US equities recovered some ground

Market movers today

  • Today is another quiet day in terms of data releases. In the afternoon, the euro area consumer confidence indicator for May is due out , which we expect to show a rise to -3.1 from -3.6 in April. Although polit ical events seem to have limited effect on consumer confidence, the elect ion of Emmanuel Macron could potent ially give further tailwind to consumer confidence

  • A few cent ral bank speeches are scheduled but we do not consider them market movers.

  • In Denmark, the consumer confidence indicator for May is due out this morning, which we expect to be largely unchanged from April at 7.4.


Selected market news

Asian stocks are mixed this morning after US equities recovered some ground yesterday as focus shifted from polit ical risks in the US back to economic data. The Philly Fed Index showed a st ronger-than-expected rise in factory act ivity in the mid-At lantic region, abat ing the risk-off mood somewhat after the biggest sell-off in US stock markets in eight months on Wednesday. However, investors remain caut ious due to uncertaint ies surrounding US President Trump and his capacity to push through with promised tax cuts and infrast ructure spending, bringing 10Y US Treasury yields down to 2.23%, their lowest level since April. Former FBI Director James Comey's test imony to the Senate next week will be watched closely by the market for any new clues on T rump's involvement in t he federal invest igat ion , after he denied any wrongdoing yesterday.

In the ECB minutes from the April meeting released yesterday, policymakers indicated a caut ious approach to changes in policy communicat ion to prevent undue market upheaval. This confirms our view that the ECB will take only very small and gradual steps in moving in a more hawkish direct ion and we st ill believe it is less likely the ECB will change its forward guidance at the June meet ing (see more here ECB research: Hawkish wording but changed forward guidance less likely, 10 May). However, this should not exclude that the ECB will argue that the opt ions for providing addit ional accommodat ion have become less likely.

Present ing the Conservat ives' manifesto yesterday ahead of the elect ion on 8 June, Theresa May pledged voters to press on with her approach to Brexit , cut immigrat ion and int roduce corporate reform. Our main scenario remains that the Conservatives will consolidate their majority after the elect ion, reducing t he risk of a ‘no deal Brexit '.

Reports alleging that the Brazilian President Michel Temer gave his blessing to an at tempt to pay to silence a potent ial witness in the count ry's biggest -ever graft probe brought back investor concerns about a possible government collapse and added to market jit ters across the Americas, causing Brazilian stocks and the real to fall sharply.

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