In a quiet start to the week following last week’s surprisingly strong rebound which followed a stronger than expected jobs report (perhaps to demonstrate that good news is once again good news), Japan stocks continued to sink as the USDJPY dropped to fresh lows, while commodities declined for a fifth day as the supply glut from crude to copper weighed on prices, dragging down commodity currencies. European equities rose, rebounding from a one-month low.
Crude fell in early trading after Saudi Arabia’s deputy crown prince said last week the kingdom will only arrest production if Iran does, although it has since posted a modest rebound, while copper dropped to a one-month low. European stocks advanced after trading at their lowest valuations in more than a year relative to U.S. equities, even as France’s phone companies tumbled after a deal to consolidate the nation’s telecommunications industry fell apart.
“Three of the major commodities oil, gold and copper have all retraced in recent days,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S told Bloomberg. “Saudi Arabia caused a major upset on Friday by saying that a freeze deal was conditional of Iran joining which will not happen at this stage.” Copper and industrial metals have been hurt on concern China’s investment-led economic boom won’t be enough to avoid more cutbacks, he said.
In key macro news, Euro-area unemployment dropped to 10.3% in February down from an upwardly revised 10.4%, and the lowest level since 2011, in line with estimates. “I see this number as a movement sideways,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “This is a reflection of what is happening in the economy. Growth has clearly weakened in the second half of last year and the first quarter of this year will also probably be a bit weaker.”
Youth unemployment remained disturbingly high, with 21.6% of Europeans under 25 unemployed, just modestly lower than the 22.7% a year ago.
In other news, Eurozone producer price inflation also dropped, this time by -0.7%, and down -4.2%, to the most negative annual increase since the financial crisis.
The Stoxx Europe 600 Index added 0.8%, after being in the red earlier, while futures on the Standard & Poor’s 500 Index gained 0.2% despite the GAAP PE multiple on the S&P hitting approaching 24, the highest level since the dot com era. While U.S. stocks erased annual losses and closed at their highest level of the year on Friday, the rebound in European shares has stalled for more than two weeks. With a valuation of about 14.7 times estimated earnings, the Stoxx 600 traded at its lowest level since January 2015 relative to the S&P 500 on Friday.
This is where markets stood as of this moment:
- S&P 500 futures up 0.2% to 2068
- Stoxx 600 up 0.8% to 336
- FTSE 100 up 0.3% to 6165
- DAX up 0.3% to 9829
- German 10Yr yield down less than 1bp to 0.13%
- Italian 10Yr yield up less than 1bp to 1.23%
- Spanish 10Yr yield up 1bp to 1.45%
- S&P GSCI Index down 0.3% to 315.5
- MSCI Asia Pacific up 0.3% to 126
- Nikkei 225 down 0.3% to 16123
- S&P/ASX 200 down less than 0.1% to 4995
- US 10-yr yield down 1bp to 1.76%
- Dollar Index up 0.13% to 94.74
- WTI Crude futures down 0.7% to $36.53
- Brent Futures down 0.3% to $38.55
- Gold spot down 0.4% to $1,217
- Silver spot down 0.6% to $14.96
Top News:
- Orange-Bouygues Deal Collapse Ends Months of Tense Diplomacy: Deal to consolidate French telecom industry proved too complex; government demands on price, governance were late obstacle
- Alaska Air Said Near Accord to Buy Branson’s Virgin America: Negotiations are advanced, deal could face regulatory scrutiny after wave of combinations; JetBlue Airways was said to be other competitor in bidding; Alaska Air Seen Winning Virgin America for ~$2.5b Cash: WSJ
- World Leaders Hid Wealth Via Shell Companies, Report Alleges: Leaked files from Panama law firm show web of hidden wealth, International Consortium of Investigative Journalists says
- Bank of Tokyo-Mitsubishi Mulls U.S. Regional Banks in Growth Bid: U.S. banking market remains aa focus because of size and steady growth as lender wants to be among top 10 U.S. banks by deposits
- Biggest Ever Saudi Overhaul Targets $100 Billion of New Revenue: Levies on expats, energy, luxury goods, sugary drinks seen; plan is to boost non-oil revenue to balance budget by 2020
- Amtrak Resumes Service After Fatal Crash Slows Northeast Trains: To restore regular train service today in Northeast after crash that killed 2 railroad workers near Philadelphia
- Blackstone to Buy HPE’s Stake in Mphasis for $825m: To buy at least 84% of HPE’s stake for 430 rupees/share, remaining 16% will be bought through mandatory tender offer
- SoftBank’s Arora Said in ‘Active’ Talks With Yahoo: N.Y. Post: SoftBank President Arora said to be in talks with Yahoo’s board, including CEO Marissa Mayer
- Trump Back on Attack Demanding Kasich Exit, Predicting Recession: Trump demanded competitor John Kasich drop out of the Republican presidential race and asserted U.S. is headed for a “very massive recession”
- Top JPMorgan Treasuries Trader’s Exit Said to Draw SEC Inquiry: Regulators examining alleged policy breaches that prompted JPMorgan’s U.S. head of government-bond trading and another employee to leave firm this year, according to person briefed on the matter
- ‘Batman v Superman’ Rules Box Office for Second Weekend: movie registered hefty sales amid light competition from new releases
Looking at regional markets, we find that Asian stocks trade mostly positive following last Friday’s gains on Wall St. where stronger than expected NFP and Average Hourly Earnings data lifted sentiment, despite weakness across the commodities complex. This saw the ASX 200 (+0.05%) underpinned from the open with participants also short-covering following last week’s declines. Nikkei 225 (-0.25%) saw indecisive price action as a firmer JPY weighed on sentiment, while trade in the region was also thin with China, Hong Kong and Taiwan markets closed for Ching Ming festival. 10 year JGBs traded higher amid indecisiveness in riskier assets while the BoJ also entered the market to purchase about JPY 1.2trl of government debt.
