annual rate fell to 4.7% Y/Y (exp. 4.8%, prev. 5.0%). The ONS said inflation eased due to a variety of factors, including falling fuel prices and unchanged food costs; the only significant offset came from the price of clothes, which rose strongly following an unusual decrease in February. Analysts at Capital Economics viewed the March CPI dip as temporary, expecting inflation to rise to around 3.5% in the near term due to utility and water price hikes; however, they believe weak economic conditions and global disinflationary pressures will eventually push inflation lower, supporting faster interest rate cuts by the BoE.


• 
  CHINA GDP: China's GDP grew by 5.4% in Q1 (exp. 5.2%), driven by production and consumption growth. However, the economy faces challenges due to a trade impasse with the US, with calls for stimulus to counter the impact of increased tariffs on Chinese goods. Capital Economics said "policy support should continue to shore up domestic demand over the coming months," noting that the March budget allows for a further ramp up in fiscal spending, and CapEco sees further monetary easing happening soon, "perhaps as early as next Monday," which will "probably mean that growth remains above 4.0% this year, even in the face of elevated US tariffs." Elsewhere, China reported retail sales of 5.9% Y/Y in March (exp. 4.2%), and industrial output of 7.7% Y/Y (exp. 5.8%).

TODAY’S AGENDA:

• 
  DAY AHEAD: Final Eurozone HICP is expected to be unrevised at the annual level (2.2% Y/Y), while the March monthly figure is expected to be revised up to +0.6% M/M from an initially stated +0.4%. Weekly MBA mortgage applications data are due. US retail sales are seen rising 1.3% M/M (prev. 0.2%), with the core rate printing +0.3% M/M (prev. 0.3%), and the Control Group +0.6% M/M (prev. +1.0%) (primer below). US industrial output and manufacturing production data for March are seen at -0.2% M/M and +0.3% M/M respectively, while capacity utilisation is seen falling. In central banks, analysts are split on whether the BoC will opt to cut rates or leave them unchanged in today’s decision (preview below). BoC Governor Macklem and First Deputy Governor Rogers will deliver remarks in wake of the announcement. From the Fed, Chair Powell is due to speak at the Economic Club of Chicago today (see below for primer). Elsewhere, 2026 voters Hammack and Logan will also speak. In supply, Germany will sell EUR 1bln of 2052, andEUR 1.5bln of 2056 debt; the US will sell USD 13bln of 20yr bonds. Notable corporate reports due today include: CFG, USB, TRV, ABT, PLD, PGR, CSX, KMI, AA. In energy, API data reportedly showed US crude stocks posting a larger than expected build of +2.4mln bbls (exp. +0.5mln), Cushing stocks drew down by -0.3mln bbls, distillates posted a larger than expected draw of -3.2mln bbls (exp. -1.2mln), as did gasoline, where stocks drew down by -3.0mln bbls (exp. -1.6mln); the more widely followed DoE inventory report will be released later today.


• 
  PRIMER - FED CHAIR POWELL (13:30EDT/18:30BST): Fed Chair Powell is due to speak at the Economic Club of Chicago, with focus on his views regarding tariffs, given recent developments. Since Powell’s last comments on April 4th, Governor Waller (voter) has expressed dovish sentiments, favouring quicker and deeper cuts if the US pursues big tariffs. In contrast, other officials have shown caution about the impact of tariff-induced price rises. NY Fed’s Williams (voter) raised unemployment and inflation forecasts while lowering growth expectations, and Collins (2025 voter) stated the Fed would be ready to intervene to stabilise markets if necessary. Powell is likely to reiterate that Trump tariffs could lead to higher inflation and slower growth, while maintaining that the Fed is not rushing to cut rates. He is also expected to emphasise that the current policy stance remains appropriately restrictive, a slight shift from his previous “clearly” restrictive language.


• Click here for our full Powell primer. 


• 
  PRIMER - US RETAIL SALES (13:30BST/08:30EDT): The consensus looks for headline US retail sales growth of +1.3% M/M in March (prev. +0.2%), while the ex-autos measure is seen rising +0.3% M/M (prev. +0.3%), and the Control Group +0.6% M/M (prev. +1.0%). According to Bank of America’s April Consumer Checkpoint, consumers continued spending in March, but tariffs, slowing wage growth and inflation may pose headwinds ahead, it said. The bank’s data showed March card spending per household was up 1.1% Y/Y, with seasonally-adjusted card spending +0.2% M/M. BofA said higher-income households showed stronger spending growth, driven by higher after-tax wages, while tax refunds are slightly higher than last year, with a bias towards lower- and middle-income households. On tariffs, the report notes that the import content of consumer goods and services is substantial, raising the risk of price rises from higher tariffs. In its data, BofA said it finds some evidence that consumers were buying durables ahead of the introduction of tariffs, and the evidence is strongest in auto sales. “Services spending has been the mainstay of the strong overall consumer spending story in recent years,” it writes, “however, Bank of America card data indicates that ‘nice-to-have’ discretionary services spending eased in March, while more inflation-driven spending on necessities such as insurance, rent and utilities continues to rise.”


• 
  PREVIEW - BOC POLICY ANNOUNCEMENT (14:45BST/09:45EDT): Expectations for the BoC’s rate decision are split; 11 out of 29 analysts anticipate a rate cut, while the rest see an unchanged announcement. Both arguments for holding or cutting rates have merit, as the BoC has adopted a meeting-by-meeting approach. Holding rates at current neutral levels seems prudent given the uncertainty from US trade tensions. Inflation is within the BoC’s target range but has been rising, with March providing some relief. On the other hand, a rate cut could pre-emptively address growing uncertainty, as Q1 2025 surveys show rising recession fears and weak labour market data. The BoC will also release an updated Monetary Policy Report, likely adjusting forecasts due to US tariffs, which could lead to higher inflation projections and lower growth expectations as recession concerns increase.


• Click here for our full BoC preview. 

16 Apr 2025 - 08:10- EquitiesData- Source: Newsquawk