Morning Report – Friday 30 April

Jon Robson, Head of Trading

“The US GDP figures surpassed expectations but did little to help a currency that has seen a fourth straight weekly decline against a basket of major peers. Instead, it will turn market participants’ eyes to the expected consumer-inflation data. The euro has consolidated near two-month highs set in the previous session.”

Main Headline

US gross domestic product grew at a 6.4% seasonally adjusted annual rate in January through March this year, the Commerce Department said Thursday. That left the world’s largest economy within 1% of its peak, reached in late 2019, just before the coronavirus pandemic reached the U.S. This marked the quickest first-quarter growth since 1984. Armed with hundreds of billions of dollars in federal stimulus money, consumers spent lavishly on goods as the economy has reopened. Personal consumption expenditures grew at a 10.7 per cent annualised pace, although spending on services was little changed.

UK Government officials have formed an advisory group from business associations, charities and trade unions to help draw up new employment advice for flexible working. Ministers have asked businesses to help draw up policies on how to make flexible working the default option for companies after the pandemic, despite concerns about the future of city centres should people stay working from home. Officials are raising questions about what hybrid working would mean for health and safety, productivity and data security.

GBP

Sterling is slightly lower against most major currencies this morning. Labour MP Margaret Hodge on Thursday wrote to Parliamentary Commissioner for Standards in the House of Commons requesting the investigation into the Prime Minister’s conduct around the funding of his government residence refurbishment. Her letter came a day after the Electoral Commission announced its own probe into the matter. Johnson has denied wrongdoing and a YouGov poll late on Thursday showed the Tories enjoy an 11-point lead over Labour

EUR

The euro is lower versus the dollar and higher versus the pound overnight. Spain has finalised its landmark plan to spend €140bn from the EU coronavirus recovery fund as Pedro Sánchez’s government seeks to respond to criticism that it has centralised control over the money and that the immediate economic impact may be less than hoped. Preliminary growth figures for the eurozone out today are expected to show the region contracted 0.8 per cent in the first quarter compared with the previous one.

USD

The dollar is marginally stronger against most majors in early morning trade. US jobless claims fell again to the lowest level since early 2020, another sign the labour market is rebounding this spring. Initial unemployment claims, a proxy for layoffs, fell by 13,000 last week to a seasonally adjusted 553,000. The latest reading marked the third straight week jobless claims were below 600,000. Meanwhile, regulators have proposed banning menthol cigarettes, targeting a flavour that makes up roughly a third of total sales in the country.

Markets

Hong Kong led regional losses and an Asia-Pacific stock gauge headed for its first drop in three days. Chinese regulators imposed wide-ranging restrictions on the financial divisions of 13 companies, including Tencent Holdings Ltd. and ByteDance Ltd., in a broadening effort to rein in the giants of the tech industry. China’s purchasing managers surveys also cooled risk appetite, pointing to slower expansion in activity. The U.S. earlier reported 6.4% annualized growth in the first quarter. Futures edged higher in Europe but fell the U.S., after another record high for the S&P 500 Index. Mixed earnings reports Thursday included disappointments for Ford Motor Co. and Twitter Inc., and gains for Facebook Inc. and Amazon.com Inc. Concerns about chip shortages erased an earnings-driven climb for Apple Inc. Treasuries were steady, while the German bund yield is hovering around the highest level in more than year. Meanwhile, copper topped $10,000 a metric ton for the first time since 2011 and crude oil dipped, trading just below $65 a barrel.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: U.K. April Nationwide House Prices

8:45 a.m.: France April CPI, PPI

9:00 a.m.: Italy March Unemployment

9:00 a.m.: Spain 1Q GDP, March Retail Sales

9:00 a.m.: Turkey March Trade

10:00 a.m.: Germany, Italy 1Q GDP

11:00 a.m.: Euro-Area 1Q GDP, March Unemployment, April CPI

11:00 a.m.: Italy April CPI

12:00 p.m.: U.K. sells bills

2:30 p.m.: U.S. March Personal Income, Spending

7:00 p.m.: Baker Hughes U.S. Rig Count

SNB’s Jordan speaks at the central bank’s annual general meeting

Germany sovereign debt rated by Fitch

Turkey bans payments in cryptocurrencies

Corporate Events

Earnings include AstraZeneca, Barclays, BBVA, Eni, Exxon, Chevron, AbbVie

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