Top Asian News
- Goldman Says Sell Asia Currencies After Best Rally Since ’08: Predicts yen plunge to 130/dollar, yuan at 7 in 12 mos.
- BOJ Negative Rates Risk Destroying Loan Market as Freeze Deepens: Call market activity at record low 2 mos. after shift
- Japan Inc. Inflation Expectations Decline as Confidence Wanes: Cos. cut forecasts for inflation for next 5 yrs from now
- Honda Fit Fires, Collisions Prompt at Least Sixth Major Recall: Co. recalls more than 283,000 Fits, Vezels in Japan
- SunEdison Said to Seek Buyers for 1GW of India Solar Projects: Developer has 1,060MW of unbuilt solar projects in India, BNEF says
European equities have seen a downbeat start to the week in terms of newsflow, despite modest upside in Euro Stoxx (+0.2%), with significant underperformance seen in French telecom names after collapse of the potential deal between Orange (-5.5%) and Bouygues (-14.6%), with the likes of Iliad (-14.3%) and Numericable (-14.1%) also suffering as a consequence.
The German curve has reversed some of the initial flattening bias, with Bunds consequently moving off the best levels to trade near unchanged levels even as peripheral bond yield spreads remained broadly wider. GR/GE lOy spread widened by over 10bps even as the head of the IMF dismissed reports that the body is trying to push Greece towards default as “simply nonsense”. At the same time, market participants had to contend with a large slate of EUR denominated corporate supply, with the likes of Fedex and Credit Suisse due to price.
Dovish rhetoric from ECB’s Praet who said that the central bank will act forcefully to low inflation if conditions warrant did little to drive Bunds, with GE/UK spread widening amid the release of better than expected UK construction PMI data
Top European News
- Praet Says ECB Will React ‘Forcefully’ to Low Inflation If Needed: Says “prolonged period of low inflation we are in today has increased the risks that inflation misses might become persistent”
- SocGen Plans to Cut About 125 Jobs in France, Mostly in Trading: Plans cuts in France, mostly at trading operations as harsher capital rules put profitability under pressure
- Melrose Said to Drop Out of Race for Philips Lighting Unit: Likelihood of IPO increases even as sale process continues
- Greece’s Euro Future May Be Back in Play If Rescue Talks Drag On: Creditors resume talks in Athens on bailout program; pensions, tax policy remain obstacles, EU officials say
- Lagarde Says IMF Greek Deal Far Off as Talks Roiled by Leaks: Rebuffed Greek calls to replace top officials overseeing country’s bailout, said IMF is “a good distance away” from agreement that would allow for additional loans
- Banks, Investors Push EU to Fix Flaws in ABS Market Revival Plan: 32 Banks, asset managers and groups issue joint note on plan; signatories to letter include HSBC, BlackRock, UniCredit, BBVA
In currencies, the USD has seen modest gains today, notably against the commodity currencies and the JPY. The Aussie weakened 0.8 percent to 76.17 U.S. cents, after climbing 2.3 percent last week. Retail sales were little changed in February from a month earlier, a report showed, missing economists’ forecast for a 0.4 percent gain. The nation’s central bank reviews monetary policy on Tuesday, when it’s expected to hold borrowing costs at a record low.
The yen added 0.1 percent to 111.54 per dollar after jumping 0.8 percent on Friday amid the greenback’s retreat. The won strengthened 0.7 percent. The ruble sank 1.5 percent, falling for a second day and South Africa’s rand slid 0.5 percent, leading declines in developing-nation currencies. India’s rupee climbed to the highest this year before foreign investors bid for quotas on the country’s bonds.
