Market movers today
We start out the week with a lot of preliminary activity indicators for April, before attention later this week turns to the ECB meeting on Thursday as well as the US preliminary GDP numbers for Q1.
In the euro area, the PMI figures will be released today. Manufacturing PMI declined throughout Q1 18, from 60.6 in December 2017 to 56.6 in March 2018. We believe a further decline to 55.5 is pending for April. Several survey indicators have pointed to lower optimism, fear of a trade war and the euro appreciation last year is starting to show its impact on activity. Similarly, Service PMI declined to 54.9 in March since peaking at 58.0 in January. We believe Service PMI is set for a further decline to 54.3 in April.
In the US, Markit PMIs are due for release on Monday. Empire regional PMIs fell in March which points to a slowdown in manufacturing sector. The gap between ISM and Markit PMI manufacturing remains a mystery, although we consider ISM to have come in at a too high level. We believe both indices will fall over the coming months. Markit service PMI fell in February but we estimate it increased slight ly in March from 54 up to 55.
Selected market news
Asian stock markets are trading on a mixed note this morning. In Japan, the manufacturing PMI rebounded slightly to 53.3 after declining in Q1 as the Japanese manufacturing sector has shown some weakness recently as a stronger yen has weighed on exporters.
On Friday, North Korean leader Kim Jong-un pledged to suspend further missile and nuclear testing ahead of a summit between North and South Korea at the end of April , which is likely to be followed by a meeting between US President Trump and the North Korean leader in June. President Trump initially hailed the North Korean pledge to suspend its missile tes ing as ‘big progress’ but tempered his enthusiasm yesterday, re-inject ing a note of caution.
Over the weekend, the IMF communique pointed to global leaders expressing concerns about the high level of debt globally and trade frictions . At the meetings, the US came under criticism from other member countries for its latest trade measures. However, US finance Minister Steven Mnuchin hit back, calling for the IMF to step up efforts to reduce global imbalances, in particular surplus countries like Germnay and China. Furthermore, Mnuchin revealed that he is planning to visit China in the near term to discuss trade and other economic issues.
