Morning Report – Tuesday 11 May
Jon Robson, Head of Trading
“Market participants are awaiting U.S. consumer price figures on Wednesday. However, the dollar will continue depreciating further until there is data to suggest that last Friday’s disappointing payroll report for April was an anomaly. For now, investors are focussing on currencies where a central bank pivot has already occurred, such as the Canadian dollar, Norwegian krone and sterling.”
U.S. health regulators have for the first time cleared a Covid-19 vaccine’s use in children, paving the way for many to be immunised before summer camps and the start of the next school year. The FDA’s decision Monday widens the Pfizer-BioNTech vaccine’s use to children as young as 12. Meanwhile, new coronavirus infections in the US have fallen to the lowest level in 11 months. More than 152m Americans have now received at least one dose of a coronavirus vaccine and 34.8 per cent of the total population has been fully vaccinated.
Today the Queen will set out the legislation that Boris Johnson hopes will pave the way for him to win a second full term as prime minister. The Prime Minister will to press ahead with scrapping fixed five-year terms between elections, freeing him up to call an earlier poll before before December 2024. It is expected among 25 Bills that will be pledged for introduction in Parliament in the coming year, including flagship reforms to the NHS, an overhaul of the planning system and a crackdown on crime.
Sterling is lower against most major currencies this morning. Britain’s current-account shortfall, the difference between money coming into the U.K. and money going out, is starting to worry economists and stoke concerns about the pound. The gap is forecast to reach its widest since World War II this year as Britain grapples with post-Brexit ties with the European Union and an imports-fueled rebound from the pandemic.
The euro is stronger versus most majors overnight. More than 2,000 people have arrived on the Italian island of Lampedusa in 24 hours as people smugglers took advantage of calm seas to launch at least 20 boats. Elsewhere, Norway’s expert committee on vaccination advised the government on to use neither the Oxford/AstraZeneca nor the Johnson & Johnson jab for its immunization drive. The decision is based on the reports of rare blood clots with low platelets but also takes into consideration the stable and low case count in Norway.
The dollar is lower against the euro and higher against the pound in early morning trade. Hacking victim Colonial Pipeline said it’s manually operating a segment of its crucial fuel artery and expects to substantially restore all service by the weekend. The White House has opened a debate over the merits of companies making ransom payments to cyber attackers. Joe Biden said Russia has “some responsibility” to crack down on those who conducted the Colonial Pipeline cyberattack.
Asian stocks and U.S. equity futures slid Tuesday following a technology-led Wall Street tumble as surging commodity prices stoked concern about inflation. Other assets were steady. MSCI Inc.’s Asia-Pacific share index fell the most since March, with tech stocks underperforming. Japan and Hong Kong bore the brunt of the selloff, while China reversed earlier losses. Nasdaq 100 futures retreated as much as 1.4% after the index slid on concerns that inflation could drive up interest rates, weighing on equity valuations. S&P 500 contracts dropped after the gauge fell from an all-time high. Oil dipped as traders monitored progress on reopening the largest U.S. oil-products pipeline. The spotlight remains on whether the latest surge in commodity prices will stoke inflation. Data showed China’s factory-gate prices rose more than expected in April.
Main Economic Data/Central Banks/Government (All Times CET)
9:00 a.m.: Turkey’s March industrial production
9:00 a.m.: Hungary’s April CPI
9:00 a.m.: Netherlands sells bonds
10:00 a.m.: Italy’s March industrial production
10:30 a.m.: Spain sells bills
11:00 a.m.: Germany’s ZEW survey for May
11:00 a.m.: Norway finance minister presents revised budget
4:30 p.m.: BOE’s Bailey speaks on Libor
U.K. Queen delivers speech
OPEC monthly oil report; EIA short-term energy outlook
Earnings include Hochtief, Salvatore Ferragamo, SoftBank Corp., Takeda, EA, Palantir, E.on, Nissan, Quantumscape, Opendoor Technologies, Aramark