In commodities, WTI and Brent have both seen positive trade in mid European trade with WTI finding support at USD 38.20/bbl with the next level in focus on the upside being USD 37.00/bbl. Gold has also seen an uptick in prices after falling earlier in the session and gapping down at the open. Silver also has recovered slightly after falling in the Asian and Early Eu session but there is a key resistance level higher a USD 15.2020/oz. Meanwhile Copper prices were subdued and remained near a monthly low with a lack buyers due to holidays in the Asia including largest consumer China on a technical note there is a key support level for Copper at around the 214.90 level which also coincides with an upward trendline on the daily chart where prices first made its lower highs. In base metals Zinc, Tin and Lead are all following in the same direction with prices edging lower.
Bulletin Headline Summary from RanSquawk and Bloomberg
- French telecom names lead the way lower for European equities, while Bunds fail to gain from risk off sentiment.
- Commodity linked currencies experiencing modest weakness amid downside in the energy and metals complexes, with AUD continuing to underperform after the downbeat data from overnight.
- Looking ahead, highlights include US Factory Orders and Durables Goods with speakers including Fed’s Rosengren (Voter, Dove) and Kashkari (Non-Voter, N/A)
- Treasuries little changed, European equity markets rise and Asian markets fall (China closed), oil higher in overnight trading. Today’s economic data includes factory orders, Labor Market Conditions Index.
- Societe Generale SA said it plans to cut about 125 jobs in France, mostly at its trading operations, as stricter market regulations squeeze profitability
- Euro-area unemployment retreated in February to 10.3%, the lowest since 2011, continuing its slow decline as the economy grows at a modest pace
- EU efforts to revive the asset-backed securities market and boost financing for small businesses could falter if repairs aren’t made to its plan for a new class of “simple, transparent and standardized” products, some of the biggest financial firms in the 28-nation bloc said
- Copper is heading for its longest losing streak in two years amid concern a glut will persist as miners press on with cost cuts and banks such as Barclays Plc see more losses
- Gold’s biggest quarterly surge since 1986 has all but erased losses the Bank of Russia suffered by mounting a rescue of the ruble more than a year ago.
- The freeze in Tokyo’s market for overnight loans looks set to extend into a third month as the Bank of Japan’s negative rate policy makes it harder for brokers to price and process transactions
- Leaked files from a Panama law firm that creates shell companies show that politicians, criminals and celebrities worldwide have used banks and shadow companies to hide their finances
- Iceland PM Gunnlaugsson faces a no confidence vote in parliament amid revelations he had an investment account in the British Virgin Islands created with the aid of the Panama-based law firm at the center of a global tax evasion leak.
- Sovereign 10Y bond yields mostly steady; European and Asian equity markets mixed (China, Hong Kong, Taiwan closed); U.S. equity-index futures rise. WTI crude oil rises; gold and copper move lower
US Event Calendar
- 9:45am: ISM New York, March, est. 54.1(prior 53.6)
- 10:00am: Labor Market Conditions Index Change, March (prior -2.4)
- 10:00am: Factory Orders, Feb., est. -1.8% (prior 1.6%)
- Factory Orders Ex Trans, Feb., est. -0.5% (prior -0.2%)
- Durable Goods Orders, Feb. F, est. -2.8% (prior -2.8%)
- Durables Ex Transportation, Feb. F, est. -1.0% (prior -1%)
- Cap Goods Orders Non-def Ex Air, Feb F (prior -1.8%)
- Cap Goods Ship Non-def Ex Air, Feb F (prior -1.1%)
Central Banks
- 9:30am: Fed’s Rosengren speaks in Boston
- 7:00pm: Fed’s Kashkari speaks
DB’s Jim Reid completes the overnight wrap
This week we’ve got the usual post-payrolls lull in the data but there are still a couple of events which will have some bearing on the near-term direction for markets. The first is on Wednesday evening where we’ll get the March FOMC minutes to comb through. Given the range of dovish (mainly Yellen) and hawkish (Bullard, Lacker, Lockhart, Williams) Fedspeak of late it’ll be interesting to see what clues the minutes throw up. Also potentially interesting this week is a panel interview on Thursday evening which will see current Fed Chair Yellen participate along with former Chairs Bernanke, Volcker and Greenspan.
With that to look forward to, this morning in Asia, with China and Hong Kong closed for holidays it’s been a bit of slow start with most of the price action relatively benign. In Japan we’ve seen the Nikkei (-0.18%) and Topix (+0.10%) trade between gains and losses for the most part, while elsewhere the Kospi is +0.14% and the ASX +0.19%. Credit markets are a touch tighter generally. In the FX space the Aussie Dollar is slightly weaker post some softer than expected retail sales numbers in Australia.
