Market movers today
German IFO expectations are due for release and we expect a decline for a third consecutive month although the level is set to remain high. The current assessment component is likely to continue to increase and our forecast is above consensus.
ECB’s President Draghi speaks today and it will be interesting to hear whether he draws attention to the better European growth outlook after the composite PMI increased to the highest level in almost three years. Recently ECB members including Draghi have been very dovish and highlighted the risks of a too prolonged period of low inflation which the ECB is ready to use unconventional instruments to cope with.
US data have generally been stronger than expected and we forecast another aboveconsensus print when durable goods orders are released today. The orders declined relatively sharply due to the cold winter but started to rebound in February.
The positive trend in US data is also seen in initial jobless claims, which have declined to the lowest level since 2007 considering a four-week moving average. Today consensus is for a rise to 315K from 304K last week.
Focus will be on Q1 earnings with 65 companies in the S&P 500 index reporting.
Selected market news
The S&P 500 ended lower yesterday after having gained in six consecutive days. Likewise the Euro Stoxx declined following a three-day winning streak. The recent development is mainly driven by earnings, where estimates have continued to show a downtrend more than 18 months into the recovery. Ahead of the Q1 reporting season we took a somewhat sceptical view at least with regard to European and Nordic companies. So far the Q1 results have proven us right, with reports being weaker than expected in Europe and the Nordics but somewhat stronger than expected for US companies. Having said this, it is still early days with only around 20-25% of the companies having reported.
Nowotny downplayed expectations about more stimulus in May as he said that the ECB will only be able to really judge in June whether the trend of low inflation is strengthening. Some ECB members have hinted at this before but the increase in euro PMIs yesterday implies we see a lower likelihood of more easing in May. In our view inflation has to surprise on the downside and stay very low in April for the ECB to ease in May.
Yesterday Portugal held its first regular government bond auction since applying for international help in 2011. The auction of the 10Y bond resulted in a better-thanexpected yield of 3.57% and it looks like Portugal will make a clean exit from the Troika programme during the summer.
The Reserve Bank of New Zealand raised cash rate target another 25bp to 3.00% after it as the first major central bank post 2011 hiked in March. RBNZ’s Governor Wheeler said that ‘inflationary pressures are becoming apparent’ and RBNZ seems determined to hike in order to fight inflationary pressures.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.