After a solid run-up in the previous session, gains are harder to come by today. Even so, European bourses gave it a good shot in early trade before slipping lower. The positive tone remains as investors digest a slew of corporate earnings, upbeat data and the BoE decision to reduce the pace of bond purchases.

European indices closed steeply higher on Wednesday on reopening optimism and impressive Eurozone business activity. The good news has kept on flowing today, suggesting the Eurozone economy has turned a corner.

German factory orders rose 1.5% MoM in March and saw demand rising for the third consecutive month. Orders jumped by 3%, double forecasts, highlighting the resilience of the country’s manufacturing sector even as Germany faced a third wave of Covid.

Eurozone retail sales also jumped in March as lockdown easing saw eager consumers hit the shops. Retail sales rose 2.7% MoM ahead of the 1.5% forecast, which bodes well for the coming months when more restrictions will be eased.

The UK service sector is another bright spot, where activity grew at its fastest pace in more than seven years in April as lockdown restrictions were eased. Hospitality businesses and retailers threw open their doors to the public last month for the first time this year, sending the PMI to 61. This was a sharp rise from 56.3 recorded in March, thanks to strong pent-up demand.

US indices are pointing to a subdued start after the Dow hit a fresh all-time high on Thursday. News that President Biden supports the suspension of patents on Covid vaccines was bad news for drug makers but is good news for the global economic recovery. The quicker the world receives the vaccine, the faster global economic recovery will be, and the less likely we will see a vaccine-resistant mutation.

Data wise, US challenger job cuts and initial jobless claims will be in focus, offering further clues as to the health of the US labour market ahead of tomorrow’s closely-watched non-farm payrolls.


FX – US dollar eases lower, GBP steady after BoE

The US dollar is edging lower, falling away from its two-week high reached in the previous session. Eyes remain firmly on the data ahead of Friday’s closely-watched non-farm payroll. Yesterday’s ADP data revealed that 742k jobs were created in the private sector, setting the non-farm payroll up for a potential million-plus print.

The pound has barely moved despite impressive service-sector activity data. Escalating Brexit tensions between France and the UK and the arrival of Navy patrol ships in Jersey could weigh on sterling.