Iran attack was expected and countered near perfectly as safe haven assets tentatively unwind

EU Mid-Market Update: Iran attack was expected and countered near perfectly as safe haven assets tentatively unwind; Earnings season slowly picks up.

Notes/observations

- Crude oil drops after fresh conflict in the Middle East on the weekend, with Iran directly firing ~300 drones and missiles at Israel, but as it was heavily telegraphed, 99% were intercepted and no reported fatalities. World waiting for any response from Israel with Western leaders trying to persuade the occasionally hot-headed Israeli PM to take it as win and move on.

- Not as bad as feared theme causing safe havens assets to unwind gains that were seen on Fri, with US dollar and Gold lower. Equities seen bidding.

- FTSE 100 underperforms ahead of busy week for UK economic data, including unemployment, jobless claims, CPI and PPI, CBI industrial trends and retail sales.

- Bitcoin is volatile ahead of halving, a 4-year periodical event, expected on Apr 19th, which lowers the rate at which Bitcoins are generated from 6.25BTC to 3.125BTC. On crypto front, Hong Kong approved BTC and ETH ETFs.

- Asia closed mostly lower except Shanghai Composite which outperformed +1.3%. EU indices are -0.4% to +1.0%. US futures are +0.3-0.5%. Gold +0.3%, DXY -0.1%; Commodity: Brent -1.0%, WTI -1.2%; Crypto: BTC +2.5%, ETH +5.5%.

Asia

- China PBoC kept the 1-year MLF rate unchanged at 2.50% as expected.

- Japan Feb Core Machine Orders M/M: +7.7% v +0.8%e; Y/Y: -1.8% v -6.0%e.

- Japan Fin Min Suzuki reiterated watching FX moves closely.

Global conflict/tensions

- Iran attacked Israel with drones and missiles in its 1st ever attack on the country. Most of the missiles and drones were intercepted. Articles noted that Iran gave wide notice days before the attack on Israel allowing mass casualties and rampant escalation to be prevented.

- Israel ambassador to the UN stated it had the right to retaliate against Iran.

- G7 leaders condemn Iran attack on Israel and warned of risk of escalation in region.

- US Pres Biden affirmed America's ironclad commitment to the security of Israel; Told Netanyahu that US would oppose any Israeli counterattack against Iran.

- Israel IDF: Govt will decide on steps forward, possible as early as Monday (Apr 15th) or in the coming days; a spectrum of response options have been sent to govt.

- Ukrainian commander-in-chief Oleksandr Syrsky noted that the situation on the eastern front had significantly worsened in recent days.

- US Senior Admin Official stated that China was supporting Russia's war effort in Ukraine by helping it ramp up its defense production.

Europe

- ECB Villeroy (France): Confidence in fight against inflation is growing and should decide to cut rates at the next meeting in Jun.

- US Treasury and UK announced new sanctions barring import of Russia-origin aluminum, copper and nickel into the US.

- London Metal Exchange banned from its system Russian metal produced on or after April 13th to comply with new U.S. and UK sanctions imposed for Russia's invasion of Ukraine.

Americas

- House Intel Chair Mike Turner (R-Ohio) expected the House to pass Ukraine-Israel-Taiwan aid this week.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.35% at 507.00, FTSE -0.44% at 7,960.05, DAX +1.05% at 18,091.75, CAC-40 +0.64% at 8,062.22, IBEX-35 +0.01% at 10,687.50, FTSE MIB +1.02% at 34,107.00, SMI +0.33% at 11,416.60, S&P 500 Futures +0.54%].

Market Focal Points/Key Themes: European indices open generally higher and maintained the trend through the early part of the session; sectors leading the way higher include industrials and consumer discretionary; among lagging sectors are energy and telecom; oil & gas subsector lower following perceived easing of tensions in the Middle East; Prysmian to acquire Encore Wire; Synthomer to sell its Belgian ops; Glanbia acquires Flavor Producers; Fosun plans to divest 15.4M in Ageas shares to BNP Paribas; earnings expected in the upcoming US session include Goldman Sachs, Charles Schwab and M&T Bank.

