Morning Report – Monday 26 April

Jon Robson, Head of Trading

“German business sentiment has been on the rise, edging the euro towards a two-month high against the dollar. No major policy change is expected from this week’s Federal Reserve meeting, with the negative dollar trend set to continue.”

Main Headline

The White House has offered to send supplies of therapeutics, rapid diagnostic test kits, ventilators and protective gear to India, as the country of more than 1.3 billion people is in the grip of a Covid-19 surge. Export of raw materials required to manufacture vaccines, currently banned, as well as supplies relating to oxygen generation are being considered. The U.K. and Germany also pledged support and medical supplies. India reported 349,691 new coronavirus cases Saturday, marking the fourth consecutive day the country has set a global record for a single-day rise in infections.

Boris Johnson is battling to get his government back on track amid incendiary claims about his conduct during the pandemic and ongoing controversies over lobbying and cronyism. After former top aide Dominic Cummings published a blog post on Friday that alleged failings and potential rule-breaking, Labour has demanded the Electoral Commission launch a formal investigation into the refurbishment of Boris Johnson’s Downing Street flat. Meanwhile, the Daily Mail reported on Monday that the PM said last year he would rather see “bodies pile high in their thousands” than order a third lockdown. Number 10 “strongly denied” he made the comment.

GBP

Sterling is stronger against most major currencies this morning. The UK Food and Drink Federation said on Monday that the latest UK government data painted a stark picture of the challenges facing companies, and especially smaller businesses, as they grapple with new veterinary and customs checks introduced on January 1. The federation, which represents more than 800 companies, said the statistics showed that food and drink exports to the EU in February were worth £578.7m, down from £1bn in February 2020.

EUR

The euro is higher versus the dollar and lower versus other majors overnight. Von der Leyen revealed the European Union plans to open its doors this summer to U.S. tourists who’ve been fully vaccinated against Covid-19. Germany’s opposition Green Party overtook Chancellor Angela Merkel’s Christian Democrat-led bloc in an opinion poll after the group nominated Annalena Baerbock as its top candidate for the Sept. 26 national election.

USD

The dollar is lower against most majors in early morning trade. US regulators have recommended healthcare providers resume using Johnson & Johnson’s Covid-19 vaccine after concluding the benefits outweighed the risks of serious blood clotting issues. Meanwhile, two centrist senators key to negotiations over infrastructure spending signalled progress in talks but made clear they don’t support President Biden’s expansive $2.3 trillion proposal.

Markets

Stocks in Asia and U.S. and European futures were mixed Monday as investors look for clues on the economic recovery in a big earnings week and a Federal Reserve meeting. Japan’s benchmark edged up, while equities rose in South Korea and slipped in Hong Kong and China. U.S. futures fluctuated after most major groups in the S&P 500 advanced Friday. The 10-year Treasury yield ticked higher, though remained below 1.6%. Copper surged to the highest in a decade on expectations supply will tighten as the global economic recovery gains traction. Commodity currencies like the Australian dollar advanced. Oil retreated. Bitcoin bounced back above $50,000 as it recovered from the lowest in seven weeks.

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

9:00 a.m.: Spain March PPI

10:00 a.m.: Germany April Ifo Survey

11:30 a.m.: Germany sells bills

2:00 p.m.: ECB’s Panetta speaks

2:50 p.m.: France sells bills

3:00 p.m.: ECB’s Lane speaks

U.K.’s Johnson, India’s Modi hold online talks

Cabinet Secretary Simon Case takes questions over Cummings’ claims as he faces the Public Administration and Constitutional Affairs committee.

Mario Draghi appears in Parliament to discuss Covid aid spending

Bloomberg Green Summit

Iran nuclear deal joint commission reconvenes and runs through April 30

Corporate Events

Earnings include Tesla, Vale, Philips, NXP, Kuehne + Nagel

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