Market movers today
The US-China trade dispute continues to be on the radar.
Focus will revert to economic key figures, as the US employment report is due for release today. Wage growth will take centre stage. A drop in the hourly earnings growth in February to 2.6% y/y from 2.8% y/y eased inflation concerns, but they might flare up again if wage growth moves back up. Also keep an eye on the unemployment rate, which is expected by consensus to drop to an 18-year low of 4.0%. On the payroll number, consensus expects a rise of 185k following a strong 313k print in February.
German industrial production is due for release this morning. Yesterday German factory orders disappointed somewhat, rising only 0.3% m/m (consensus 1.5% m/m), which suggests there is some downside risk to the industrial production number as well. The softer orders generally confirm the picture of decelerating euro area growth.
Selected market news
The positive risk sentiment continued yesterday in global financial markets amid signs that we have reached a negotiation stage in the US-China conflict, which has helped ease fears over a trade war. Although we see signs that we have passed the peak in terms of tensions between US and China, we should expect ebbs and flows in the trade negotiations to drive continued market volatility. Overnight, risk sentiment in global financial markets turned around after Trump ordered his administration to consider tariffs on an additional USD100bn worth of Chinese imports (see Bloomberg ). For more on where we expect to go from here, see Research: Two scenarios for the US-China trade conflict , 4 April 2018.
This week’s euro area data releases have been undershooting expectations with weak euro area core and headline inflation on Wednesday and German factory orders, euro area retail sales and final euro area PMI service yesterday. This confirms the overall picture of a deceleration in euro area growth. A drop in momentum could push the ECB to maintain a dovish tone (see also Bloomberg ).
In Norway house prices increased 0.2 % m/m in March (Danske: 0.3 % m/m, no consensus). Also, inventory-to-sales came down again. This implies a further stabilisation of the Norwegian housing market. Decreasing downside risks from the housing market support a Norges Bank rate hike over the summer (although not our base case).