Equities

- Consumer discretionary: Adidas [ADS.DE] +3.5% (analyst double upgrade), Inchcape [INCH.UK] +3.5% (divests UK retail ops to Group 1 Automotive for ~£346M), Pagegroup [PAGE.UK] -5.5% (trading update), Mitie Group [MTO.UK] +7.0% (FY24 trading update, further buyback).

- Consumer staples: Glanbia [GLB.IE] +7.0% (acquires US flavor platform Flavor Producers for $300M).

- Energy: Galp Energia [GALP.PT] -1.5% (trading update - production metrics).

- Technology: Temenos [TEMN.CH] +15.0% (Special Committee concludes Hindenburg Research made incorrect and misleading allegations about Co), Logitech [LOGN.CH] -5.0% (analyst downgrade).

- Telecom: Prysmian [PRY.IT] +3.0% (acquires Encore Wire Corporation), Claranova [CLA.FR] +5.0% (new CEO).

Speakers

- (FI) Finland Mar CPI M/M: -0.1% v +0.5% prior; Y/Y: 2.2% v 3.0% prior.

- (NO) Norway Mar Tarde Balance (NOK): 64.0B v 51.7B prior.

- (DK) Denmark Mar PPI M/M: -0.9% v -1.2% prior; Y/Y: -1.5% v -1.1% prior.

- (CH) Swiss Mar Producer & Import Prices M/M: 0.1% v 0.1% prior; Y/Y: -2.1% v -2.0% prior.

- (IN) India Mar Wholesale Prices (WPI) Y/Y: 0.5% v 0.6%e.

- (TR) Turkey Feb Unemployment Rate: 8.7% v 9.0% prior.

- (PL) Poland Mar Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 2.0% v 1.9% prelim.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 477.9B v 460.9B prior; Domestic Sight Deposits: 469.4B v 452.1B prior.

- (TR) Turkey Mar Central Govt Budget Balance (TRY): -209.0B v -153.8B prior.

- (IT) Italy Feb General Government Debt: €2.872T v €2.850T prior (record level).

- (EU) Euro Zone Feb Industrial Production M/M: 0.8% v 0.8%e; Y/Y:-6.4 % v -5.5%e.

Currencies/fixed income

- USD was steady after recent gains last week based upon the Fed pivot on its perceived rate path outlook. Safe haven flows likely to continue the greenback’s strength as geopolitical tensions are heightening in the Mid-East. The next step likely to hinge on Israel’s response to Iran’s drone and missile attack from over the weekend.

- USD/JPY at 153.80 despite continued FX rhetoric from Japanese officials. Fin Min Suzuki reiterated the govt stance of “watching FX moves closely". Japan Top FX Diplomat Kanda commented that was in frequent contact with FX officials abroad.

Economic data

- ECB's Simkus (Lithuania) commented that there was a chance for July cut following June's one; Escalation of Israel-Iran conflict could cancel the June cut. Further trajectory of cuts to depend on July decisions; Saw more than 50% chance of more than 3 rate cuts this year. No sudden reason to go for bigger than 25bps rate cut steps.

- Japan Top FX Diplomat Kanda commented that was in frequent contact with FX officials abroad.

- Bank of Japan (BoJ) said to consider putting less emphasis on inflation in setting policy.

- Fed’s Logan (non-voter) commented that the gender gap remained in US.

- Iran Govt Statement stressed that it did not want to raise tensions in the region.

- Israel Army spokesperson noted that it had presented to govt some possible responses to Iran attack.

Fixed income issuance

- None seen.

Looking ahead

- IMF holds spring meeting.

- (SE) Sweden Central Bank (Riksbank) Gov Thedeen with member Breman at IMF meeting.

