Strong Earnings Pull FTSE 100 Higher Ahead of BoE Meet, Election Day

The blue-chip index rose 0.3%, with fashion retailer Next gaining 2.1% after it raised its profit outlook for the 2021-22 year for the second time in two months.

Engineer Melrose gained 1.2% after it said it was performing “modestly” ahead of expectations, with operating margins in the first quarter improving faster than expected.

The domestically focused mid-cap FTSE 250 index advanced 0.2%.

The BoE is expected to raise 2021 GDP forecast sharply from its previous estimate of 5% growth at 1100 GMT, and it might start to slow its pandemic emergency support.

Voters in England, Scotland and Wales head to the polls on Thursday in a series of different elections, with a vote for the Scottish parliament and one for a seat in Westminster in focus for clues to Britain’s future political landscape.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)

FTSE 100 Jumps on Boost from Miners, Banks; Croda Shines

By Devik Jain

The blue-chip index rose 1.1%, with the speciality chemicals group’s shares gaining 2.6% after it announced a strategic review of two units that cater more to industrial customers as it shifts focus to consumer-care and life-sciences sectors.

Miners provided the biggest boost to the index tracking higher metal prices. Anglo American added 2.7%, after Citigroup raised its price target. [MET/L]

Barring Virgin money, all banks gained with NatWest Group and Barclays jumping more than 2% each.

The FTSE 100 has gained 7.8% so far this year as businesses reopened after the third lockdown and improving economic data coupled with speedy vaccine rollouts and government support pointed to a strong recovery from the pandemic crash last year.

However, concerns that central banks might put a lid on their policies as economies reopen and inflation rises has kept FTSE 100 in a tight trading range recently.

“The fact remains the economic data is only likely to improve, and any by-product of that is likely to mean the prospect of either tighter monetary policy rates in one shape or another, at some point, with the only question being one of timing.” said Michael Hewson, chief market analyst at CMC Markets.

All eyes are now on the Bank of England’s meeting on May 6 where it will likely slow its bond purchases.

The domestically-focused mid-cap FTSE 250 index advanced 0.5%.

Building materials supplier SIG gained 2.7% as it sees return to profitability in the first half of 2021, and forecast higher annual profit than previously expected.

British challenger bank Virgin Money slipped 4.7% after it posted higher than expected first-half costs of 460 mln pounds.

(Reporting by Devik Jain in Bengaluru; Editing by Rashmi Aich and Krishna Chandra Eluri)

Shares Stall Near Peaks, Dollar Shuffles Higher

By Marc Jones

A surge in the price of almost everything, from wood and wheat to metals and microchips, has fuelled talk of an inflation spike.

Sensitive cyclical sectors including energy, mining and travel and leisure helped drive Europe modestly higher, while Wall Street’s tech giants, which have surged during the pandemic, were mostly pointing lower again. [.EU][.N]

On Monday, New York Fed head John Williams had said that the U.S. economic momentum was “not nearly enough” yet to change anything.

Bond market borrowing costs inched up on Tuesday, although signs that the world’s major central banks remain in no rush to reel in their massive stimulus schemes kept 10-year U.S. Treasury yields under 1.65% and Germany’s Bund yields below 13-month highs. [GVD/EUR]

Australia’s central bank left its key interest rates at near zero overnight for a fifth straight meeting too and pledged to keep its policies super-supportive for a prolonged period.

MSCI’s broadest global index, which tracks 50 countries, was barely budged just 1% off its record high.

Australia’s S&P/ASX200 had risen 0.6% and Hong Kong had climbed 0.7% in thin Asian trading due to holidays in both China and Japan.

Taiwan’s tech-heavy bourse was the region’s key exception, with stocks closing down 1.7% amid a rare uptick in domestic COVID-19 infections and after Wall Street’s tech indexes had struggled on Monday. [.N]

“We see near-term volatility in inflation as the economic restart progresses, and believe markets under-appreciate potential for medium-term price pressures,” analysts at BlackRock said in their weekly note.

SCOXIT?

In the currency market, the dollar clawed back some ground to partially unwind last month’s long decline as investors squared up positions ahead of monthly payrolls data due at the end of the week. [FRX/]

The dollar index, which measures its value against a basket of six other major currencies, climbed 0.4% to 91.34, just shy of a near two-week high. It fell more than 2% in April.

Sterling dipped marginally to $1.3865 ahead of a Bank of England meeting on Thursday where analysts reckon the bank may announce a slowdown in its bond buying programme.

There are also key British regional elections on Thursday. Focus will be mostly on Scotland where a big win for the SNP party in the country’s devolved parliament elections would put the issue of independence from the UK firmly back on the radar.

 

For a graphic on Sterling’s referendum rollercoaster rides:

https://fingfx.thomsonreuters.com/gfx/mkt/ygdpzllobpw/Pasted%20image%201619617157323.png

 

Cryptocurrency ether powered to another record peak, nearing $3,500.

Oil markets flip-flopped, firsting nudging Brent down 0.2% to $67.38 before hoisting it back to almost $68.50 again. Wheat took a breather after its near 20% April surge while gold dipped from a more than two-month high to $1,785 per ounce. [O/R][GOL/]

Emerging market investors had plenty to juggle too. India’s stock markets dipped as COVID-19 infections surged past 20 million and traders were bracing for another busy day in Latin America. Colombia’s peso slumped on Monday after its president withdrew a tax reform plan, sparking fears for its investment grade credit rating.

Peru’s markets have been rattled by elections, El Salvador’s bonds have been hit by the country’s President ousting top judges while Brazil’s heavyweight central bank is expected to hike interest rates again this week.

For a graphic on India suffering world’s worst COVID wave:

https://fingfx.thomsonreuters.com/gfx/mkt/ygdpzormmvw/Pasted%20image%201620131264160.png

(Reporting by Marc Jones, editing by Ed Osmond and John Stonestreet)

Is the UK’s Forecast Path to Monetary Normalisation Too Slow and Shallow?

Viewed against February’s +2.2% reading and January’s -8.1%, an argument can be made that consumer confidence is rapidly returning, auguring well for a strong post-pandemic recovery. However, could this returning confidence be too strong? Specifically, could it see the large savings stock accumulated over the pandemic finance a spending surge capable of steepening the trajectory to monetary normalisation?

Will the UK savings rate return to its long run average?

The unknown variable when discussing the strength of consumption recovery is the degree to which households will draw upon savings to finance excess spending. Averaging around 8.5% since the 1960s, ONS figures show the savings ratio rose to 25.9% in Q2 2020 before dropping to a still high 16.1% in Q4. Not only can these savings be viewed as an intertemporal substitution of consumption, but also an increase in wealth.

Historically, around 5% of excess wealth is spent each year, a figure being used by the BoE in its policy forecasts. However, given how these savings have been accumulated – forced consumption compression rather than an aspiration to save – it is reasonable to think that once lockdown restrictions are removed more than 5% will be spent, with the savings ratio also falling back to its long run average. Further, BoE figures show these savings have largely accumulated in deposit accounts rather than repositories such as pension funds and equities, increasing the temptation to draw on them given their easy access.

How much recourse to savings will be made?

The strength of any savings-fuelled spending spree is unknown at this stage. With the bulk of these savings accumulated by higher income households and pensioners, with typically a lower propensity to consume, it may be only modest. Much may therefore depend on the behaviour of lower income households. But in the opposite direction, the boom in ‘staycations’ expected this summer will provide an atypical boost to domestic expenditure. Overall, it remains unclear exactly how things will pan out. But the evidence so far suggests it is an issue that should be sounding warnings for the BoE, with at least the acknowledgment of a potential policy response.

Will pent-up demand see the BoE falling behind the policy curve?

The lack of spending opportunities has almost certainly left pent-up demand that consumers will look to satiate going forward. High frequency data from the BoE shows card spending already rising to 89% of pre-pandemic levels from 12th April when lockdown restrictions started to be lifted; in the same vein, footfall data shows consumers returning in large numbers to shopping malls and retail outlets.

