Morning Report – Thursday 29 April

Jon Robson, Head of Trading

“The dollar was pinned near nine-week lows as Biden’s speech on spending intentions and Powell’s reaffirmation of the Fed’ accommodative stance gave a green light for the global reflation trade. The euro benefitted from the softening dollar.”

Main Headline

Biden addressed a joint session of Congress for the first time as president on Wednesday to pitch greater government investment to boost the economy, including his $1.8 trillion proposal for new spending on child care, education and paid leave. Speaking just ahead of his 100^th day in office, he declared that “America is ready for a takeoff,” as he used the speech to reiterate his intention to raise revenue from big business and high-income households to fund government spending.

Arlene Foster announced she will step down as the first minister of Northern Ireland at the end of June after it became known that she faced a challenge to her leadership of the Democratic Unionist party. Her departure potentially risks more instability after the Brexit settlement essentially created an economic border with mainland Britain. While Foster opposed the protocol, she did little to undermine it. Foster may be better remembered for forming a coalition that kept former-U.K. prime minister Theresa May in office back in 2017.

GBP

Sterling is stronger against most major currencies this morning. Boris Johnson is facing two new investigations into alleged donations for the refurbishment of his Downing Street residence. The Electoral Commission opened a formal investigation into whether a donation to Conservative party funds should have been declared. The second investigation into the flat will be overseen by Lord Christopher Geidt, a former private secretary to the Queen, who on Wednesday was announced as the new independent adviser on ministerial interests.

EUR

The euro is lower versus other majors overnight. The U.S. and European Union are seeking to avoid an escalation in a row over tariffs on European metals exports as the transatlantic alliance tries to repair their economic counterweight against China. Elsewhere, Brussels has announced it is putting in place tough new processes to ensure the EU’s unprecedented recovery fund is not frittered away, amid mounting concerns about the potential for fraud and waste in the €750bn programme.

USD

The dollar is higher against the euro and lower against the pound the early morning trade. In a press conference following the conclusion of policymakers’ two-day meeting, the Fed chair Jay Powell affirmed that the US central bank was not yet ready to discuss tapering its massive programme of asset purchases. The head of enforcement at the SEC, the US markets regulator, has quit just days after being appointed following criticism from a judge about her conduct during her previous work as a corporate lawyer for ExxonMobil.

Markets

U.S. equity futures jumped and Asian stocks rose, buoyed by robust earnings from technology heavyweights and the prospect of more stimulus to spur the economic recovery from the pandemic. S&P 500 and Nasdaq 100 contracts advanced, with the latter outperforming after Apple Inc. crushed revenue estimates and Facebook Inc. reported higher sales. European equity futures climbed. In South Korea, Samsung Electronics Co. beat analysts’ profit forecasts but warned of further fallout from chip shortages. Hong Kong led gains in Asia, where Japan was shut for a holiday. Treasuries dipped after rallying in U.S. hours. Crude oil extended gains on a confident outlook on demand from OPEC and its allies, despite the threat from India’s Covid-19 crisis. Commodities such as silver and copper resumed rallies.

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

9:00 a.m.: Spain 1Q Unemployment, April CPI

9:00 a.m.: Turkey April economic confidence

9:30 a.m.: ECB’s Guindos speaks

9:55 a.m.: Germany April unemployment

10:00 a.m.: Euro-Area March M3 money supply

11:00 a.m.: Euro-Area April economic, consumer confidence

11:00 a.m.: Italy March PPI

11:00 a.m.: Italy sells bonds

11:00 a.m.: ECB’s Elderson speaks

1:30 p.m.: ECB’s Weidmann speaks

2:00 p.m.: Germany April CPI

2:30 p.m.: U.S. initial jobless claims, 1Q GDP

3:00 p.m.: ECB’s Holzmann speaks

Turkey’s new central bank governor Sahap Kavcioglu holds first press conference

Corporate Events

Earnings and sales updates include Neste, Eni, Amazon, Mastercard, Comcast, Merck & Co., McDonald’s, Caterpillar, Twitter

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