- (NG) Nigeria Mar CPI Y/Y: No est v 31.7% prior.

- (CO) Colombia Central Bank Economists Survey.

- (PE) Peru Mar Unemployment Rate: No est v 7.3% prior.

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

- 05:30 (DE) Germany to sell combined €5.0B in 6-month and 12-month Bubills
(NL) Netherlands Debt Agency (DSTA) to sell combined €3.0B in 3-month and 6-month bills

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel Mar Unemployment Rate: No est v 3.3% prior.

- 06:00 (IL) Israel to sell combined ILS2.0B in 2027, 2029, 2035 and 2037 bonds.

- 06:30 (TR) Turkey to sell bonds (2 tranches).

- 07:00 (IL) Israel War Cabinet meeting.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (IE) ECB’s Lane (Ireland, chief economist).

- 08:15 (CA) Canada Mar Annualized Housing Starts: 239.3Ke v 253.5K prior.

- 08:30 (US) Apr Empire Manufacturing: -5.0e v -20.9 prior.

- 08:30 (US) Mar Advance Retail Sales M/M: 0.4%e v 0.6% prior; Retail Sales (ex-auto) M/M: 0.5%e v 0.3% prior; Retail Sales (ex-auto/gas): 0.3%e v 0.3% prior; Retail Sales (control group): 0.4%e v 0.0% prior.

- 08:30 (CA) Canada Feb Wholesale Sales (ex-petroleum) M/M: 0.8%e v 0.1% prior; Manufacturing Sales M/M: 0.7%e v 0.2% prior.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €5.8-7.4B in 3-month, 6-month and 12-month bills.

- 09:45 (UK) BOE Gilt sale operation.

- 10:00 (US) Apr NAHB Housing Market Index: 51e v 51 prior.

- 10:00 (US) Feb Business Inventories: 0.4%e v 0.0% prior.

- 11:00 (PE) Peru Feb Economic Activity Index (Monthly GDP) Y/Y: 2.1%e v 1.4% prior.

- 11:00 (CO) Colombia Feb Industrial Production Y/Y: -0.8%e v -1.5% prior; Manufacturing Production Y/Y: -2.8%e v -4.3% prior.

- 11:00 (CO) Colombia Feb Retail Sales Y/Y: -2.7%e v -3.9% prior.

- 11:30 (IL) Israel Mar CPI M/M: 0.5%e v 0.4% prior; Y/Y: 2.6%e v 2.5% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Mar Import Price Index M/M: No est v 1.2% prior; Y/Y: No est v -0.2% prior; Export Price Index M/M: No est v 1.4% prior; Y/Y: No est v 4.2% prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 81.9 prior.

- 21:30 (CN) China Mar New Home Prices M/M: No est v -0.4% prior.

- 22:00 (CN) China Q1 GDP Q/Q: 1.5%e v 1.0% prior; Y/Y: 4.8%e v 5.2% prior; GDP YTD Y/Y: 4.9%e v 5.2% prior.

- 22:00 (CN) China Mar Industrial Production Y/Y: 6.0%e; Industrial Production YTD Y/Y: 6.6%e v 7.0% prior.

- 22:00 (CN) China Mar Retail Sales Y/Y: 5.0%e; Retail Sales YTD Y/Y: 5.4%e v 4.6% prior.

- 22:00 (CN) China Mar YTD Fixed Urban Assets Y/Y: 4.0%e v 4.2% prior.

- 22:00 (CN) China Mar YTD Property Investment Y/Y: -9.2%e v -9.0% prior; Residential Property Sales Y/Y: No est v -32.7% prior.

- 22:00 (CN) China Mar Surveyed Jobless Rate: 5.2%e v 5.3% prior.

- 23:00 (KR) South Korea Feb M2 Money Supply M/M: No est v 0.2% prior; ‘L’ Money Supply M/M: No est v 0.5% prior.