Moving on. News flow over the weekend and this morning has been fairly light but one story which has attracted some attention is coming out of the talks between Greece and its Creditors. Greek PM Tsipras is said to have questioned the credibility of the negotiations following the release of a leaked transcript in which negotiations were said to be ‘difficult’. In an FT article this morning IMF Chief Lagarde is said to have responded to claims that the Fund was looking to push Greece towards default as a negotiating tactic as being false. Lagarde did however say that in her view a coherent program for Greece was ‘still a good distance away’ and the weekend’s incident ‘has made me concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side’.
Reversing gear now and quickly recapping that data from Friday. In terms of the March employment report in the US, headline non-farm payrolls printed at a slightly higher than expected 215k (vs. 205k expected). That follows a 245k reading in February which was revised marginally higher on Friday. That takes the Q1 average to 209k which compares to the average monthly reading of 229k in 2015. There was good news also in the average hourly earnings numbers which rose a greater than expected +0.3% mom (vs. +0.2% expected) last month, which has had the effect of lifting the YoY rate one-tenth to +2.3%. Meanwhile, the labour force participation rate edged up one-tenth to 63.0% (highest in two years) which was seen as causing the U-3 unemployment rate to nudge up one-tenth to 5.0%. There was also no change in average weekly hours worked at 34.4hrs after expectations had been for a slight increase.
Away from the employment numbers, the March ISM manufacturing print rose a better than expected 2.3pts last month to 51.8 (vs. 51.0 expected) which is the first reading greater than 50 since August last year. New orders (+6.8pts to 58.3) were a big standout in the data with that index alone at the highest level since November 2014. That said there was a slightly softer employment component in the data which was also evident in the payrolls data for the sector. It’s worth noting that tomorrow will see the confirmation of the March non-manufacturing index reading which is expected to rise to 54.1. Should that be the case, then the spread between the two last month of 2.3pts would be the least since December 2014 (when the spread was 2pts). Meanwhile, also of note on Friday was an upward revision to the final University of Michigan consumer sentiment print last month by 1pt to 91.0. The manufacturing PMI was also nudged up 0.1pts in the final read to 51.5, however there was less good news in the construction spending numbers in February when spending was said to have decreased -0.5% mom (vs. +0.1% expected). Finally, towards to the end of Friday we also saw some disappointment in the latest US vehicle sales numbers where sales were said to have fallen back to 16.5m saar in March from 17.4m in the prior month (expectations had been for little change). While the early Easter holiday period played a part, vehicle sales have now been in a downward trend since the recent high in October last year.
In terms of the price action, risk markets had initially weakened post the flow of economic data on Friday but that was quickly reversed and markets traded firmer right up until the closing the bell. The S&P 500 eventually finished with a +0.63% gain to kick off the new month which means the index gained +1.81% over the past week. Credit markets also had a strong session on Friday with CDX IG closing 3bps tighter. The Dollar was volatile but ultimately ended up flat on Friday which means the Dollar index was down a steep 1.72% last week, the second worst week this year. US Treasuries also chopped around but the end result being little change with the benchmark 10y currently sitting at 1.765% this morning. Comments from the Fed’s Mester added little to the recent debate with the Cleveland Fed President suggesting that she sees the US economy as evolving in a way that would mean rate hikes are appropriate this year, but refusing to comment on her thoughts on potential timing.
Interestingly, the moves for risk assets in the US on Friday came despite the backdrop of a steep leg lower for Oil markets. WTI ended the week with a -4.04% loss on Friday to close at $36.79/bbl (and is down further this morning) which is the lowest closing price since March 3rd. In fact prices are now down close to 15% from their highs of last month and ahead of the upcoming meeting between producers in Doha on the 17th of April, for which expectations of a positive outcome appear to diminishing quickly. Friday’s move seemingly came about on the back of comments from Saudi Arabia’s deputy Crown Prince who said that the nation will only freeze output should Iran follow suit. This of course comes following the remarks from Iran’s oil minister who downplayed the possibility of the nation freezing current production levels.
Those declines for Oil on Friday weighed most heavily on European equity markets where we saw the Stoxx 600 tumble -1.30%, despite a late effort to bounceback into the close. That concluded a third consecutive weekly decline for the index. Prior to that we had seen some supportive manufacturing PMI numbers in the region with the Euro area print in particular revised up 0.2pts at the final read to 51.6.
As usual we’ll also be keeping a close eye on the latest chatter out of Fed officials. Kashkari and Evans are due to speak on Tuesday with Mester on Wednesday. We then hear from Kaplan early on Thursday before Fed Chair Yellen is scheduled to speak in a discussion with Bernanke, Greenspan and Volcker on Thursday evening. The Fed’s George will speak on Friday. Over at the ECB we’ll hear from Praet and Constancio during the week, as well as ECB President Draghi on Thursday at a presentation in Lisbon.
Запись Global Stocks Rise, Europe Rebounds As Oil Halts Decline впервые появилась crude-oil.top.