This demand will help offset the closing of the furlough scheme end-Q3, with potentially fewer jobs lost and new positions created, allowing unemployment to peak at a lower rate than the BoE is forecasting. But crucially, this removes some of the pressure expected to bear down on potential inflation. The result could be higher CPI that remains above the BoE’s 2% target next year rather than dropping back below it as currently forecast.

Normally such an increase in demand would see interest rates raised. But the BoE’s standpoint is to refrain from tightening until the economic recovery is entrenched, i.e., until spare capacity is eliminated and the 2% inflation target on a sustainable footing. Unless this message changes – and at this stage that appears unlikely – any financial tightening necessitated by this pent-up demand will be provided by the financial markets only. Official policy looks likely to remain too loose.

Do current policy assumptions need revising?

Early data suggests the BoE’s policy assumptions may be too soft, that the anticipated 5% savings-fuelled boost to consumption too conservative and that inflationary pressures might require a monetary policy response more aggressive than currently forecast. Market pricing sees a first 15bps hike delivered in Q1 2023; the proposition is that this may be too little, too late, and that a full 25bps rise may be required in 2022. And this matters more than just to the markets. Government borrowing built up over the pandemic – £303bn over the last financial year – requires financing.

While current low interest rates make this affordable, a faster and steeper rise in borrowing costs could put a hole in the Government’s fiscal plans, potentially requiring further spending cuts and/or tax rises to be made. Accordingly, both the BoE and the Government will be hoping consumers keep their excess savings in the bank.

Opinion editorial by Stuart Cole, Head Macro Economist at Equiti Capital


‘’This material is provided for informational purposes only and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Equiti Capital. This material is not, and is not intended to be, a “research report”, “investment research” or “independent research” as may be defined in applicable laws and regulations worldwide. Please see the full disclaimer here: https://www.equiticapital.co.uk/media/11057/disclaimer.pdf ’’

The Week Ahead – Central Banks, Economic Data, and COVID-19 in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 57 stats in focus in the week ending 7th May. In the week prior, 61 stats had been in focus.

For the Dollar:

In the 1st half of the week, private sector PMIs and ADP nonfarm employment change figures are in focus.

Expect the market’s favored ISM Non-Manufacturing PMI and ADP figures to be key.

The focus will then shift to the weekly jobless claim figures on Thursday ahead of the NFP numbers on Friday.

Expect nonfarm payroll figures and the unemployment rate to be the main area of focus late in the week.

On the monetary policy front, FED Chair Powell is scheduled to speak early in the week. The markets will be looking for any break from the script.

In the week, the Dollar ended the week up by 0.46% to 91.280.

For the EUR:

It’s also a busy the week on the economic data front.

Monday through Wednesday, private sector PMIs for Italy and Spain and German retail sales figures are in focus.

While retail sales are key, expect Italy and the Eurozone’s private sector PMIs to be key.

Late in the week, the German economy is back in focus.

German factory orders, industrial production, and trade data are due out. Following some disappointing GDP numbers last week, we can expect EUR sensitivity to the stats.

On the monetary policy front, ECB President Lagarde is due to speak at the end of the week…

The EUR ended the week down by 0.64% to $1.2020.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar.

Finalized private sector PMIs will be in focus in a shortened week.

Expect any revisions to the services PMI to be key.

The main event of the week, however, is the BoE’s monetary policy decision on Thursday.

While the BoE is expected to stand pat, any dissent and hawkish talk give the Pound a boost.

The Pound ended the week down by 0.39% to $1.3822.

For the Loonie:

It’s a quiet week ahead on the economic calendar.

On Tuesday, trade data for March will influence ahead of April employment and Ivey PMI figures on Friday.

Expect the employment figures to be the key driver at the end of the week.

The Loonie ended the week up 1.51% to C$1.2288 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week ahead.

Key stats include manufacturing data at the start of the week and trade data on Tuesday.

Building approvals are also due out on Wednesday but will likely have a muted impact on the Aussie Dollar.

While we can expect the trade data to have the greatest impact, the RBA monetary policy decision is the main event of the week on Tuesday.

Any hawkish chatter and expect the Aussie Dollar to eye a return to $0.80 levels.

The Aussie Dollar ended the week down by 0.30% to $0.7716.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

On Wednesday, employment figures for the 1st quarter are due out ahead of building consent numbers on Thursday.

Expect the employment change figures to be key in the week. The markets will be looking from a pickup in hiring to support a sustainable economic recovery.

The Kiwi Dollar ended the week down by 0.51% to $0.7162.

For the Japanese Yen:

It is a quiet week ahead, with the Japan markets closed Monday through Wednesday.

Economic data is limited to finalized private sector PMIs for April. Barring any marked revision from prelim figures, however, we don’t expect too much impact on the Yen.

The Japanese Yen rose by 0.85 to ¥107.88 against the U.S Dollar.

Out of China

It’s a busy week ahead.

Through the 1st half of the week, the market’s preferred Caixin survey PMI numbers are due out. Expect the manufacturing PMI for April to have the greatest impact on Tuesday.

At the end of the week, April trade figures will also be in focus.

A continued surge in both imports and exports would support riskier assets.

The Chinese Yuan ended the week up by 0.33% to CNY6.4749 against the U.S Dollar.

Geo-Politics

U.S and China and U.S and Russia relations remain the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

While a number of the big names have released earnings results, a large number are still scheduled to release results in the week ahead.

From the U.S, big names include CVS Health Corp (Tues), ICHOR Holdings (Tues), and FOX Corp (Wed).

The Weekly Wrap – Impressive Stats from the U.S Give the Greenback a Much-Needed Boost

The Stats

It was a busier week on the economic calendar, in the week ending 30th April.

A total of 61 stats were monitored, following 46 stats from the week prior.

Of the 61 stats, 30 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 38 of the stats reflected an upward trend from previous figures. Of the remaining 23 stats, 22 reflected a deterioration from previous.

For the Greenback, a run of 3 consecutive weekly losses came to an end. In the week ending 30th April, the Dollar Spot Index rose by 0.46% to 91.28. In the previous week, the Dollar had fallen by 0.76% to 90.859.

Out of the U.S

It was a busier week on the economic data front.

In the 1st half of the week, core durable goods and consumer confidence figures were in focus.

The stats were skewed to the positive. Core durable goods reversed a 0.3% fall, with a 1.6% rise in March.

More significantly, the CB Consumer Confidence Index jumped from 109.0 to 121.7.

In the 2nd half of the week, GDP, jobless claims, personal spending, and inflation figures were in focus.

The stats were also skewed to the positive, supporting market optimism towards the economic outlook.

In the 1st quarter, the economy expanded by 6.4%, following 4.3% growth in the 4th quarter of last year.

Jobless claims figures were also positive, with initial jobless claims falling from 566k to 553k in the week ending 23rd April.

At the end of the week, personal spending also impressed, jumping by 4.2% to reverse a 1% fall from February.

Inflationary pressures were on the rise, with the FED’s preferred Core PCE Price Index rising by 1.8% in March, year-on-year. In February, the index was up by 1.4%. Following the FED’s assurances from earlier in the week, however, the uptick had a muted impact on the markets.

On the monetary policy front, the FED stood pat on policy, which was in line with expectations. FED Chair Powell continued to reassure the markets that there would be no tapering to the asset purchasing program or shift in interest rates any time soon.

The assurances had left the Greenback on the backfoot in response.

In the equity markets, the Dow and the NASDAQ fell by 0.50% and by 0.39% respectively, while the S&P500 eked out a 0.02% gain.

Out of the UK

It was a particularly quiet week.

There were no material stats to provide the Pound with direction in the week.

The lack of stats left the Pound in the hands of market optimism towards the reopening of the economy.

In the week, the Pound fell by 0.39% to end the week at $1.3822. In the week prior, the Pound had risen by 0.70% to $1.3876.

The FTSE100 ended the week up by 0.45%, partially reversing a 1.15% fall from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, German business and consumer confidence waned as a result of the latest spike in new COVID-19 cases.

In the 2nd half of the week, stats were also skewed to the negative weighing on the EUR.

