Market movers today
The US-China trade dispute continues to be on the marketradar.
Today is a quiet day in terms of data releases. For Scandinavian market movers see the nex tpage.
Selected market news
This week’s focus will continue to be on the US-China trade conflict, where uncertainty increased on Friday as Trump ordered his administration to consider tariffs on an additional USD100bn worth of Chinese imports. Yesterday, Trump tweeted that‘President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!’. This might be seen as a sign of it all ending with a deal and hence be interpreted positively by the markets. We still believe that the ultimate outcome of the trade conflict will be one of a negotiated solution and do notexpect an all-outt rade war. However, it seems things could get worse before they get better, see Flash Comment: Uncertainty goes up as Trump chooses escalation over negotiation, 6 April 2018.
Also, this week, we get the minutes from the ECB March meeting. At this meeting, the ECB removed the QE flexibility. We doubt the minutes will provide new insights about the timing of the next step in the normalisation process. In fact, recent indicators in the euro area have been sluggish, which could postpone the next step in the ECB announcement.
On Friday, the US employment report came out slightly to the weak side. Payrolls rose by 103k in March, i.e. below consensus of a growth of 188k. Unemployment in March was higher than expected at 4.1%, unchanged from February. The underemployment rate fell from last month, which was the only real strong number. Average hourly earnings increased by 2.7% in line with consensus and our expectations. Friday’s numbers will, in our view, not change the Fed’s rate hiking cycle. This was supported by Fed Chair Powell’s gradual-hikes-warranted speech on Friday , where he said that‘we will continue to aim for 2 percent inflation and for a sustained economic expansion with a strong labour market’ and ‘as long as the economy continues broadly on its current path, further gradual increases in the federal fund rate will best promote these goals’. We still expect the Fed to hike rates twice more this year, in June and December (though with a risk of a third additional hike) and another three hikes next year.
