_edited_edited.png)
Markets Update: M&A activity heats up on 'M&A Monday' as global markets eye Turkey's runoff election
Today's important market events:
[USD] Multiple FOMC Members Speak, Startig with Bostic - 14:45 CEST
Asia-Pacific stocks traded mixed on Monday, following the subdued performance of Wall Street on Friday. Investors in the region are bracing for this week's key economic releases. European equity futures are indicative of a slightly higher open, with the Euro Stoxx 50 up 0.1% after the cash market closed up 0.2% on Friday. The US dollar index (DXY) is near Friday's highs, while the Japanese yen (JPY) is lagging the majors. The Australian dollar (AUD) and New Zealand dollar (NZD) are outperforming. The euro (EUR) is trading on a 1.08 handle against the US dollar (USD). US President Joe Biden said that debt ceiling talks are moving along and that they will know more in the next couple of days about progress in the discussions. Turkish President Recep Tayyip Erdogan's share of votes in the first round of the presidential election was below the 50% threshold needed to win outright, with 49.2%. Headlines/Economic Data
Australia
ASX 200 opens flat at 7,254
Australia Foreign Minister Wong names members of the Australia-China relations advisory board
NAB: Sees Australia cash rate peak at least 4.1% (current cash rate is 3.85%)
New Zealand
New Zealand government pledges over NZ$1 billion for cyclone and flood recovery
New Zealand April Performance Service Index (PSI): 49.8 v 54.4 prior (moves back into contraction)
Bankers Association says RBNZ liquidity review creates uncertainty related to the bond market, specifically the non-government bond market
China/Hong Kong
Hang Seng opens -0.5% to 19,525
Shanghai Composite opens -0.1% at 3,269
China PBOC Open Market Operation (OMO): Sells CNY2.0 billion v CNY2.0 billion prior in 7-day reverse repo
China PBOC sets Yuan reference rate: 6.9654 v 6.9481 prior [weakest CNY fix since March 10th]
China PBOC conducts CNY125 billion in 1-year Medium-Term Lending Facility (MLF) at 2.75% vs. 2.75% prior [CNY100 billion in MLF funds are maturing]
US Secretary of State adviser Chollet: Secretary of State Blinken hopes to visit China in the near future – SCMP
EU Foreign Policy Chief Borrell: EU ministers agree on China basic recalibration lines, trade relations must be balanced
China-Hong Kong Swap Connect Launch Event; HK Exchange CEO Lee Says Swap Connect Scheme could further improve CNY global status; PBOC's Dep Gov Pan - Swap Connect shows support to HK as financial center – Hong Kong press
Hong Kong Q1 Final GDP Q/Q: 5.3% v 5.3%e; Y/Y: 2.7% v 2.7%e (post-close Friday)
Japan
Nikkei 225
Opens +0.5% at 29,547
Japan April PPI (CGPI) M/M: 0.2% v 0.0%e; Y/Y: 5.8% v 5.6%e
US President Biden to meet with Japan PM Kishida on Thursday – financial press
Japan might allow utilities to raise prices from June; the cos. are expected to raise prices by up to 43% - Japanese press [update]
Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected]
US Treasury Secretary Yellen met with Japan Finance Minister Suzuki at G-7 in Hiroshima, Japan; Discussions included US debt ceiling - financial press (update from the weekend)
Japan Foreign Minister Hayashi: China and Russia are increasing their military collaboration - (Update) US press
Japan PM Kishida: The need for Govt-BOJ to closely coordinate on economic policy is heightening
Japan's top economic council on Monday debated the role of the Govt-BOJ should play in sustainably raising wages, eliminating risk of return to deflation
Japan Economy Minister Goto: BOJ must respond nimbly to any change, downside risks to economy
Japan MOF sells ¥2.5 trillion in 5-year JGB bonds; avg yield: 0.1160% v 0.1570% prior; bid-to-cover: 3.70x v 3.95x prior
South Korea
Kospi
Opens -0.2% at 2,469
South Korea stock markets to close on May 29th for one-off holiday
United States
President Biden believes that the debt ceiling will be addressed on Tuesday, May 16, and remains optimistic about the outcome of the talks.
Treasury Secretary Janet Yellen said that the current banking environment and pressures on earnings of some US regional banks may lead to some concentration in the sector. She also said that US regulators will likely be open to mergers among midsize banks.