While the French economy managed to avoid a contraction in Q1, both Germany and the Eurozone’s economies contracted.

The contraction was aligned with ECB President Lagarde’s outlook and the latest downward revision to Germany’s economic forecasts.

Inflation for the Eurozone and member states, unemployment figures from Germany and the Eurozone, and French consumer spending figures also drew attention.

Consumer spending hit reverse in France while inflationary pressures picked up in France and across the Eurozone.

Unemployment from Germany disappointed, while the Eurozone’s unemployment rate declined from 8.2% to 8.1%.

For the week, the EUR slipped by 0.64% to $1.2020. In the week prior, the EUR had risen by 1.00% to $1.2097.

The CAC40 rose by 0.18%, while the DAX30 and EuroStoxx600 ended the week down by 0.94% and by 0.34% respectively.

For the Loonie

It was a busier week.

Retail sales figures impressed mid-week, with core retail sales and retail sales both jumping by 4.8% in February. In January, core retail sales had fallen by 1.2% and retail sales by 1.1%.

At the end of the week, February GDP and March RMPI numbers were also in focus.

The economy expanded by a further 0.4%, following 0.7% growth in January. In March, the RMPI rose by 2.3% following a 6.6% jump in February.

Continued market reaction to the previous week’s BoC outlook and policy decision also supported the Loonie.

In the week ending 30th April, the Loonie jumped by 1.51% to C$1.2288. In the week prior, the Loonie had risen by 0.22% to C$1.2476.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar, with a Friday pullback leaving the pair in the red.

In the week ending 30th April, the Aussie Dollar fell by 0.39% to $0.7716, with the Kiwi Dollar ending the week down by 0.51% to $0.7162.

For the Aussie Dollar

It was a quiet week.

1st quarter inflation and private sector credit figures for March were in focus in the week.

The stats were skewed to the negative, pegging the Aussie back in the week.

In the 1st quarter, the trimmed mean CPI rose by 1.1% year-on-year, its lowest annual movement on record.

Private sector credit figures were positive, however, with both personal and business credit on the rise.

For the Kiwi Dollar

It was also a quiet week.

Trade data and business confidence figures were in focus.

A narrowing of New Zealand’s trade surplus was Kiwi Dollar negative, while a pickup in business confidence provided support late in the week.

The narrowing of New Zealand’s trade surplus came as imports surged at the end of the 1st quarter. Year-on-year, New Zealand’s trade surplus narrowed from NZ$2,380m to NZ$1,690m.

In April, the ANZ Business Confidence Index rose by 6 points from a prelim -8.4 to -2.0.

For the Japanese Yen

It was a busy week.

Mid-week, retail sales figures impressed. In March, retail sales were up by 5.2%, year-on-year. In February, sales had been down by 1.5%.

At the end of the week, industrial production increased by 2.2%, reversing a 1.3% decline from February.

Deflationary pressures picked up in April, however, with Tokyo core consumer prices falling by 0.2%, year-on-year. In March, core consumer prices had fallen by 0.1%.

The Japanese Yen fell by 1.33% to ¥109.31 against the U.S Dollar. In the week prior, the Yen had risen by 0.85% to ¥107.88.

Out of China

It was a quiet week on the data front.

NBS private sector PMIs were in focus at the end of the week. The stats were skewed to the negative, however, with both service and manufacturing sector growth easing in April.

The Manufacturing PMI fell from 51.9 to 51.1, with the Non-Manufacturing PMI falling from 56.3 to 54.9.

In the week ending 30th April, the Chinese Yuan rose by 0.33% to CNY6.4749. In the week prior, the Yuan had risen by 0.37% to CNY6.4963.

The CSI300 slipped by 0.23%, with the Hang Seng ended the week down by 1.22%.

Strong Earnings Drive FTSE 100 Higher; Midcaps Underperform

The blue-chip index rose 0.7% with medical products maker Smith+Nephew jumping 4.6% to the top of the index after it reinstated its 2021 outlook following revenue growth in first quarter.

The index was also supported by Unilever, which rose 3.5% after it beat quarterly sales forecasts, helped by a pick up in home cooking during coronavirus lockdowns and a strong economic recovery in China.

The domestically focused midcap FTSE 250 index advanced 0.2%.

WH Smith slipped 4.6% after it warned of the possible risk of breaching its covenant tests in 2022 and launched a potential 325 million-pound ($450 million) bonds offering as the retailer navigates the COVID-19 pandemic.

(Reporting by Devik Jain in Bengaluru; Editing by Shounak Dasgupta)

Asia Shares Extend Gains on Supportive Fed, Biden’s Stimulus

By Kane Wu

European and U.S. markets were set to open higher as well, with FTSE futures up 0.15%. E-mini futures for the S&P 500 index rose 0.53% and Nasdaq futures advanced 0.87%.

Biden proposed the sweeping new $1.8 trillion plan in a speech to a joint session of Congress on Wednesday, pleading with Republican lawmakers to work with him on divisive issues and to meet the stiff competition posed by China.

He also made an impassioned plea to raise taxes on corporations and rich Americans to help pay for what he called the “American Families Plan” in his maiden speech to Congress. He has also proposed nearly doubling the tax on investment income, which knocked stock markets last week.

Stephen Dover, Franklin Templeton’s chief market strategist in California, said the effect of the tax package on markets is hard to measure for now.

“If it passes, I think it will have an impact on individual stocks that will pay a higher rate of tax or companies with founders that will pay capital gains and could sell stocks,” he said. “I think investors are going to think about whether they want take their gains now and that creates the possibility of short-term volatility now.”

MSCI’s broadest index of Asia-Pacific shares outside Japan built on early gains and was up 0.46% by mid-afternoon.

Australia’s S&P/ASX 200 edged up 0.24%, as strong oil prices lifted energy stocks.

China’s blue-chip CSI300 index was 0.45% higher, while Hong Kong’s Hang Seng index rose half a percentage point. Seoul’s KOSPI was flat while Taiwan shares rose 0.17%.

Markets in Japan were closed for a holiday but Nikkei futures rose 0.35% to 29,055 points.

For the rest of the day, investors will focus on the first estimate of U.S. GDP for the first quarter, which is expected at 13:30 GMT.

Fed Chair Jerome Powell said on Wednesday that “it is not time yet” to begin discussing any change in policy after the U.S. central bank left interest rates and its bond-buying programme unchanged, despite taking a more optimistic view of the country’s economic recovery.

Excerpts of Biden’s speech released in advance by the White House “hit the high points – big infra(structure) spend, talking climate action and vaccines,” said John Milroy, investment adviser at Ord Minnett. “The Fed remains dovish, all very supportive.”

Tech shares got a boost after Apple Inc on Wednesday posted sales and profits ahead of Wall Street expectations, though it warned a global chip shortage could dent iPad and Mac sales by several billion dollars.

Wall Street ended lower on Wednesday. The Dow Jones Industrial Average fell 0.48% to end at 33,820.38 points, while the S&P 500 lost 0.08% to 4,183.18.

The dollar pared up early losses against the yen to 108.61 and the euro gained 0.07% to 1.2132 following the Fed’s decision to maintain supportive policies.

Oil prices extended gains on Thursday after rising 1% in the previous session as bullish forecasts for a demand recovery this summer offset concerns of rising COVID-19 cases in India, Japan and Brazil.

Brent crude for June rose 0.27% to $67.45 a barrel, while U.S. West Texas Intermediate crude for June was at $64.02 a barrel, up 0.25%.

Spot gold added 0.14% to $1,783.85 an ounce.

(Reporting by Kane Wu in Hong Kong; additional reporting by Andrew Galbraith in Shanghai and Scott Murdoch in Hong Kong; Editing by Jacqueline Wong and Kim Coghill)

London Stock Exchange Income Rises, Refinitiv Savings on Track

By Huw Jones

About 40 million pounds ($55.5 million) of savings in combined operating costs from the Refinitiv takeover had been realised and new products had been launched, the group said.

It said it was on track to achieve 25% of the announced 350 million pounds savings target by the end of 2021, in line with previous guidance.

