11:15 EU Mid-Market Update via TradeTheNews

EU raises its GDP outlook for both 2021 and 2022; Germany inflation at a 2-year high; focus on US CPI reading in session.


- German Apr Final CPI reading confirms its highest annual pace in two years - UK Q1 GDP data showed the economy weathered coronavirus restrictions better than initially feared; markets expect growth to continue to accelerate in the coming months - Awaiting US inflation data but unlikely to have Fed move away from its loose monetary policy despite higher inflation.

Asia: - South Korea Apr Unemployment Rate: 3.7% v 3.9% prior - Australia Debt Agency AOFM) comments on 2021-22 bond issuance program. 2020-21 It cuts its planned issuance for current fiscal year from A$210B to A$210B Coronavirus: - Total global cases 159.3M; total deaths: 3.31M.

Europe: - UK Chief Negotiator Frost stated that the Northern Ireland protocol could not last in its current state and was presenting significant challenges for businesses -

Americas: - Fed’s Bullard (non-voter, dove): reiterates expects to see more inflation in 2021 and noted it was too early to talk about tapering asset purchases - Fed's Kashkari (dove, non-voter) reiterated stance that the US was a long way from maximum employment - Fed’s Harker (non-voter) saw no reason for Fed to pull back on stimulus now; Fed policy to hold steady for now. Saw inflation reaching 2.3% this year, with core inflation at 2%; monetary and fiscal aid creates upside risk for inflation - Fed's Bostic (FOMC voter): we're on the road to recovery but long way to go.

Energy: - Weekly API Crude Oil Inventories: -2.5M v -7.7M prior - IAEA: Iran’s Natanz plant has enriched uranium to 63%, higher than the announced 60% earlier; complicates talks to revive its nuclear deal with world powers.


*** **Equities**

Indices [Stoxx600 +0.32% at 437.98, FTSE +0.61% at #, DAX +0.14% at 15,141.05, CAC-40 +0.04% at 6,269.74 , IBEX-35 +0.06% at 8,993.00, FTSE MIB +0.10% at 24,421.50, SMI +0.18% at 11,009.52, S&P 500 Futures -0.29%]

Market Focal Points/Key Themes: European indices open generally flat and failed to gain direction later in the sesion with mixed performance across the board; better performing sectors include materials and consumer discretionary; sectors inclined to the downside include industrials and financials; Swedish markets to close early; UDG Healthcare to be acquired by Nenelite; earnings expected in the upcoming US session include Wendy’s, Hera, Pirelli and Sonos.

***Equities*** - Consumer discretionary: Ahold Delhaize [AD.NL] +4% (earnings), Carrefour [CA.FR] +2% (earnings), Ubisoft [UBI.FR] -7% (earnings), TUI Group [TUI1.DE] -3% (earnings), Delivery Hero [DHER.DE] -2% (expands in Germany)- Financials: Commerzbank [CBK.DE] +7% (earnings), ABN AMRO Bank [ABN.NL] -7% (earnings)- Healthcare: UDG Healthcare [UDG.UK] +22% (to be acquired; earnings), Bayer [BAYN.DE] +3% (earnings), Merck KGaA [MRK.DE] -1% (earnings)- Telecom: Deutsche Telekom [DTE.DE] +2% (earnings).

***Speakers: - EU Commission Spring Forecasts raised its 2021 and 2022 growth forecasts and saw all EU economies returning to pre-pandemic growth by the end of 2022 - France Fin Min Le Maire stated that 2021 French GDP growth to be among the strongest in the region - UK Chancellor of the Exchequer Sunak (Fin Min): Household incomes have been protected during the pandemic which will bode well for spending this yea - EU Economic Commissioner Gentiloni (Italy): To keep budget rules suspended through 2022 - Finland Finance Ministry forecasted 2021 GDP growth at 2.6% and saw 2022 growth at 2.5% - Turkey President Erdogan stated that would take normalization steps after holiday; COVID-19 restrictions to be eased gradually from week of May 16th (next week) - Philippines Central Bank (BSP) Policy Statement noted that its accommodative stance to help quicken recovery but noted that sustained support for domestic demand remained a priority. CPI to return to target in 2021-22 period aided by PHP currency (Peso) and that risks to inflation outlook were broadly balanced - IEA Monthly Oil Report noted that the world had used up it pandemic oil glut. Cut its 2021 global oil demand growth from 5.7M bpd to 5.4M bpd.

**Currencies/ Fixed Income** - Recent weakness in global equity markets helped to stem the USD losses as safe-haven flows surfaced. Dealers note that any strength in the greenback would be short-lived as any higher US inflation data would unlikely to have Fed move away from its loose monetary policy. Analysts currently expect no US rate hikes for the next two years - Italy 10-year govt yield at 1.00% (highest since Sept) as dealers note concerns that ECB could implement a premature tapering of its Pandemic Emergency Purchase Program (PEPP).

- Source TradeTheNews.com


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