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Markets Update: Are Banks Dragging Down the US Economy? NFP Report to Shed Light on Troubling Headwinds
Today's important market events:
[GBP] UK Construction PMI (Apr) - 10:30 CEST
[USD] Nonfarm Payrolls (Apr) - 14:30 CEST
[USD] Unemployment Rate (Apr) - 14:30 CEST
[CAD] Employment Change (Apr) - 14:30 CEST
Asian-Pacific (APAC) stocks had a mixed trading session today, following a weak lead from the US market where risk sentiment was dampened by banking-related challenges. Officials at the federal and state levels in the US are reportedly scrutinizing possible market manipulation in relation to banking shares. Meanwhile, European equity futures point towards a higher opening with the Euro Stoxx 50 index up by 0.5%, after the cash market closed down by 0.5% yesterday.
Sources have revealed that policymakers at the European Central Bank (ECB) have agreed on a smaller rate increase in exchange for guidance on more future hikes and a wind-down of the Asset Purchase Programme (APP). The US Dollar Index (DXY) is currently under pressure, with support at 1.10 being held in the EUR/USD pair, while Cable sits on a 1.26 handle. The antipodeans are outperforming.
Australia/New Zealand:
- The ASX 200 opened down 0.2% at 7,178.
- Australia New Zealand Bank (ANZ.AU) reported H1 (A$) cash NPAT of 3.82B, beating the 3.11B from the previous year (3.81Be), with NII at 8.50B compared to 7.10B y/y, and revenue at 10.5B compared to 9.5B y/y.
- Macquarie Group (MQG.AU) reported FY23 (A$) net at 5.18B, up from 4.71B y/y (4.99Be), and operating revenue at 19.1B compared to 17.3B y/y.
- The Australia Mar Home Loans Value M/M increased by 4.9%, beating expectations of -0.3%e.
- The Australia Central Bank (RBA) Statement on Monetary Policy (SOMP) reiterated that some further policy tightening may be necessary, assuming a peak rate of 3.75%.
- Australia Treasurer Chalmers unveiled a plan to deal with electricity prices, with the budget expected to include substantial relief for vulnerable Australians.
China/Hong Kong:
- The Hang Seng opened up 0.6% at 20,061, while the Shanghai Composite opened flat at 3,350.
- Hong Kong Mar Retail Sales Value Y/Y was 40.9%, slightly below expectations of 41.2%e, with Retail Sales Volume Y/Y at 39.4%, beating expectations of 35.5%e.
- The USD/CNY (CN) China PBOC set the Yuan reference rate at 6.9114, up from 6.9054 prior.
- The China PBOC Open Market Operation (OMO) sold CNY3.0B compared to CNY33.0B prior in 7-day reverse repo, net draining CNY162B compared to CNY529B prior.
- Apple (AAPL) CEO Cook stated that the supply chain had no material shortages at all during Q2 in post-earnings comments.
- China Apr Caixin PMI Services came in at 56.4, lower than the expected 57.0e, marking the fourth straight month of expansion.
Japan/South Korea/Other Asia:
- The Nikkei 225 was closed for a holiday, while the Kospi was also closed for a holiday.
- The US "hinted" that Taiwan chip-related firms may receive support under the Chips Act, according to Taiwan media.
- The Taiwan Central Bank (CBC) Mar Minutes showed that inflation is expected to soften this year.
- Philippines Apr CPI Y/Y came in at 6.6%, lower than the expected 7.0%e, marking the 12th month above target.
- The Philippines Central Bank (BSP) remains committed to adjusting the monetary policy stance as necessary to prevent further broadening of price pressures following the Apr CPI data.
- Indonesia Q1 GDP Q/Q was at -0.9%, beating the expected -1.0%e, with Y/Y at 5.0% matching the expected 5.0%e.
North America:
- Preliminary non-farm productivity for Q1 in the US dropped by 2.7%, which was larger than the expected 2.0%. Additionally, unit labor costs increased by 6.3% compared to the expected 5.5%, marking the biggest drop in productivity and largest increase in unit labor costs since Q2 2022.
Initial jobless claims in the US came in at 242K versus the expected 240KE. Meanwhile, continuing claims decreased to 1.81M versus the expected 1.87ME.
The Federal Reserve released factors affecting reserve balances (H.4.1), indicating a decline in discount window borrowing to $5.35B compared to $73.9B the previous week. Banks have borrowed $75.8B versus $81.3B the previous week from the new BTFP facility.
Federal and State officials in the US are reportedly investigating potential market manipulation in banks, according to press reports.
AAPL has reported Q2 earnings of $1.52 versus the expected $1.43, with revenue of $94.8B compared to the expected $93.1B. The company also announced a share buyback of up to $90B and raised their quarterly dividend by 4.3% to $0.24 from $0.23, resulting in an indicated yield of 0.57%.
Europe:
- The European Central Bank (ECB) has raised key rates by 25bps as expected, and rates will stay restrictive for as long as necessary. ECB chief Lagarde has stated that inflation has been too high for too long, with price pressures remaining strong in prepared remarks.
During the Q&A session, Lagarde stated that the mood on the meeting was determined to get inflation back to the target level, and they do not have a numerical estimate for sufficiently restrictive measures.
In the UK, net consumer credit for March was higher than expected at £1.6B versus the expected £1.2BE, while net lending came in at £0.0B versus the expected £1.6BE. Mortgage approvals for March reached a 5-month high of 52.0K versus the expected 46.0KE.
The 10-year U.S. Treasury (UST) futures remained subdued after surrendering most of the gains made in the previous day, as mixed data releases and anticipation for the incoming U.S. jobs report became the market's focus. Meanwhile, Bund futures retreated from their post-European Central Bank (ECB) highs, failing to hold onto the 137.00 level.
Crude oil futures saw slight upward movement after experiencing acute selling earlier in the week, but the recovery was limited due to ongoing banking sector woes and Saudi Arabia mostly cutting its OSPs. On the other hand, spot gold prices were flat, and market participants were indecisive ahead of the upcoming U.S. jobs data.
Copper futures remained rangebound, with the mixed risk appetite containing the price action.
Today's highlights include the Swiss Consumer Price Index, Eurozone Retail Sales, and Labour Market Reports from the US and Canada. Also, the ECB Survey of Professional Forecasters (SPF) and speeches from the Federal Reserve's Cook and Bullard, and the ECB's Elderson, are worth noting. Finally, investors should also pay attention to earnings reports from Intesa Sanpaolo, Adidas, InterContinental Hotels, and Cigna.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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