The group completed its $27 billion takeover of Refinitiv in January, turning the 300-year-old exchange into a financial market data giant overnight, although still number two behind leader Bloomberg LP.

In March, it outlined capital and operational costs following the Refinitiv deal that were bigger than investors expected, sending LSE shares tumbling. The stock has fallen about 20% since March 4, slipping 0.6% on Wednesday.

In a further setback, Refinitiv’s data terminals suffered a blackout lasting several hours this month.

Chief Financial Officer Anna Manz told a call with analysts that guidance of 850 million pounds in capital expenditure and 150 million pounds in operational costs for 2021 remained unchanged.

“We are exactly where we expected to be at the end of the first quarter,” Manz said.

RBC analysts said the “robust” first quarter figures pointed to a strong start in the delivery of cost synergies. Total income of 1.68 billion pounds and gross profit of 1.5 billion pounds were both in line with market expectations, it said.

Chief Executive David Schwimmer said Refinitiv had not delivered any surprises. “Refinitiv is exactly what we expected. We had done a lot of due diligence,” Schwimmer said.

LSE would focus on integrating Refinitiv and reducing debt, and would only consider small acquisitions, Schwimmer said.

“You should not expect us to be going out and doing very large, big M&A at this point,” he said.

The group said it would hold investor events to give a “deeper insight” into the newly enlarged business, with the first on July 2 giving an overview of data and analytics.

The group said its divestment of Borsa Italiana was progressing and expected to be completed in the second quarter.

The LSE had said it would sell the Milan exchange in order to win approval for its Refinitiv takeover from European Union competition regulators. Euronext is buying the Italian bourse.

The LSE holds its annual meeting online at 1100 GMT on Wednesday. Advisory group ISS is recommending shareholders vote against Chief Executive David Schwimmer’s 25% pay rise because of the higher-than-expected costs of integrating Refinitiv.

Thomson Reuters the parent company of Reuters News, holds a 15% stake in the LSE following the Refinitiv deal.

 LSE shares

(Reporting by Huw Jones and Muvija M.; Editing by Carmel Crimmins and Edmund Blair)

European stocks slip as Fed caution offsets upbeat bank earnings

By Sruthi Shankar

The pan-European STOXX 600 index slipped 0.3%, with travel and leisure stocks easing from all-time highs, and miners retreating after a recent rally.

The region’s banking sector was up 0.3% and insurers rose 0.6%.

Deutsche Bank jumped 6.5% to the top of STOXX 600, as strength at its investment bank helped the German bank post a better-than-expected first-quarter net profit.

Topping London’s FTSE 100, Lloyds Banking Group rose 3.3% after reporting a better-than-expected profit.

Sweden’s SEB and Spain’s Santander inched lower after their quarterly results.

“At a market level, Europe has performed strongly year-to-date and it’s clear that there has been an anticipation that the recovery will be quite sharp and strong,” said Tom Dorner, investment director for European equities at Aberdeen Standard Investments. “You’re still seeing a rotation in the market in favour of the more cyclical names like banks and autos.”

Investors, however, stayed away from making big bets ahead of the U.S. central bank’s policy announcement due at 1800 GMT. Policymakers are widely expected to reaffirm their stance to keep monetary policy loose until enough economic progress has been made.

Earnings at European companies in the first quarter of 2021 are expected to surge 71.3% from a year earlier, according to Refinitiv IBES data, up from last week’s forecast of a 61.2% jump.

The world’s biggest advertising company WPP rose 2.9% on returning to underlying growth in the first quarter, as clients launched new products and brands.

German food delivery company Delivery Hero jumped 5.9%, as it expects revenues to more than double in 2021.

Among decliners, Lysol maker Reckitt Benckiser Group fell 1.4%, even as the company backed its full-year outlook.

British supermarket chain Sainsbury’s dropped 2.5%, after it reported a 39% fall in annual underlying profit.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Rashmi Aich)

Stocks Slip as Investors Turn Cautious Ahead of Fed Meeting

By Tommy Wilkes

LONDON (Reuters) -Stocks gave up early gains on Monday as confidence that economies are recovering rapidly was overshadowed by caution over the speed of the market’s rally and ahead of a U.S. Federal Reserve policy meeting.

The start to the week was quiet as investors refrained from taking on large positions before a two-day Fed meeting that will begin on Tuesday and the impending release of quarterly gross domestic product numbers for the United States.

Investors have remained ebullient in recent weeks, with Wall Street hitting another intraday record high on Friday and European shares not far off their own record highs.

But there was some limited selling on Monday in Europe.

The Euro STOXX 600 was down 0.1% by 1050 GMT while Germany’s DAX lost 0.13%. Britain’s FTSE 100 was flat.

Wall Street futures pointed to a weaker open after Friday’s gains.

Asian shares rallied, however. MSCI’s broadest index of Asia-Pacific shares outside Japan reached its highest since March 12, despite a late selloff in Chinese shares.

That helped offset the falls in Europe and lift the MSCI world equity index, which tracks shares in 49 countries, by 0.16%.

Stocks — as well as most other risk assets — are basking in a massive rally. The MSCI world index has suffered only three down months in the past 12 and is up nearly 5% this month and 9% for the year as investors bet on a rapid post-pandemic economic rebound turbocharged by vast government and central bank stimulus.

Analysts, however, say stocks look a little overvalued and that the rally will run into hurdles after setting such a lightning pace and with so much of the economic recovery and fiscal stimulus splurge already priced in.

“The real crux of the issue, however, is what’s in the price. The year-to-date rally has increasingly eliminated upside to our targets,” noted Andrew Sheets, a strategist at Morgan Stanley.

“Across four major global equity markets (the U.S., Europe, Japan and emerging markets), only Japan is currently below our end-2021 strategy forecast.”

BOLSTER CONFIDENCE

Still, recent data pointing to a solid global economic recovery has bolstered confidence and limited any investor nervousness, as have strong corporate earnings and the continued rollout of COVID-19 vaccinations in developed economies.

Early April manufacturing activity indicators out last week pointed to a robust start to the second quarter with data hitting record highs in the United States and signalling an end to Europe’s double-dip recession.

First-quarter U.S. gross domestic product data due later in the week is likely to show activity probably returned to pre-pandemic levels, analysts said.

Most observers expect the Fed will stick to its pledge to keep stimulus flowing easily until the economy has recovered sufficiently and downplay the threat of rising inflation — any suggestion otherwise could knock confidence sharply.

“The equity market is happy that the Federal Reserve is likely to continue with no new guidance on eventual tightening of policy as it wants to react to outcomes rather than anticipating them and believes that any inflationary rise in coming months will prove transitory,” said Steen Jakobsen, Chief Investment Officer at Saxo Bank.

In currencies, the dollar — which had benefited from rising Treasury yields the past few months – fell against a basket of currencies to its weakest since March 3. Other major currencies were little changed.

Bitcoin snapped a five-day losing streak with an 8.5% jump. Cryptocurrencies fell on Friday on concern that U.S. President Joe Biden’s plan to raise capital gains taxes would curb investments in digital assets.

Those tax proposals, while raising hackles among some investors, caused only a temporary blip in stock markets’ march higher.

Government bond yields rose as investors dumped safer assets.

The U.S. 10-year Treasury yield rose 2 basis points to 1.5843% but that is some way off the plus-1.7% levels hit earlier this month when fears about a spike in inflation rattled markets. Euro zone government bond yields also ticked higher.

Turkey’s lira rebounded 1.3% following its recent slide but remains close to an all-time low as a chill settled on relations with the United States and after the new central bank chief signalled rate hikes would harm the economy.

In commodities, U.S. crude fell $1.01 to $61.13 per barrel and Brent eased $1.11 to $65.

Gold climbed 0.1% to $1,779 an ounce.

(Editing by Ed Osmond and Bernadette Baum)

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Stronger Pound Drags FTSE 100 Lower; Midcaps Outperform

By Devik Jain

(Reuters) -London’s FTSE 100 edged lower on Monday as heavyweight export-oriented companies slipped on a stronger pound, while a rally in shares of IMI helped the mid-cap index outperform the blue-chip index.

