Market movers today
In the Euro area, it’s quiet on the data front ahead of ‘Super Thursday’, but markets will stay tuned for any policy hints from ECB President Draghi when he opens a farewell colloquium in honour of the departing Chief Economist Peter Praet at 09:30 CEST.
In the UK, European elections kick off today. Normally, the elections would not be a major market mover but, given Brexit, it is more interesting this time, not least because the Conservative Party is likely to suffer a heavy defeat and Nigel Farage’s new Brexit party may be the biggest party of all. In our view, it is likely this would increase pressure on Prime Minister Theresa May to resign. Furthermore, CPI inflation for April is also on the agenda.
In the US, markets will keep an eye on the FOMC minutes from the May meeting set to be released later in the day. As the Fed has clearly communicated that it expects to be on hold for some time, focus will likely be mainly on the reasoning behind the surprise cut in the Interest on Excess Reserves (IOER).
In Scandinavia, the Riksbank will publish the first Financial Stability Report for 2019 (see next page).
Selected market news
Global financial markets are watching every little aspect of the renewed trade dispute between the US and China, which currently shows no sign of ending. Yesterday, US equity markets saw some relief on the back of a decision from the Trump administration to issue a licence that will allow US companies to keep doing business with Huawei for the next three months in a bid to contain the fallout from the export restrictions on the Chinese telecoms equipment maker. However, recovery in Asian equity markets fizzled out following news that the Trump administration is considering curtailing the flow of American technology to China’s top makers of surveillance gear.
In the UK, Prime Minister Theresa May yesterday proposed to give Parliament a vote on whether to call another referendum to ratify Britain’s divorce from the EU conditional on MPs backing her overall withdrawal bill first. However, the proposal seemed to have little effect in winning over sceptics, with prominent Brexiteers, such as conservative MP Boris Johnson and Labour Party leader Jeremy Corbyn, and May’s Northern Irish allies condemning her proposal. Indeed, consensus is increasingly shifting towards a scenario where either Brexiteer Boris Johnson or Labour’s Corbyn is set to take the UK through some form of Brexit and both are seen by markets as pound-negative. In reality, we will not have more certainty before May steps down and domestic politics is reshuffled. Either candidate may indeed show to be more pragmatic but for now a bit more pound volatility has been introduced.
