• US equities gained 1% driven by a late session rebound in financials. This morning, Asian stocks trade mixed.

  • US Treasury Secretary Geithner said before the G20 meeting in Washington that the global downturn has shown signs of easing in recent weeks, although significant risks remain.

  • The IMF announced on Thursday it will double the borrowing limits on IMF loans for poor countries as the global financial crisis spreads to the poorest regions of the world.

  • In the euro zone, both manufacturing and services PMI showed a stronger than expected increase in April, indicating that businesses became less pessimistic about their business conditions.

  • South Korea’s economy narrowly avoided recession in the first quarter of this year as GDP rose by 0.1% Q/Q from a 5.1% Q/Q decline in the fourth quarter of 2008.

  • Chrysler is preparing a bankruptcy plan, according to people with knowledge of the discussions, as there is only one week remaining to clinch the detail with Fiat, which also emerged as a potential buyer for GM’s Opel.


Markets

On Thursday, European bond markets basically held a sideways trading pattern. The traditional drivers for bond trading were unable to give the price action a clear direction. European eco data (PMI and industrial orders) were better than expected but had no lasting impact. The same applied to the impact of the European stock markets. There were a lot of earnings releases but the signals as they came from different sectors were mixed and failed to push the indices in one way or another. So, both the stock markets and the bond market basically traded in a wait-and-see mood. Several factors of uncertainty make investors cautious to place big bets with the fate of the US auto sector and the potential consequence of the US stress tests for banks still to most obvious sources of uncertainty on the equity markets. The late stock market rebound in the US didn’t really change this broader picture.

On the currency market, the euro posted a strong performance. EUR/USD already found a better bid in European trading supported by better than expected European eco data. A second up-leg occurred in step with the US stock market rebound late in the US trading session. The pair currently tries to regain the 1.3113 neckline. So, at least for now, uncertainty on the non-conventional policy measures to be announced at the May ECB meeting is losing its impact on euro trading. Sterling remains under pressure on press articles that the UK may lose its AAA rating.

Today, the calendar is well-filled. In Germany, the IFO business climate survey is scheduled for release. In the UK, markets watch out for the Q1 GDP and the retail sales. In the US, the durables and new home sales will be published. The UK GDP is expected to show the third consecutive quarterly contraction. In the first quarter, GDP is expected to have contracted by 1.5% Q/Q (from -1.6% Q/Q in Q4), while retail sales are forecasted to have dropped by 0.3% M/M in March. US durables are forecasted to fall back (-1.5% M/M) in March after the unexpected surge in February, which was mostly driven by defence related orders. For new home sales the consensus is looking for a flat outcome in March.