The Australian dollar fell to a two-week low

Market movers today

• Today focus will be on global PMIs. We forecast euro manufacturing PMI to decline slightly after it peaked at 54.0 in January. The development in the orderinventory balance does not point to further improvement and the uncertainty connected with the situation in Ukraine is likely to have affected business sentiment in the euro area in April. On the other hand, new export orders could start to stabilise as US data have been stronger going into Q2 while the Chinese manufacturing PMI appears to have bottomed. In the US the Markit manufacturing PMI is expected to show a slight increase in April.

• We expect US new home sales to increase after they dropped to a five-month low in February. Yesterday US existing home sales fell less than expected and it seems that sales are stabilising after falling steadily since July last year. We look for a recovery in US housing in H2 as the effect of higher mortgage rates fades.

• Bank of England’s Monetary Policy Committee publishes the minutes of its April decision. Although inflation was below target for a second month in a row, we believe the BoE is comfortable on hold and the debate within the MPC is when/how to tighten.

• Focus will also be on Q1 earnings reports with 40 companies in the S&P 500 index including Apple and Boeing releasing earnings results today.

Selected market news

In China the flash estimate for Markit/HSBC manufacturing PMI in April improved slightly to 48.3 from a final reading of 48.0 in March. The details were mixed with new orders improving to 47.7 from 46.5 but export orders declined to 49.3 from 51.3 in March. Inventories of finished goods also continued to increase in April albeit at a slower pace than in March. Overall it appears that China's manufacturing PMIs have bottomed out. However, the relatively weak details suggest the rebound will be modest in the coming months, so the Markit/HSBC manufacturing PMI will probably not be above 50 until July or August.

The tensions in Ukraine continue and the US has said it plans to send 600 troops for exercise in eastern Europe to reassure allies on Russia’s border. The plans were announced after Ukraine accused pro-Russian separatists of torturing and killing two people and of shooting at one of its military planes, see WSJ.

Yesterday Nasdaq and S&P500 advanced for a sixth-consecutive day helped by solid earnings reports. This morning the release of the Chinese Markit/HSBC manufacturing PMI reversed the upward movement in the Hang Seng index as the figure remained below 50. Nikkei is a bit higher this morning.

In Australia consumer price inflation was weaker than expected in Q1 and the Australian dollar fell to a two-week low.