EU PMIs mixed with focus on weakness in Italy and Switzerland

EU mid-market update: EU PMIs mixed with focus on weakness in Italy and Switzerland; Afternoon rally on Wall Street from Powell was short-lived.

Notes/observations

- EU bond yields decline modestly after big misses in Italian and Swiss PMIs, both coming in below all analyst estimates. Conversely, some upwards revisions in final France, German and Euro Zone readings. Euro moved lower in line with increased rate cut bets.

- General theme is of stabilization in equity markets after volatile trade was triggered by Fed decision and post rate presser by Powell. FOMC left policy unchanged as expected with Powell throwing cold water on any chance of a rate hike.

- Key EU earnings from: Standard Chartered, Novo Nordisk, Maersk and Shell

- Upcoming US premarket earnings: AGCO, APO, ARW, BAX, BDX, BTU, BWA, CAH, CI, CMI, CNQ, COP, D, EXC, GCI, HII, ICE, K, LIN, LNC, MCO, PENN, PH, SO, TRGP, TRI, WEN

- Asia closed mixed with Hang Seng outperforming +2.5%. EU indices are -0.8% to +0.3%. US futures are +0.3-0.8%. Gold -0.7%, DXY -0.1%; Commodity: Brent +0.9%, WTI +0.9%; Crypto: BTC +1.2%, ETH +2.8%

Asia

- South Korea Apr CPI M/M: 0.0% v 0.1%e v 0.1% prior; Y/Y: 2.9% v 3.0%e; CPI Core Y/Y: 2.3% v 2.3%e

- Bank of Japan (BOJ) Mar Minutes (2 decisions ago): Vital to communicate no rapid rate hikes plan

- South Korea Apr PMI Manufacturing: 49.3 v 49.8 prior

- Australia Mar Trade Balance (A$): 5.0B v 7.3Be; Exports M/M: +0.1% v -3.2% prior; Imports M/M: 4.2% v 4.4% prior

- Japan top FX diplomat Kanda noted that he had nothing to say on whether Japan intervened in FX markets to curb yen weakness (**Note: yen currency advanced more than 3% during the NY afternoon session and tested 153.04 on suspected Japan MOF currency intervention)

Europe

- ECB's De Cos (Spain) commented that inflation to fall to 2% target in 2025 after fluctuating for rest of 2024. Disinflationary process is advanced, but not yet complete

Americas

- FOMCleft the Target Range unchanged between 5.25-5.50% (as expected). Statement noted of the lack of further progress toward inflation target in recent months. Inflation had eased over past year but remains elevated

- Bank of Canada (BOC) Gov Macklem noted of increased confidence inflation would continue to come down gradually. Getting closer to be able to cut rates

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.12% at 503.73, FTSE +0.30% at 8,145.65, DAX +0.03% at 17,926.45, CAC-40 +0.03% at 10,857.50, IBEX-35 +0.03% at 10,857.50, FTSE MIB +0.04% at 33,760.00, SMI -0.15% at 11,243.91, S&P 500 Futures +0.53%]

Market focal points/key themes: European indices open generally lower, and remained in that direction through the early part of the session; sectors managing to maintain some buoyancy are financials and consumer discretionary; sectors pulling to the downside include technology and energy; oil and gas subsector under pressure after US inventories rise to the highest level in almost a year; Arkema acquires flexible packaging laminating adhesives business from Dow; earnings expected in the upcoming US session include Apple, ConocoPhilips, Cigna and Regeneron.

Equities

- Consumer discretionary: Hugo Boss [BOSS.DE] -0.5% (earnings), Pandora [PNDOR.DK] +5.5% (earnings).

- Energy: Shell [SHEL.UK] -1.0% (earnings, guidance, buyback), Orsted [ORSTED.DK] +1.5% (earnings), Vestas [VWS.DK] -4.5% (earnings) - Financials: Sabadell [SAB.ES] +7.5% (BBVA confirms offer), ING Group [INGA.NL] +5.5% (earnings), Standard Chartered [STAN.UK] +6.5% (earnings, affirms guidance) - Healthcare: Novo Nordisk [NOVOB.DK] -2.5% (earnings, raises guidance) - Industrials: Maersk [MAERSKB.DK] -4.5% (earnings, raises guidance; comments on better demand).

- Materials: ArcelorMittal [MT.NL] +1.0% (earnings), DSM-Firmenich [DSFIR.NL] -2.0% (trading update).

