Market movers today
During the day, we get consumer confidence for Norway (Q2), Germany (June) and the US (May). The pattern so far has been a small increase in consumer confidence, as the COVID-19 data have been improving and we are seeing the end to the lockdowns. For the monthly indices we may see a continuation of this trend.
In France and the UK, business confidence indicators in May are due out at 08:45 CEST and 12:00 CEST, respectively.
In the US, new home sales in April are expected to have declined further. That said, the US housing market has not taken a major ‘financial crisis’-like hit and, based on MBA mortgage applications, things seem to be improving in the US housing market.
We expect the Hungarian central bank will keep the policy rate unchanged at 0.90% today.
Besides that, focus remains on COVID-19 developments, the easing of lockdown restrictions in the advanced economies and the geo-political situation between the US and China and in Hong Kong.
Selected market news
We saw a positive opening on the Asian equity markets this morning despite the tensions between the US and China and the protests in Hong Kong. However, the gradual opening of the economies and the recovery dynamics (such as seen in the better-than-expected German business expectations data released yesterday), where Japan ended the state of emergency yesterday and the ongoing news flow on potential drugs to battle the coronavirus is supportive for the equity markets.
Furthermore, the Chinese government has sought to reassure Hong Kong and the rest of world that Hong Kong’s legal system will remain independent despite the proposal for a new national security law.
The oil price also continue its slow but steady move upwards, with the oil price rising to USD34.
Comments from French Central Bank governor Villeroy yesterday also boosted confidence that the ECB will increase the PEPP programme at the forthcoming ECB meeting on 4 June. He said that the ECB has room to innovate and act both “rapidly and powerful” and in loosening the limits in the PEPP programme. Looking at the current pace of purchases in the PEPP, the ECB will reach EUR750bn sometime in late September/early October. We also saw further tightening in the spread between the periphery and core-EU markets.
