Market movers today
After a busy week we finish off on a quiet note. The main release today will be preliminary US consumer confidence for April from the University of Michigan. The consensus is for a small decline from 98.4 to 98.0.
Otherwise, focus continues to be on comments from UK politicians regarding Brexit and any news on US-China trade talks . This week, US Treasury Secretary Steven Mnuchin said the US and China has found agreement on an enforcement mechanism, which has been one of the key challenges.
Selected market news
Asian stocks traded mixed following the US markets, which were steady ahead of corporate earnings and leaning on solid economics. The Treasuries market also calmed. Chinese equities and the Japanese Topix index slid slightly and, while US stock futures were flat, Q1 19 reporting starts today with several US banks.
Market concerns over a sharp slowdown in US growth were alleviated as data showed the number of people filing applications for unemployment benefits dropped to a 50-year low. Also, comments from Fed Vice Chairman Richard Clarida that the US economy is in a “good place” calmed the markets. Clarida also re-emphasised the Fed’s patience on rate hikes.
The IMF’s Christine Lagarde stated yesterday that the six-month delay in Brexit avoids the “terrible outcome” of a “no-deal” solution, but does nothing to lift uncertainty over the final outcome. The IMF’s Deputy Managing Director, Mitsuhiro Furusawa, warned that a sharper-than-expected slowdown in China’s economy is still a key risk to global growth.
In Washington, Bank of Italy Governor and ECB council member Ignazio Visco said new TLTRO details would be defined at the 6 June meeting, when new economic projections would be released. The ECB will also discuss the side effects of negative rates before the meeting. A Reuters report stated that the ECB was considering offering negative rates on TLTRO loans as the idea of a tiered deposit rate was “met with widespread scepticism”.
US President Donald Trump declared yesterday that he would not revoke sanctions on North Korea at a meeting in Washington with South Korean President Moon Jae-in discussing how to get US-North Korea nuclear talks back on track after an unsuccessful summit in Hanoi.
PM Theresa May told Parliament she will try to get a Brexit deal approved to avoid getting trapped in a long extension. May also hinted at a compromise on what trade ties with the EU should look like after Brexit. She said there was not much difference between Labour and her government in terms of their trade proposals, hinting that a customs union is a possible topic for compromise. May also restated that she opposes a second referendum on Brexit.