Speakers

- Japan Top FX Diplomat Kanda stated that could not overlook excessive FX moves having an impact on domestic economy.

- Bank of Japan (BoJ) accounts data suggested ¥3.26-3.66T (~$22B v ~$37B on Monday) of FX intervention on Wed/Thurs, May 1st/2nd.

- Taiwan Central Bank (CBC) Apr Minutes saw one member note that it might have to raise rates again if prices did not fall. Power price increase might fuel inflationary expectations.

Currencies/fixed income

- USD was languishing in the session after Fed signaled it saw a lack of further progress on inflation. Greenback did face some headwinds as Powell suggested a rate cut was still more likely than an increase but the timing remained unclear.

- Focus remain on the yen after more speculation the BOJ was intervening on the MOF’s behalf in FX. USD/JPY hovering around the 155.50 area by mid-session. Dealers noted that it appeared the Japanese authorities were trying to make the 160 level the current ceiling for the USD/JPY pair.

Economic data

- (RU) Russia Apr Manufacturing PMI: 54.6e v 55.7 prior.

- (CH) Swiss Apr CPI M/M: 0.3% v 0.1%e; Y/Y: 1.4% v 1.1%e.

- (CH) Swiss Apr CPI EU Harmonized M/M: 0.5% v 0.2%e v -0.1% prior; Y/Y: 1.4% v 1.1%e; CPI Core Y/Y: 1,2% v 0.9%e prior.

- (CH) Swiss Mar Real Retail Sales Y/Y: -0.1 v +0.2% prior.

- (SE) Sweden Apr PMI Manufacturing: No est v 50.0 prior.

- (HU) Hungary Feb Final Trade Balance: €1.7B v €1.7B prelim.

- (HU) Hungary Apr Manufacturing PMI: 51.8 v 51.7e.

- (TR) Turkey Apr Manufacturing PMI: 49.3 v 50.0 prior (1st contraction in 3 months).

- (PL) Poland Apr Manufacturing PMI: 45.9 v 47.9e.

- (ES) Spain Apr Manufacturing PMI: 52.2 v 51.4e (3rd month of expansion).

- (CH) Swiss Apr PMI Manufacturing: 41.4 v 45.5e (16th straight contraction.

- (CZ) Czech Apr Manufacturing PMI: 44.7 v 46.7e (23rd straight contraction).

- (TH) Thailand Apr Business Sentiment Index: 47.3 v 49.6 prior.

- (IT) Italy Apr Manufacturing PMI: 47.3 v 50.4 prior ((moved back into contraction).

- (FR) France Apr Final Manufacturing PMI: 45.3 v 44.9 prelim.

- (DE) Germany Apr Final Manufacturing PMI: 42.5 v 42.2 prelim (confirmed 22nd month of contraction).

- (EU) Euro Zone Apr Final Manufacturing PMI: 45.7 v 45.6 prelim (confirmed 22nd month of contraction.

- (NO) Norway Apr PMI Manufacturing: 52.4 v 50.7 prior (6th month of expansion).

- (IT) Italy Mar PPI M/M: -0.4% v -1.5% prior; Y/Y: -12.7% v -14.2% prior.

- (HK) Hong Kong Q1 Advance GDP Q/Q: 2.3% v 0.9%e; Y/Y: 2.7% v 0.8%e.

- (NG) Nigeria Apr Manufacturing PMI: 51.1 v 51.0 prior.

- (ZA) South Africa Apr Manufacturing PMI: # v 50.5e.

- (CY) Cyprus Apr CPI M/M: No est v 0.4% prior; Y/Y: # v 1.2% prior.

- (GR) Greece Mar Unemployment Rate: % v 11.0% prior.

Fixed income issuance

- (IN) India sold total INR270B vs. INR270B indicated in 3-month, 6-month and 12-month bills.

- (FR) France Debt Agency (AFT) sold total €11.926B vs. €10.5-12.0B indicated in 2033, 2034, 2043 and 2055 Bonds.

- Sold €4.324B in 3.50% Nov 2033 Oat; Avg Yield: 3.01% v 2.87% prior; Bid-to-cover: 2.35x v 1.88x prior (Apr 4th 2024).

- Sold €3.215B in 1.25% May 2034 Oat; Avg Yield: 3.03% v 2.81% prior; bid-to-cover: 2.18x v 2.44x prior (Mar 7th 2024).