The FTSE 100 fell 0.1% as large dollar-earning consumer staples companies such as Diageo, British American Tobacco, and Unilever dropped after the pound strengthened.

However, the losses were limited as miners added 1.4% after copper prices hit their highest in over 10 years. [MET/L]

Aero and defence stocks also rose, with Rolls Royce jumping 3.7% after it said on Friday it was in constructive talks with Spain over the sale of its Spanish unit ITP Aero.

The domestically focussed mid-cap FTSE 250 index added 0.3%. Engineering firm IMI jumped 7% to the top of index after it raised its annual profit outlook.

Globally, the mood was upbeat amid concerns over rising cases in parts of Asia ahead of U.S. Federal Reserve’s meeting, series of economic data and earnings reports from U.S. tech heavyweights and big UK banks this week. [MKTS/GLOB]

“With a data calendar as juicy as this week, Monday morning COVID-19 nerves are likely to be quickly forgotten,” said Jeffery Halley, senior market analyst at OANDA.

The FTSE 100 has gained 7.3% year-to-date as encouraging economic data on the back of speedy COVID-19 vaccinations and constant policy support from the government lifted optimism about a stronger economic recovery.

Goldman Sachs expects Britain to grow by a “striking” 7.8% this year, more than the United States following a nearly 10% slump last year as it was hit by longer coronavirus lockdowns than many of its peers.

Global education group Pearson rose 2.2 after posting a 5% increase in underlying revenue growth in the first quarter, helped by strong demand for online learning courses.

Food ingredients maker Tate & Lyle added 6.2% after saying it was exploring the sale of a controlling stake in its commercial sweeteners unit and separate it from its food and beverage solutions business.

(Reporting by Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Uttaresh.V)

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The Week Ahead – Economic Data, the FED, and COVID-19 News in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 58 stats in focus in the week ending 30th April. In the week prior, 46 stats had been in focus.

For the Dollar:

Durable goods and core durable goods orders along with consumer confidence figures are due out early in the week.

Expect core durable goods and the consumer confidence index figures to have the greatest influence.

On Thursday, the focus will shift to 1st quarter GDP and jobless claims figures.

While the jobless claims figures will influence, expect the GDP numbers to be key on the day.

At the end of the week, personal spending and the FED’s preferred Core PCE Price index figures will be in focus.

On the monetary policy front, the FED is also in action on Wednesday. With the markets expecting the FED to stand pat on policy, the rate statement will be the main area of focus.

In the week, the Dollar ended the week down by 0.76% to 90.859.

For the EUR:

It’s also a busy the week on the economic data front.

German business sentiment and consumer confidence figures get things going.

Expect both sets of numbers to influence on Monday and Wednesday.

On Thursday, the German economy is back in focus, with unemployment figures due out.

With concerns over the German economic outlook lingering, expect any jump in unemployment to test the EUR.

At the end of the week, 1st quarter GDP figures for the Eurozone and member states will also be in focus.

Other stats include April inflation figures, French consumer spending, and unemployment figures for the Eurozone.

Barring particularly dire numbers, however, we don’t expect too much influence from the numbers.

The EUR ended the week up by 1.00% to $1.2097.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar.

There are no major stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of COVID-19 news and market risk sentiment.

The Pound ended the week up by 0.70% to $1.3876.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, February retail sales figures will provide the Loonie with direction.

At the end of the week, February GDP and March RMPI numbers will also influence.

Away from the economic calendar, expect GDP numbers from the U.S and beyond and crude oil prices to also provide direction.

The Loonie ended the week up 0.22% to C$1.2476 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week ahead.

1st quarter inflation figures are due out on Wednesday and Friday.

Expect Aussie Dollar sensitivity to the numbers.

Private sector credit figures for March are also due out at the end of the week.

The Aussie Dollar ended the week up by 0.06% to $0.7739.

For the Kiwi Dollar:

It’s a quiet week ahead.

The markets will need to wait until Thursday for March trade data and April business confidence figures.

We would expect both sets of numbers to influence.

From elsewhere, expect 1st quarter GDP numbers to also provide direction in the week.

The Kiwi Dollar ended the week up by 0.80% to $0.7199.

For the Japanese Yen:

It is also a relatively busy week ahead.

On Wednesday, retail sales figures will draw attention. Consumer spending remains key to an economic recovery. In February, retail sales had fallen by 1.5%.

The focus will then shift to a busy Friday. March inflation and industrial production figures will be in focus.

Expect prelim industrial production figures for March to have the greatest impact.

On the monetary policy front, the BoJ is also in action early in the week.

The Japanese Yen rose by 0.85 to ¥107.88 against the U.S Dollar.

Out of China

It’s a quiet week ahead.

Private sector PMI figures for April are due out on Friday. Expect the numbers to influence market risk sentiment at the end of the week.

Away from the economic calendar, however, chatter between the U.S and China will also draw attention.

The Chinese Yuan ended the week up by 0.37% to CNY6.4963 against the U.S Dollar.

Geo-Politics

U.S and China and U.S and Russia are the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however. Progress towards a nuclear agreement would be a market positive outcome.

Corporate Earnings

From the U.S, big names include:

Tesla Inc (Mon), Alphabet Inc (Tues), Microsoft Corp (Tues), Apple Inc (Wed), Boeing Co (Wed), Ford Motor Co (Wed), Amazon.com Inc (Thurs), Exxon Mobil Corp (Fri), and Chevron Corp (Fri).

From the EU:

Deutsche Bank (Wed) and Total SE (Thurs).

The Weekly Wrap – It Was another U.S Dollar Fall in a Busy Week for the Markets

The Stats

It was a quieter week on the economic calendar, in the week ending 23rd April.

A total of 46 stats were monitored, following 72 stats from the week prior.

Of the 46 stats, 34 came in ahead forecasts, with 8 economic indicators coming up short of forecasts. There were 4 stats that were in line with forecasts in the week.

Looking at the numbers, 35 of the stats reflected an upward trend from previous figures. Of the remaining 11 stats, 8 reflected a deterioration from previous.

For the Greenback, it was a third weekly loss in 6-weeks. In the week ending 23rd April, the Dollar Spot Index fell by 0.76% to 90.859. In the previous week, the Dollar had fallen by 0.66% to 91.556.

Out of the U.S

It was a quieter week on the economic data front.

Key stats included weekly jobless claims and prelim private sector PMI numbers for April.

In the week ending 16th April, initial jobless claims decreased from a revised 586k to 547k. Economists had forecast an increase to 617k.

Private sector PMIs were also positive for riskier assets.

In April, the manufacturing PMI increased from 59.1 to 60.6, with the services PMI rising from 60.4 to 63.1.

Economists had forecast PMIs of 60.5 and 61.9 respectively.

In the equity markets, the Dow fell by 0.46%, with the NASDAQ and the S&P500 declining by 0.25% and by 0.13% respectively.

Out of the UK

It was a busy week.

In the 1st half of the week, employment and inflation figures were in focus.

The stats were skewed to the positive. A more modest fall in employment supported a fall in the unemployment rate in February to 4.9%. There was also a more modest rise in claimant counts, though wage growth slowed.

Inflationary pressures picked up in March, with the UK’s annual rate of inflation accelerating from 0.4% to 0.7%. A pickup in wholesale inflationary pressures suggested a further uptick in consumer prices near-term.

At the end of the week, retail sales and prelim private sector PMIs impressed.

In March, core retail sales jumped by 4.9%, following a 2.5% increase in February. Retail sales rose by a more impressive 5.4%, following a 2.2% rise in February.

From the private sector, both service and manufacturing sector activity picked up at the turn of the quarter.

The all-important services PMI rose from 56.3 to 60.1, with the manufacturing PMI increasing from 58.9 to 60.7.

In the week, the Pound rose by 0.70% to end the week at $1.3876. In the week prior, the Pound had risen by 0.53% to $1.3779.

