Notes/Observations
- Most of Asia (including China, Hong Kong, Japan) is closed for holiday; most of Europe is also closed
- US/China official completed talks in Beijing; negotiation move back to Washington next week
- Focus on FOMC; potential for Fed to be more optimistic on the economic situation
Asia:
- South Korea Apr Trade Balance registers a larger-than-expected surplus as exports fall for a 5th straight month ($4.1B v $3.7Be)
- New Zealand Employment Change registered its 1st decline since 2017 (Q/Q: -0.2% v +0.5%e); odds increasing for a RBNZ rate cut
Europe/Mideast:
- ECB’s Lane (Ireland): if there were a negative Brexit outcome, there would be a big reaction in financial markets; market appears overly optimistic. Not the case that the ECB is out of options
Americas:
- White House said to have drop its cyber theft demands in effort to accelerate trade deal with China
Energy:
- Weekly API Oil Inventories: Crude: +6.8M v -3.1M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [FTSE +0.1% at 7426, S&P 500 Futures +0.3%]
Market Focal Points/Key Themes:
- The FTSE trades slightly higher this morning, in a quieter morning with the closure of many of the major European Indices for May Day holiday. US Index futures point to a higher open buoyed by stronger results from Apple, after reporting above forecasts and Q2 guidance ahead of estimates. Shares are up over 5% in the premarket.
- On the corporate front shares of Sainsbury’s trade sharply higher following strong earnings, while UK fashion retailer Next trades slightly higher on a Q1 update and affirmed outlook. Elsewhere, Orsted, London Stock Exchange and Augean are among other names rising on earnings, while Avon Rubber, GN Store Nord and RPS Group are among the names trading lower following earnings and updates.
- Elsewhere Lloyds Banking shares rise after revising its capital guidance; with Just Eat and Forrexpo trading lower following analyst downgrades.
- Looking ahead notable earners include CVS, Johnson Controls, Estee Lauder and Humana among others.
Equities
- Consumer discretionary: Sainsbury’s [SBRY.UK] +4.7% (Earnings), Next [NXT.UK] +0.3% (Earnings), Just Eat [JE.UK] -2.0% (Analyst downgrade)
- Materials: Augean [AUG.UK] +11% (Trading update),
- Energy: Orsted [ORSTED.DK] +1.7% (Earnings), Sound Energy [SOU.UK] +6% (Tendrara gas sales update)
- Financials: Lloyd’s [LLOY.UK] +1.4% (Adjustments to capital guidance), LSE [LSE.UK] +2.1% (earnings)
- Healthcare: Ambu A/S [AMBUB.DK] -0.5% (Earnings)
Speakers
- ECB’s De Guindos (Spain): Financial stability is more challenging; consolidation remains necessary. Low interest rate environment would be with us for the foreseeable future caused by structural factors. Both national and cross border consolidation are potentially viable
- UK Labour Shadow Business Sec Long-Bailey: Cross-party talks have been positive but still waiting to see if Govt moved from some issues
- Treasury Sec Mnuchin reiterated that had productive talks in Beijing on the trade front; negotiations to resume back in Washington next week
Currencies/ Fixed Income
- FX markets were listless with many trading centers closed for holiday.
- USD remains slightly on the defensive for the time being with focus shifting to the FOMC decision later today. Dealers noted that the greenback could recover some lost ground if the Fed became more optimistic on the economic situation
- EUR/USD holding above the 1.12 level while the GBP/USD was higher by 0.2% at 1.3070 area.
- NZD currency was softer after New Zealand employment data sparked further speculation that the RBNZ could cut rates as soon as next week. NZD/USD lower by 0.2% at 0.6655 area.
Economic Data
- (UK) Apr Nationwide House Prices M/M: 0.4% v 0.1%e; Y/Y: 0.9% v 0.7%e
- (AU) Australia Apr Commodity Index: 122.2 v 122.1 prior
- (NL) Netherlands Apr Manufacturing PMI: 52.0 v 52.2e (68th month of expansion)
- (UK) Apr UK PMI Manufacturing: 53.1 v 53.1e (33rd month of expansion)
- (UK) Mar Net Consumer Credit: £0.5B v £1.0Be; Net Lending: £4.1B v £3.6Be
- (UK) Mar Mortgage Approvals: 62.3K v 64.5Ke
- (UK) Mar M4 Money Supply M/M: -0.5% v +0.3% prior; Y/Y: 2.2% v 1.3% prior; M4 Ex IOFCs: 0.7% v 2.4% prior
- (DK) Denmark Apr PMI Survey: 59.6 v 56.6 prior
Fixed Income Issuance
- None seen
Looking Ahead
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Apr 26th: No est v -7.3% prior
- 07:00 (UK) Weekly PM May question time in House of Commons
- 08:00 (UK) Baltic Bulk Index
- 08:15 (US) Apr ADP Employment Change: +180Ke v +129K prior
- 08:30 (CA) Canada Mar MLI Leading Indicator M/M: No est v 0.0% prior
- 08:30 (US) Treasury quarterly refunding for 3-year, 10-year and 30-year bonds for week of May 6th
- 09:30 (CA) Canada Apr Manufacturing PMI: No est v 50.5 prior
- 09:45 (US) Apr Final Markit Manufacturing PMI: 52.4e v 52.4 prelim
- 10:00 (US) Apr ISM Manufacturing: 55.0e v 55.3 prior; Prices Paid: 55.0e v 54.3 prior
- 10:00 (US) Mar Construction Spending M/M: 0.0%e v 1.0% prior
- 10:30 (US) DOE Weekly Oil Inventories
- 14:00 (US) FOMC Interest Rate Decision: expected to leave Interest Rates unchanged at 2.25-2.50% range; Leaves Interest Rate on Excess Reserves (IOER) unchanged at 2.40%
- 14:30 (US) Fed Chair Powell post rate decision press conference
