Stock markets traded mixed. Overnight Chinese data showed a slowdown in the pace of contraction in the manufacturing sector. Beijing’s new policy support, which includes cash handouts for hiring graduates and support for internet companies’ offshore listings, supported the sentiment a bit. In the rest of the world though, inflation jitters returned and yields spiked, with Australia’s 10-year up 8.5 bp and the German Bund yield lifting 1.0 bp to 1.06%. US Dollar stabilized as Treasury yields spiked.
European open: Swiss economy stronger than expected at the start of the year. Official GDP numbers beat expectations and showed a quarterly growth rate of 0.5% q/q up from 0.3% q/q in Q4 last year. Services were still held back at the start of the quarter by virus restrictions, and the impact of Russia’s invasion of Ukraine won’t show in these numbers yet. SNB head Jordan warned that the fallout from the war and sanctions against Russia could mean stagflation risks globally, but still, with these numbers, the SNB’s negative interest rate environment will also be challenged.
- USDIndex recovered slightly to 101.79.
- Equities – Nikkei and ASX meanwhile closed with losses of -0.3% and -1.0% respectively as inflation jitters returned and yields spiked. GER40 and UK100 up 0.9% and 0.4%.
- Yields – US 10-year rate has jumped 9.4 bp to 2.83% as markets return from yesterday’s holiday.
- Oil – USOil spiked to $119.20 per barrel as demand expectations pick up and EU leaders agreed a partial ban on Russian oil.
- Bitcoin extended gains above 20-day SMA for the first time since April 7.
- FX markets – USDJPY lifted to 127.33, EURUSD down to 1.0734, Cable below the 1.26 mark.
Today – GDP from Switzerland and Canada for Q1, German unemployment, Eurozone HICP. US housing index, Chicago index and Consumer Confidence. The Biden-Powell meeting is also on tap.
Biggest FX Mover @ (08:00 GMT) EURUSD (-0.39%) declined to 1.0730 due to USD strength. MAs aligning lower, MACD histogram zeroed, RSI 35 & falling, H1 ATR 0.00117, Daily ATR 0.00942.
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Andria Pichidi
Market Analyst
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