The FTSE100 ended the week down by 1.15%, partially reversing a 1.50% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

Ahead of a busy Friday, key stats included German wholesale inflation and Eurozone consumer confidence figures.

At the end of the week, prelim private sector PMI numbers for April were also in focus.

The stats were skewed to the positive. Wholesale inflationary pressures picked up further, with consumer confidence across the Eurozone improving.

The private sector PMIs were also skewed to the positive.

While private sector activity in Germany expanded at a marginally slower rate, the Eurozone services sector returned to growth for the 1st time since Aug-2020.

At the turn of the quarter, the Eurozone’s manufacturing PMI hit a new all-time high, supporting a rise in the composite PMI to a 9-month high 53.7.

On the monetary policy front, the ECB was also in action in the week. In line with market expectations, the ECB stood pat on monetary policy, assuring continued support.

The decision to stand pat was positive for the European majors. From the press conference, ECB President Lagarde talked of an economic contraction in the 1st quarter, which supported the market view of unwavering policy support.

For the week, the EUR rose by 1.00% to $1.2097. In the week prior, the EUR had risen by 0.66% to $1.1977.

The DAX30 slid by 1.17%, with the CAC40 and EuroStoxx600 ended the week with losses of 0.15% and 0.78% respectively.

For the Loonie

It was another quiet week.

Inflation and house price figures were in focus in the week.

It was a mixed set of numbers. Inflationary pressures picked up in March, with the core annual rate of inflation accelerating from 1.2% to 1.4%.

House price figures disappointed, however, rising by a modest 1.1% in March. In February, house prices had risen by 1.9%.

While the stats influenced, the Bank of Canada monetary policy decision and rate statement were the key drivers.

Mid-week, the Bank of Canada talked of a likely rise in interest rates next year. While other central banks continue to talk of an extended period of support, the BoC talked of signs of a strong recovery, supporting the shift in policy outlook.

In the week ending 23rd April, the Loonie rose by 0.22% to C$1.2476. In the week prior, the Loonie had risen by 0.22% to C$1.2503.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 23rd April, the Aussie Dollar rose by 0.06% to $0.7739, with the Kiwi Dollar ending the week up by 0.80% to $0.7199.

For the Aussie Dollar

It was a quiet week.

Key stats included retail sales and business confidence figures.

The stats were skewed to the positive. Retail sales increased by 1.4% in March, reversing a 0.8% fall from February.

Business confidence also improved, with the NAB Quarterly Business Confidence Index rising from 15 to 17.

While the stats were Aussie Dollar positive, the RBA meeting minutes were key in the week.

The minutes provided Aussie Dollar support, in spite of the RBA assuring continued policy support. A sharp recovery in the labor market to pre-pandemic levels supported a more optimistic economic outlook.

While the RBA does not expect to reach its targets on inflation and employment until 2024, the minutes showed that negative rates remained very unlikely.

For the Kiwi Dollar

It was a quiet week, with economic data limited to inflation figures. The stats were Kiwi Dollar positive, with inflationary pressures picking up in the 1st quarter.

Quarter-on-quarter, consumer prices increased by 0.8%, following a 0.5% rise in the 4th quarter of last year.

The annual rate of inflation picked up from 1.4% to 1.5%.

For the Japanese Yen

It was a busy week.

In the 1st half of the week, trade data was in focus.

The numbers provided some comfort, with Japan’s trade surplus widening from ¥215.9bn to ¥663.7bn in March.

Exports jumped by 16.1%, while imports rose by a more modest 5.7%.

At the end of the week, prelim private sector PMIs for April were in focus.

The services PMI remained unchanged at 48.3, while the manufacturing PMI increased from 52.7 to 53.3.

The Japanese Yen rose by 0.85% to ¥107.88 against the U.S Dollar. In the week prior, the Yen had risen by 0.79% to ¥108.80.

Out of China

It was a quiet week on the data front, with no major stats for the markets to consider.

On the monetary policy front, the PBoC left loan prime rates unchanged, which had a muted impact on the markets.

In the week ending 23rd April, the Chinese Yuan rose by 0.37% to CNY6.4963. In the week prior, the Yuan had risen by 0.49% to CNY6.5206.

The CSI300 rallied by 3.41%, with the Hang Seng ended the week up by 0.38%.

FTSE Index Underperforms as it Fights for The 7,000 GBP Level

According to the BBC, almost 33 million people in the UK have received at least one dose of their coronavirus vaccine, and more than 10 million have had a second dose. The government plans to vaccinate the rest of the adult population – another 21 million people – by the end of July.

UK Unemployment Better than Expected

Earlier on Tuesday, the UK claimant count change for February came in better than expected, with the unemployment rate falling to 4.9%, versus the expected rise to 5.1%, compared with January’s 5.0%. Following the release, the sterling was trading higher, with the GBPUSD pair rising above the important 1.40 level again.

Upcoming UK Data

Later in the week, traders will also focus on inflation indices, due Wednesday, with retail sales being released on Friday.

The official CPI (Consumer Price Index) inflation is expected to rise to 0.8% year-on-year, up from 0.4%. That would still be way below the US inflation of 2.6%. Inflation is forecast to accelerate from 0.1% to 0.3% monthly.

Retail sales are projected to improve notably from February’s levels as some shops were allowed to open in March. However, it will take a very long time for the retail sector to shun all the losses suffered throughout the pandemic completely.

Both events will most likely cause volatility in the GBPUSD pair and the FTSE index as well.

Last but not least BoE (Bank of England) Governor Andrew Bailey speaks about diversity in market intelligence at the BoE’s virtual event on Wednesday. Since his speech is not about monetary policy, traders will most likely ignore it.

The FTSE 100 and GBP Effect

Usually, there’s a negative correlation between the GBP and the FTSE 100 index, meaning, if the sterling strengthens, the FTSE index tends to weaken and vice versa.

Therefore, if the GBPUSD continues moving above the important 1.40 level, it could further undermine the FTSE index.

Technically speaking, it looks like the bulls are having trouble holding the psychological level of 7,000 GBP. Moreover, it seems like there’s a false bullish breakout with a quick bearish reversal. If the index closes below previous highs near 6,960 GBP, it could be a bearish signal for the FTSE 100.

The next major support could be found at the 6,800 GBP level, where strong bids are expected to defend the medium-term uptrend.

Alternatively, the strong resistance remains near the 7,000 GBP level and afterward at around the current cycle highs of 7,050 GBP. Should the FTSE rise above that level, the long-term uptrend would be confirmed.

FTSE 100 Weaker Against Other Indices

The British index has been the worst performer lately in comparison to other EU and US indices. It’s still well below its pre-pandemic highs, while the German DAX and US benchmarks are way above their pre-pandemic tops.

Probably, the reason is that the response by the BoE has been the weakest, and the UK lockdown might have been one of the hardest.

On the other hand, should the situation improve, the FTSE index might start outperforming other indices as it has more than 10% potential to reach pre-COVID highs.

For now, the long-term sentiment seems bullish, and dips are expected to be bought. However, as mentioned earlier, the short-term outlook is not that positive.

We think that equity indices are due for a correction as they are way overextended above their moving averages, which usually leads to a correction toward the 50 or 200-day moving averages. Those declines will most likely be used to buy the dip as investors enter the market at better prices.

For a look at all of today’s economic events, check out our economic calendar.

British Midcaps Hit Record High; Equiniti Group Shines

By Devik Jain

The British outsourcer jumped 13.8% after U.S. private equity firm Siris Capital tabled a 624.3 million pounds ($864.59 million) bid in an all-cash deal.

The blue-chip index edged 0.1% higher in choppy trading, with gains being capped by a 0.8% decline in heavyweight energy shares as they tracked lower oil prices. [O/R]

AstraZeneca rose 0.4%, and was among the biggest boost to the FTSE 100 after the Philippines said it will resume administering drugmaker’s COVID-19 vaccine to people below 60 years of age.

The domestically focussed mid-cap FTSE 250 index also gained 0.4% to touch a record high.

“Markets are back to being a bit dull for now but pretty buoyant,” Deutsche Bank strategist Jim Reid wrote in a note.

