Monday: Easter Monday - UK & Mainland European Markets Closed, US Chicago Fed national Activity Index, Existing Homes Sales
Tuesday: AU Manufacturing/Services PMI, JN Manufacturing PMI, BoJ Core CPI, EU Consumer Confidence, US House Price Index, Services PMI, New Homes Sales, Richmond Manufacturing Index, Weekly API Inventories
Wednesday: AU CPI, JN Leading Index, FR Business Survey, IT/SP Trade Balance, ECB Economic Bulletin, GE Ifo Business Climate, 10-yr Govt Bond Auction, UK PSNB, US Weekly DoE Inventories, CA BoC Interest Rate Decision & Press Conference, North Korean Leader Kim Jong-Un to Meet Russian President Putin
Thursday: AU/NZ Holiday, JN BoJ Interest Rate Decision & Press Conference, SP PPI, Unemployment Rate, UK Distributive Trades Survey, US Durable Goods Orders, Weekly Jobless Claims, KC Fed Manufacturing Index, NZ Trade Balance, Trade Talks between US & Japan recommence
Friday: JN Industrial Production, Unemployment Rate, Tokyo CPI, AU PPI, FR Consumer Confidence, UK Gross Mortgage Approvals, US Advanced Q1 GDP, Michigan Consumer Sentiment, CA Budget Balance
Welcome back! I hope you enjoyed the Easter break. In this report I'll focus on three major themes; Iranian sanctions, recommencement of Brexit talks and corporate earnings.
There are of course other considerations for this week such as central bank decisions from Canada and Japan, as well as under performance in mainland China overnight, however, I shall refer you to the briefing I did earlier this morning for more detail (HERE).
Oil rallies as Iran waivers back in focus...
WTI crude futures are trading over 3% higher in the last 24-hrs after news that the Trump administration will not renew waivers that let countries buy Iranian oil without facing US sanctions. According to Bloomberg, the current set of waivers apply to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey, expiring on 2nd May 2019.
The latest development was immediately met with condemnation from a senior Iranian military official who threatened to block the Strait of Hormuz, a critical choke-point for seaborne transportation of crude oil.
This renewed tension certainly adds to the risk of supply shocks in the context of a positive demand side narrative with global growth concerns somewhat stabilising and with US/China trade talks seemingly progressing in the right direction. Interestingly, money managers still remain in a bullish mindset with long positions being boosted to the highest level since October in the week ended 16th April.
Theresa May under pressure once again...
After a welcome break from the Brexit negotiations cross-party talks recommence this week as MPs return from Easter recess. At present, despite talks being described as positive, there has been little sign of a deal being achieved by the self-imposed deadline of May 22nd. This date significant for UK PM May to strike a deal in order to save the Conservative Party from the embarrassment of having to take part in European elections the day after.
Any failure for the PM to find a breakthrough would lead to her to focus back on the Eurosceptic backbenchers and the DUP. Obtaining support from the former seems incredibly low in the current context of talks with the opposition with many seeing the current course destined for a soft Brexit, or opening the prospect of no Brexit at all.
Later tonight the notorious members of the 1922 committee will meet this evening to discus a potential change to the rules to enable a new leadership challenge, according to the FT. So after a relatively quiet period for the pound, sensitivity to the Brexit impasse is likely to return over the coming week.
A busy week for corporate earnings...
Reporting season is due to heat up this week with 150 S&P 500 companies reporting, including 12 out of 30 Dow components, including the largest constituent Boeing who reports pre-market on Wednesday. Rather than go into the micro level analysis of what to expect from each firm let's take stock of where we are at the moment in the S&P 500 future and where this week could take us.
Last week's move above the 2900 handle was technically and psychologically important and despite a few brief moments below the figure the market managed to hold the level. As such, we look for potential consolidation between the handle and 2923.50 (last week's high). However, we remain aware of the potential risks around the large cap names reporting this week as well as the release of US Q1 advanced GDP on Friday.
The sector that will generate the most headlines is the tech space with both growth-related stocks like Twitter, Snap and Tesla reporting, alongside their large counterparts in the sector; Facebook, Microsoft and Amazon.
Closer to home it's also worth noting that we also have the following companies reporting in the UK and mainland Europe:
Thurs: Barclays, Lloyds, Bayer
Fri: AstraZeneca, RBS, Deutsche Bank, Daimler, Total, Sanofi
Any questions on the above feel free to message me or leave a comment.
Have a great week ahead.
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