Market movers today

  • The main release will be US consumer confidence for April from University of Michigan. We expect it to be unchanged at 80.0. While the labour market has picked up a bit recently as seen by the strong jobless claims yesterday, a rise in gasoline prices has worked in the other direction on sentiment.

  • US PPI is expected to rise 0.1% m/m in March but there may be some upside risk to this as import prices released yesterday rose a bit more than expected in March.

  • In Europe final inflation data for March in Germany and Spain are released but we do not expect any revisions. ECB will also announce the repayment on the 3-year LTRO at noon.

  • S&P and Moody’s will publish sovereign debt ratings for Denmark and Sweden respectively. For more on Scandi markets see page 2.


Selected market news

Yesterday Russian President Vladimir Putin threatened to shut down natural gas exports to Ukraine including gas that passes through Ukraine to the rest of Europe. It was only a matter of time before Russia’s energy supplies would become a part of the geopolitical conflict over Ukraine. A loss of Russian gas would be a significant blow to the European economy, which gets around 25% of its gas from Russia and around half of that via the Ukraine pipeline, and push energy prices higher. However, it would also be a major loss for the freefalling Russian economy that needs every rouble in gas export revenue it can get. At the G7 meeting in Washington yesterday, finance ministers discussed whether to implement further sanctions on Russia.

Moody’s cut its outlook for Turkey’s Baa3 rating from stable to negative yesterday citing the heightened political uncertainty as one of the main reasons for the changed outlook. The lira weakened some on the news, which may halt the recent rebound in the currency.

Chinese CPI inflation rose to 2.4% y/y in March from 2.0% y/y in February, which was in line with consensus and a bit above our own expectations. Although inflation accelerated it remains below the government’s full year target of 3.5% y/y and the 2.3% y/y drop in PPI highlights that there is currently no inflationary pressure in China.

Base metals, most notably nickel and aluminium, continued to rally yesterday climbing around 2% higher – the nickel price is up more than 20% since the beginning of the year. The Indonesian ban of mineral ore export, which came into effect in January, has engineered the surge in prices by tightening global supplies. However, a recent pickup in China’s base metal demand has added further support to prices.

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