“It’s a lighter week ahead, with the main highlight likely to be at the end of the week with the flash PMIs for April … And there’ll be particular attention on the price gauges as well as investors stay attuned to any signs of growing inflationary pressures.”

With the FTSE 100 gaining 8.7% year-to-date and UK vaccine rollout continuing to progress, markets will have a chance to gauge the impact on the economy as employment data, retail sales, CPI, PPI, and flash April PMIs are all due this week.

Meanwhile, homebuilders added 0.6% after property website Rightmove said advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax-cut for home-buyers last month.

Johnson Matthey rose 0.9% after the chemicals company signed a long-term agreement with Russian metals producer Nornickel for the supply of nickel and cobalt to produce materials used to make electric vehicle (EV) batteries.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)

The Week Ahead – Economic Data, Monetary Policy, and Geopolitics in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 45 stats in focus in the week ending 23rd April. In the week prior, 72 stats had been in focus.

For the Dollar:

After a quiet 1st half of the week, the weekly jobless claims figures on Thursday will influence.

Expect any increase in claims to test market risk appetite.

On Friday, prelim private sector PMI figures for April wrap things up. The services PMI will have the greatest impact on the markets.

In the week ending 16th April, the Dollar Spot Index fell by 0.66% to 91.556.

For the EUR:

It’s a quiet start to the week on the economic data front.

German wholesale inflation figures for March are due out on Tuesday. Increased market sensitivity to inflation will give the numbers greater attention than usual.

The focus will then shift to prelim April private sector PMIs for France, Germany, and the Eurozone on Friday.

On the monetary policy front, the ECB will also deliver its first monetary policy decision of the quarter on Thursday.

While the ECB is expected to stand pat on interest rates, updates on the bond purchasing program will be the main area of interest.

From the ECB press conference, views on the economic outlook will also need monitoring on the day.

At the end of the week, ECB President Lagarde will be back in action. Following the Thursday press conference, however, there shouldn’t be too many surprises.

The EUR ended the week up by 0.66% to $1.1977.

For the Pound:

It’s a busy week ahead on the economic calendar.

In the first half of the week, employment, wages, and inflation figures will be in focus.

Expect March claimant counts and annual rate of inflation to be the key drivers.

The focus will then shift to March retail sales and prelim private sector PMIs for April on Friday.

Expect the retail sales and services PMI figures to be the key drivers at the end of the week.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak on Wednesday. Expect any views on the economic outlook or monetary policy to influence.

The Pound ended the week up by 0.53% to $1.3779.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, March inflation figures will be in focus ahead of house price figures on Thursday.

Expect the inflation figures to be the key driver, with focus likely to be on the core inflation figures.

On the monetary policy front, the BoC is also in action on Wednesday. With the BoC expected to stand pat on policy, the monetary policy report will be the main area of focus.

The Loonie ended the week up 0.22% to C$1.2503 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead.

Prelim retail sales figures are due out on Wednesday. With consumption key to the economic recovery, expect plenty of sensitivity to the numbers.

On the monetary policy front, the RBA meeting minutes on Tuesday will also influence.

The Aussie Dollar ended the week up by 1.46% to $0.7734.

For the Kiwi Dollar:

It’s a quiet week ahead.

1st quarter inflation figures are due out on Wednesday.

Expect sensitivity to the numbers, with the markets having little else to consider in the week.

The Kiwi Dollar ended the week up by 1.55% to $0.7142.

For the Japanese Yen:

It is also a relatively quiet week ahead.

Early in the week, March trade data and finalized industrial production figures for February are due out.

Expect the trade data to have the greatest influence in the week.

At the end of the week, inflation figures for March and private sector PMIs will also draw interest. Expect the private sector PMI and services PMI in particular to have the greatest influence.

The Japanese Yen rose by 0.79% to ¥108.80 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead.

There were no material stats to provide the broader financial markets with direction in the week.

While there are no stats to consider, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave 1-year and 5-year loan prime rates unchanged.

The Chinese Yuan ended the week up by 0.49% to CNY6.5206 against the U.S Dollar.

Geo-Politics

U.S-China and U.S-Russia relations are the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

There are some big names on the docket in the week ahead…

From the U.S:

IBM (Mon), Coca Cola (Mon), Procter & Gamble (Tue), Netflix (Tue), Johnson & Johnson (Tue), and American Express (Fri).

From the EU:

Nestle (Thurs), Renault (Thurs), Daimler (Fri), and Software AG (Fri).

The Week Ahead – Economic Data, COVID-19, and Corporate Earnings in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 63 stats in focus in the week ending 16th April. In the week prior, 36 stats had been in focus.

For the Dollar:

After a quiet Monday, March inflation figures will get things going on Tuesday. In spite of the FED’s assurances of unwavering support, a pickup in inflationary pressure will be a test for the markets.

The focus will then shift to a particularly busy day on the economic calendar.

Key stats include March retail sales, jobless claims, and Philly FED Manufacturing PMI numbers.

Business inventory and industrial production figures are also due out but will likely have limited impact.

At the end of the week, prelim consumer sentiment figures for April will also draw attention on Friday.

In the week ending 9th April, the Dollar Spot Index slid by 0.92% to 92.163.

For the EUR:

It’s a relatively busy week ahead on the economic data front.

Early in the week, Eurozone retail sales and economic sentiment figures for Germany and the Eurozone will be in focus.

Expect Germany’s ZEW economic sentiment figures to have the greatest impact.

Mid-week, industrial production figures for the Eurozone.

Wrapping up the week, March inflation and trade data for the Eurozone will draw attention.

Other stats in the week include inflation figures for France, Germany, Italy, and Spain. We don’t expect the numbers to have an impact on the EUR, however.

The EUR ended the week up by 1.19% to $1.1899.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Retail sales figures are due out early Tuesday ahead of industrial and manufacturing production figures later in the day.

February trade figures will also be in focus on Tuesday. Expect more interest in the numbers, as the markets look for the effects of Brexit on trade terms.

The Pound ended the week down by 0.90% to $1.3707.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

The markets will have to wait until Thursday for manufacturing sales figures. With little else to consider, the numbers will draw attention ahead of wholesale sales numbers on Friday.

Mid-week, OPEC and the IEA’s monthly report, crude oil inventory numbers will also influence.

From the Bank of Canada, the Business Outlook Survey will provide direction at the start of the week.

Away from the economic calendar, expect economic data from China to also influence…

The Loonie ended the week up 0.38% to C$1.2530 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busier week ahead.

Key stats include business and consumer confidence figures in the 1st half of the week.

In the 2nd half of the week, March employment numbers are also due out.

Expect plenty of Aussie Dollar sensitivity to the numbers. Business investment and consumer spending are both key to the economic recovery. Any weakening in consumer or business confidence will test support for the Aussie Dollar.

Improving labor market conditions will also be a must.

The Aussie Dollar ended the week up by 0.17% to $0.7623.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

Key stats include electronic card retail sales and business PMI numbers.

While we can expect the numbers to influence, the RBNZ monetary policy decision is the main event of the week.

With the markets expecting the RBNZ to stand pat, the focus will be on the RBNZ Rate Statement.

The Kiwi Dollar ended the week up by 0.01% to $0.7033.

For the Japanese Yen:

It is a quiet week ahead.

There are no material stats to provide the Yen with direction. The lack of stats will leave the Yen in the hands of market risk sentiment in the week.

The Japanese Yen rose by 0.92% to ¥109.67 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead.

Early in the week trade data for March will be in focus. Expect plenty of interest in the numbers. The markets will be looking for a sustained improvement in trade terms.

At the end of the week, 1st quarter GDP numbers and March industrial production figures will be in focus.

Other stats include retail sales, fixed asset investment, and unemployment figures. While the numbers tend to draw attention, 1st quarter GDP numbers will overshadow these stats at the end of the week.

The Chinese Yuan ended the week up by 0.22% to CNY6.5526 against the U.S Dollar.

