Market movers today
Today, we have a lot of interesting things on the agenda. A key focus point in the market is the tense situation between the US and China over Hong Kong. Today, US President Trump will hold a press conference about US measures in the form of sanctions against Chinese officials who are dealing with Hong Kong. More forceful measures, such as applying the same trade rules to Hong Kong as mainland China, may be considered down the road.
In the Nordics, we get Q1 GDP details from Denmark and Sweden and unemployment data for Denmark and Norway (April and May, respectively). Norway is set to unveil new fiscal stimulus measures. For more details see Scandi section overleaf.
In the euro area, the ECB’s monetary statistics for April and preliminary HICP inflation in May are due out at 11:00 CEST.
We will also keep an eye on the April monthly private consumption data from France.
In the US, monthly real private consumption for April is due out at 14:30 CEST, which is likely to show another significant decline. However, to some extent it is old news and more high-frequency data based on transaction card spending has shown a gradual improvement in May, see US Macro Monitor: Early signs the bleeding is stopping but the wound has not healed, 26 May.
Selected market news
After a strong rally over the past weeks, ignoring the tensions building between China and the US over Hong Kong, market anxiety started creeping in in the US session and overnight in Asia ahead of President Trump’s press conference later today. He is set to outline the administration’s response to the decision by China to tighten the grip on Hong Kong. Yesterday, China’s National People’s Congress passed the anti-sedition law, which will allow China to extend many of its security practices to Hong Kong. On Wednesday, this law prompted Secretary of State Mike Pompeo to declare that Hong Kong was no longer to be seen as autonomous from China. This opens up for actions from Trump and the US administration, which could mean imposing sanctions against foreigners who undermine “fundamental freedoms” and autonomy in Hong Kong or go as far as revoking Hong Kong’s favoured status. The question is how far Trump will go at today’s press conference, as removing Hong Kong’s favoured status would probably spark negative market developments, hitting global risk sentiment, which could backfire on the US economy as it would further deteriorate the relationship with China. With US-China tensions running high, we continue to see risk to the upside for USD/CNY and USD/CNH.
In Europe, the EU Commission economic sentiment index yesterday rose only marginally to 67.5 from 64.9 in April, while services confidence continued to fall to -43.6 from -38.6. That said, the details were less bleak, as both demand and employment expectations recovered some ground in the services and retail sectors and production expectations also rose in industry/construction. However, order book levels eased further in a sign that a swift industry turnaround is not yet in sight, especially for car manufacturers. On the consumer side, households’ expectations of their financial situation improved slightly.