- Sold €2.623B in 2.50% May 2043 Oat; Avg Yield: 3.36% v 3.16% prior; Bid-to-cover: 2.52x v 2.12x prior (Feb 1st 2024).

- Sold €1.764B in 3.25% May 2055 Oat; Avg Yield: 3.47% v 3.38% prior; Bid-to-cover: 2.76x v 2.76x prior.

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2030 and 2032 I/L Bonds.

Looking ahead

- (RO) Romania Apr International Reserves: No est v $71.2B prior.

- (ZA) South Africa Apr Naamsa Vehicle Sales Y/Y: No est v -11.7% prior.

- (IT) Italy Apr Budget Balance: No est v -€29.1B prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 06:00 (IL) Israel Feb Manufacturing Production M/M: No est v 3.8% prior.

- 06:00 (PT) Portugal Mar Industrial Production M/M: No est v 0.4% prior; Y/Y: No est v 1.0% prior.

- 07:00 (ZA) South Africa Mar Electricity Consumption Y/Y: No est v 5.0% prior; Y/Y: No est v 4.2% prior.

- 07:30 (US) Apr Challenger Job Cuts: No est v 90.3K prior; Y/Y: No est v 0.7% prior.

- 07:30 (BR) Brazil Mar Current Account Balance: -$3.1Be v -$4.4B prior; Foreign Direct Investment (FDI): $6.9Be v $5.0B prior.

- 08:00 (CZ) Czech Apr Budget Balance (CZK): No est v -105.0B prior.

- 08:30 (US) Q1 Preliminary Nonfarm Productivity: 0.7%e v 3.2% prior; Unit Labor Costs: 3.6%e v 0.4% prior.

- 08:30 (US) Initial Jobless Claims: 211Ke v 207K prior; Continuing Claims: 1.80Me v 1.781M prior.

- 08:30 (US) Mar Trade Balance: -$69.7Be v -$68.9B prior.

- 08:30 (CA) Canada Mar Int'l Merchandise Trade (CAD): 1.2Be v 1.4B prior.

- 08:30 (CL) Chile Mar Economic Activity Index (Monthly GDP) M/M: -0.6%e v+ 0.8% prior; Y/Y: 1.2%e v 4.5% prior.

- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to cut 2-week Repurchase Rate by 50bps to 5.25%.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (BR) Brazil Apr Manufacturing PMI: No est v 53.6 prior.

- 09:00 (SG) Singapore Apr Purchasing Managers Index (PMI): No est v 50.7 prior; Electronics Sector Index: No est v 50.8 prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 26th: No est v $603.2B prior.

- 09:45 (CZ) Czech Central Bank (CNB) post rate decision press conference.

- 10:00 (US) Mar Factory Orders: 1.6%e v 1.4% prior; Factory Orders (ex-transportation): No est v 1.1% prior.

- 10:00 (US) Mar Final Durable Goods Orders: 2.6%e v 2.6% prelim; Durables (ex-transportation): 0.2%e v 0.2% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.2% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.2% prelim.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (DK) Denmark Apr Foreign Reserves (DKK): No est v 636.8B prior.

- 11:00 (CO) Colombia Apr PMI Manufacturing: No est v 50.6 prior.

- 11:00 (MX) Mexico Apr PMI Manufacturing: No est v 52.2 prior.

- 11:00 (MX) Mexico Mar Total Remittances: $5.3Be v $4.5B prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 12:00 (IT) Italy Apr New Car Registrations Y/Y: -3.7%e v -3.7% prior.

- 14:00 (MX) Mexico Apr IMEF Manufacturing Index : No est v 54.5 prior; Non-Manufacturing Index : No est v 52.1 prior.

- 16:15 (EU) ECB’s Lane (Ireland).

- 19:00 (AU) Australia Apr Final PMI Services: No est v 54.2 prelim; PMI Composite: No est v 53.6 prelim.

- 20:01 (IE) Ireland Apr PMI Services: No est v 56.6 prior; PMI Composite: No est v 53.2 prior.

- 21:30 (AU) Australia Mar Home Loans Value M/M: 1.0%e v 1.5% prior; Investor Loan Value M/M: No est v 1.2% prior; Owner-Occupier Loan Value M/M: No est v 1.6% prior.

- 23:00 (TH) Thailand to sell THB40B in 6-month bills.