Geo-Politics and COVID-19

U.S foreign policy will remain the main area of focus for the markets, with U.S – China relations key.

For the Eurozone, vaccination roll-outs and COVID-19 news updates will also be in focus in the week ahead.

Corporate Earnings

Earning season also kicks off in the week ahead.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are big names delivering results in the week

The Weekly Wrap – A Dovish FED Pegs Back the Greenback

The Stats

It was a relatively quiet week on the economic calendar, in the week ending 9th April.

A total of 36 stats were monitored, following 60 stats from the week prior.

Of the 36 stats, 23 came in ahead forecasts, with 11 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 24 of the stats reflected an upward trend from previous figures. Of the remaining 12 stats, 11 reflected a deterioration from previous.

For the Greenback, it was a first weekly loss in 4-weeks. In the week ending 9th April, the Dollar Spot Index fell by 0.92% to 92.163. In the previous week, the Dollar had risen by 0.28% to 93.022.

A dovish FED left the Dollar in the red for the week.

Out of the U.S

It was a quieter week on the economic data front.

Key stats included service sector PMI, factory orders, and weekly jobless claim figures.

It was a mixed set of numbers for the Greenback.

The market’s preferred ISM Non-Manufacturing PMI rose from 55.3 to 63.7 in March. It was the only positive, however.

In February, factory orders fell by 0.8%, partially reversing a 2.7% rise from January.

Jobless claims figures were also disappointing, with initial jobless claims rising from 728k to 744k in the week ending 2nd April. Economists had forecast a fall to 680k.

Other stats in the week included JOLTs job openings, trade data, wholesale inflation, and Markit service PMIs.

These stats had a relatively muted impact on the Dollar and the broader markets, however.

On the monetary policy front, the FOMC meeting minutes reaffirmed FED Chair Powell’s stance on low for longer. Late in the week, Powell also delivered a speech talking of the need for unwavering monetary policy support.

In the equity markets, the NASDAQ rallied by 3.12%, with the Dow and the S&P500 gaining 1.95% and 2.71% respectively.

Out of the UK

It was a quiet week on the economic data front.

Finalized service and composite PMI numbers for March were in focus.

Downward revisions from prelim figures had a relatively muted impact on the Pound, however. Service sector and the broader private sector returned to growth in March, delivering Pound support.

Government plans on easing COVID-19 containment measures thanks to progress on the vaccination front also remained Pound positive.

In the week, the Pound fell by 0.90% to end the week at $1.3707. In the week prior, the Pound had risen by 0.31% to $1.3832.

The FTSE100 ended the week up by 2.65%, reversing a 0.05% loss from the previous week.

Out of the Eurozone

It was another particularly busy week on the economic data front.

Mid-week, service sector PMIs for March were in focus after impressive manufacturing numbers from the week prior.

The stats were skewed to the positive, with only Italy reporting a decline in its services PMI.

For the Eurozone, the composite PMI increased from 48.8 to 53.2, which was up from a prelim 52.5. A return to growth across the private sector came in spite of containment measures across a number of Eurozone member states.

From Germany, factory orders, industrial production, and trade data were also in focus.

Orders rose for a 2nd consecutive month, albeit at a slower pace, driven by domestic demand.

Industrial production and trade data disappointed, however.

Industrial production fell by 1.6% in February, month-on-month, following a revised 2% decline in January. Economists had forecast a 1.5% rise.

In February, Germany’s trade surplus narrowed from €22.2bn to €19.1bn, versus a forecasted narrowing to €20.0bn.

On the monetary policy front, the ECB meeting minutes were also in focus. While highlighting downside risks to the economy near-term, optimism was evident over the medium-term outlook.

In line with Lagarde’s assurances from the press conference, the minutes revealed a plan to ramp up bond purchases in the near-term. The minutes did discussed a quarterly review, however…

For the week, the EUR rose by 1.19% to $1.1899. In the week prior, the EUR had fallen by 0.30% to $1.1759.

The DAX30 rose by 0.84%, with the CAC40 and EuroStoxx600 ended the week with gains of 1.09% and 1.16% respectively.

For the Loonie

It was a busier week.

Trade data for February and March Ivey PMI numbers were in focus mid-week.

The stats were mixed. While the Ivey PMI jumped from 60.0 to 72.9, the trade surplus narrowed from C$1.21bn to C$1.04bn.

At the end of the week, employment figures for March were more significant, however.

Employment surged by 303.1K at the end of the quarter, following an impressive 259.2k jump in February.

The unemployment rate fell from 8.2% to 7.5% as a result of the surge in hiring.

In the week ending 9th April, the Loonie rose by 0.38% to C$1.2530. In the week prior, the Loonie had fallen by 0.01% to C$1.2578.

Elsewhere

It was a relatively bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 9th April, the Aussie Dollar rose by 0.17% to $0.7623, with the Kiwi Dollar ending the week up by 0.01% to $0.7033.

For the Aussie Dollar

It was a particularly quiet week.

There were no material stats to provide the Aussie with direction.

While there were no stats, the RBA was in action early in the week.

In line with market expectations, the RBA stood pat on policy.

The Rate Statement talked of a hold on the cash rate until wage growth is substantially higher and inflation is sustainably within the 2% to 3% target range. According to the statement, the Board does not expect these conditions to be met until 2024 at the earliest.

For the Kiwi Dollar

It was also a particularly quiet week.

There were no material stats in the week to provide the Kiwi with direction.

For the Japanese Yen

It was a relatively quiet week.

At the start of the week, finalized service PMI figures were in focus. In March, the services PMI increased from 46.3 to 48.3, its highest reading since 2020.

In spite of the continued contraction, optimism hit its highest level since 2013 on vaccine hopes.

Household spending figures for February also provided some hope. Month-on-month, spending increased by 2.4%, partially reversing a 7.3% slump from January.

The Japanese Yen rose by 0.92% to ¥109.67 against the U.S Dollar. In the week prior, the Yen had fallen by 0.96% to ¥110.69.

Out of China

It was a relatively quiet week on the data front.

The Caixin Services PMI for March was in focus early in the week.

Following softer growth across the manufacturing sector, service sector activity picked up in March.

The Services PMI rose from 51.5 to 54.3.

At the end of the week, inflation figures also drew attention, with the PMI surveys highlighting a marked increase in input price.

In March, consumer prices fell by 0.5%, reversing a 0.6% increase in February. In spite of the fall in March, inflationary pressure returned. The annual rate of inflation accelerated from -0.2% to 0.4%. Economists had forecast consumer prices to fall by 0.4%, month-on-month, and to rise by 0.3% year-on-year.

Wholesale inflationary pressures surged at the end of the 1st quarter. The producer price index increased by 4.40%, year-on-year, which was well above a forecasted 3.5% increase. The PPI had risen by 1.7% in February.

In the week ending 9th April, the Chinese Yuan rose by 0.22% to CNY6.5526. In the week prior, the Yuan had fallen by 0.40% to CNY6.5670.

The CSI300 slid by 2.45%, with the Hang Seng ending the week down by 0.83%.

London Stocks Rise on Optimism Over Swift Economic Recovery

The blue-chip FTSE 100 index rose 0.3%, with industrials and consumer discretionary stocks, mainly BAE Systems Plc, Relx Plc, Next Plc and Compass group Plc, being the biggest gainers.

Mining stocks, including Rio Tinto, Anglo American and BHP, were also among the biggest boosts on the index.

Global equities crept higher on hopes of a stronger U.S. economy, as investors parsed details of a $2 trillion U.S. government spending plan and hoped for strong jobs data later in the week. [MKTS/GLOB]

The domestically focused mid-cap FTSE 250 index climbed 0.3%, led by industrials and real estate stocks.

Quilter rose 2.0%, after it agreed to sell its international business to specialist life assurance company Utmost Group for 483 million pounds ($664.37 million), as it sharpens its focus on its UK wealth management unit.

Fashion retailer Next rose 4.2%, even after it reported a halving in annual pretax profit after COVID-19 lockdowns closed its stores but raised its forecast for a big rebound this year.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Shailesh Kuber)