Federal Reserve Bank of St. Louis President James Bullard, who is not a voting member of the Federal Open Market Committee (FOMC), said that market-based inflation expectations are back down to levels consistent with the Fed's 2% inflation target. He also said that policy is now at the low end of sufficiently restrictive.
Federal Reserve Bank of Richmond President Thomas Barkin, who is also not a voting member of the FOMC, said that he is very open to more rate hikes. He said that he wants to be convinced that inflation is easing before he would consider pausing the tightening cycle.
US commercial bank deposits increased by $67.3 billion in the week ended May 3, bringing total deposits to $17.16 trillion. This was the first increase in four weeks.
Energy company ONEOK announced that it would acquire midstream company Magellan Midstream Partners for $18.8 billion in cash and stock. The deal is expected to close in the second half of 2023.
Europe
Turkey
President Recep Tayyip Erdogan won the first round of the Turkish presidential election on Sunday, May 8, but he did not receive enough votes to avoid a runoff election. The runoff election will be held on May 28.
The Group of Seven (G7) leaders are planning to raise pressure on Russia by taking steps to crack down on sanctions evasion, increase energy production, and restrict exports that could help the war effort.
The G7 and the European Union (EU) are reportedly planning to agree to ban the restart of Russian gas pipelines. This would be a significant escalation of sanctions against Russia.
European Central Bank (ECB) Vice President Luis de Guindos said that the ECB is in the final stages of its historic cycle of rate hikes. He said that the central bank will continue to raise rates until inflation is brought under control.
The Bank of England is reportedly considering easing some of the rules for banks when the UK adopts new international capital rules from 2025. This could make it easier for banks to lend money and invest in the economy.
The EU is reportedly facing pressure to extend access to London clearing houses. This would allow European banks to continue to clear trades in London even after the UK leaves the EU.
Commodities Crude oil futures extended their recent declines on Monday, as investors sold off riskier assets amid concerns about the global economy. West Texas Intermediate (WTI) crude oil futures fell as low as $70.01 per barrel, while Brent crude oil futures fell as low as $73.99 per barrel. The sell-off in crude oil prices comes as the Group of Seven (G7) and the European Union (EU) are reportedly planning to agree to ban the restart of Russian gas pipelines. This would be a significant escalation of sanctions against Russia and could further disrupt global energy markets. Despite the sell-off in crude oil prices, Gazprom, the Russian state-owned energy company, continued to ship gas to Europe via Ukraine on Saturday and Sunday. The volume of gas shipped on Saturday was 40.4 million cubic meters, and the volume shipped on Sunday was 40.3 million cubic meters. Spot gold traded rangebound on Monday, as the US dollar remained relatively unchanged. Gold is often seen as a safe haven asset, and its price can rise when investors are seeking to reduce risk. However, gold is also sensitive to changes in interest rates, and higher interest rates can make gold less attractive to investors. Copper futures were subdued on Monday, as investors remained cautious ahead of the release of Chinese economic data on Tuesday. China is the world's largest consumer of copper, and its economic data can have a significant impact on the price of the metal. Here are some additional details about the commodities markets:
Crude oil: The price of crude oil has been volatile in recent months, as investors have weighed the risks of a global recession against the possibility of further supply disruptions from Russia. The G7 and EU's plans to ban the restart of Russian gas pipelines could further disrupt global energy markets and push up oil prices.
Gold: The price of gold has been relatively stable in recent months, as investors have been reluctant to make big bets on the metal amid the uncertainty in the global economy. However, gold could rise if investors become more risk-averse and seek out safe haven assets.
Copper: The price of copper has fallen in recent months, as investors have become more concerned about the global economic outlook. China is the world's largest consumer of copper, and its economic data can have a significant impact on the price of the metal.
Key economic releases to watch this week include:
Eurozone industrial production for March
Speeches from Bank of England (BoE) Chief Economist Huw Pill, Federal Reserve (Fed) Bank of Atlanta President Raphael Bostic, Fed Bank of Richmond President Thomas Barkin, and Fed Bank of St. Louis President James Bullard
UK syndicated loan supply
Earnings from Siemens Energy and Porsche
Investors will be looking for signs of economic growth and inflation in the data releases. They will also be paying attention to the tone of the speeches from central bankers for clues about the future direction of monetary policy.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team