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[PODCAST] EU Open Rundown 1st May 2019

  • A quiet tone was observed in Asia-Pacific amid market closures, US equity futures were underpinned after-hours following Apple earnings
  • Eurosceptic ministers fear that PM May is preparing to give in to Labour demands on Brexit after they were told an unpalatable result would be better than a disastrous one
  • Looking ahead, highlights include UK Manufacturing PMI, US ADP & Construction Spending, US ISM Manufacturing PMI, FOMC Rate Decision & Press Conference, ECB's de Guindos, BoC's Wilkins and Poloz
  • Earnings: CVS, Qualcomm. CME Group, Automatic Data Processing, GlaxoSmithKline
  • Note: Market Closures for European and Chinese Labour Day Holiday

ASIA-PAC

A quiet tone was observed in Asia-Pacific amid closures in nearly all the major regional bourses for Labour Day, although US equity futures were underpinned after-hours following Apple earnings in which the tech giant beat on top and bottom lines, authorized an additional USD 75bln share repurchase and raised its dividends by 5%. ASX 200 (+0.8%) was also positive with the index led higher by tech on contagion from Nasdaq futures and with financials buoyed as ANZ shares rallied nearly 3% after its H1 results, while reports that the US dropped a key demand regarding cyber theft in an effort to accelerate a trade deal with China also added to the optimism although most of the region failed to capitalize with China, Hong Kong, India, Japan, Singapore, South Korea and Taiwan all shut.

US White House reportedly dropped a key demand regarding cyber theft in an effort to accelerate a trade deal with China. (FT)

US Agricultural Secretary Perdue said he doesn't want it implied 'a deal is done' with China but said he remains cautiously optimistic about the prospects of reaching a deal. (Newswires)

UK/EU

UK PM May is said to have blocked a cabinet attempt to speed up the Brexit process this week with Downing Street overruling Brexiteer ministers that had expected a withdrawal agreement bill to be brought before the commons, while reports noted that PM May is concerned MPs could vote down the bill at the first attempt and potentially trigger a general election. (Huffington Post)

Eurosceptic ministers fear that PM May is preparing to give in to Labour demands on Brexit after they were told an unpalatable result would be better than a disastrous one. (Telegraph)

UK opposition Labour Party rejected the idea of campaigning for a referendum under all circumstances but agreed to support a 2nd Brexit referendum if it cannot secure a general election or the government will not change policy. (Newswires)

Times’ Shadow Monetary Policy Committee unanimously believe the BoE should hold interest rates this week because the political backdrop is too uncertain to change policy. (Times)

ECB's Lane (Dove) said it is not true that the ECB is out of options and that fiscal policy can have a role in reducing uncertainty and encouraging the private sector to start investing. (Newswires)

UK BRC Shop Price Index (Apr) Y/Y 0.4% (Prev. 0.9%). (Newswires)

FX

 

FX price action was mostly restrained by the holiday-thinned conditions which kept the greenbackaround the 97.50 level after the prior day’s losses against its counterparts across the pond, in which EUR/USD reclaimed the 1.1200 handle following better than expected GDP for Q1 and with GBP/USDback above the 1.3000 level. US President Trump also weighed in on the Fed once again as he stated that they incessantly lifted interest rates despite low inflation and suggested the US economy could rocket if the Fed were to reduce rates by a point, while focus shifts to the upcoming FOMC meeting where UBS expects a further dovish shift by the Fed. Elsewhere, antipodeans were mixed as AUD/USDmeandered around the 0.7050 level and with NZD/USD the underperformer after a miss on Q1 Employment and Wage data which resulted in markets pricing in a 56% probability for the RBNZ to cut rates next week vs. Prev. 40% chances the prior day.

New Zealand Employment Change (Q1) Q/Q -0.2% vs. Exp. 0.5% (Prev. 0.1%). (Newswires) New Zealand Unemployment Rate (Q1) 4.2% vs. Exp. 4.2% (Prev. 4.3%) New Zealand Participation Rate (Q1) 70.4% vs. Exp. 70.9% (Prev. 70.9%) New Zealand Labour Cost Index (Q1) Q/Q 0.3% vs. Exp. 0.5% (Prev. 0.5%)

COMMODITIES

 

Commodities were mostly rangebound overnight as a lack of participants and pre-FOMC tentativeness kept demand lacklustre with WTI crude futures firmly below the USD 64.00/bbl level after the prior day’s choppy action and larger than expected build to headline API crude inventories. Gold prices were subdued and failed to benefit from a weaker greenback as markets lay in wait for the Fed meeting later and Friday’s US jobs data, while copper mirrored the humdrum tone across asset classes with most the region away for holiday.

US API weekly crude stocks (22 Apr, w/e) 6.8M vs. Exp. 1.5M (Prev. 6.9M). (Newswires)

 

GEOPOLITICS

Venezuela’s Maduro declared victory against a coup of plotters and said armed forces had defeated a small group. There were also reports that Venezuela's Guaido called on the military and civilians to conduct fresh mass protests on Wednesday, while the FAA ordered US air operators to not fly below 26K feet over Venezuela amid political instability and tensions. (Newswires)

 

US President Trump threatened Cuba with sanctions and embargo over actions in Venezuela, while US Secretary of State Pompeo said US had indications Venezuela's Maduro was ready to leave the country on Tuesday morning but Russian President Putin convinced him to stay, however, Russia and Maduro have denied these claims. (Newswires)

US

The Treasury complex was ticking lower after overnight Chinese PMI data remained in expansion (not a spectacular print, but continues to point to stabilisation), and then EZ growth surprising to the upside slightly saw the complex find lows. However, the trend soon reversed, the complex moving higher after Chicago PMI missed the forecast range, which doesn't augur particularly well for the upcoming ISM reports (even though the data may have been influenced heavily by Boeing's woes) and the 2 and 3 year yields reached fresh 1-month lows. Some desks also suggested month-end factors were playing a role in the Treasury action. US T-note futures (M9) settled 7+ ticks higher at 123-21+.

US President Trump said the Federal Reserve has incessantly lifted interest rates even though inflation is very low and instituted a very big dose of quantitative tightening, while he believes the US economy could 'go up like a rocket' if the Fed were to reduce rates by 1 point. (Newswires)

US Senator Ernst said she would be a no on Stephen Moore for the Fed at this point and that she doesn't think Stephen Moore would be approved for the Fed board seat if the vote was held today, while Senator Graham also commented that Steven Moore's nomination would be very problematic. (Newswires)

US Speaker of the House Pelosi said there has been an agreement with US President Trump on a USD 2tln package for infrastructure. (Newswires)

US Special Counsel Mueller told AG Barr that his summary on the Special Counsel report caused confusion and missed the essence of the report. (Newswires)

Apple (AAPL) Q2 EPS USD 2.46 vs. Exp. USD 2.36, rev. USD 58.02bln vs. Exp. USD 57.37bln.(Newswires) - Co. authorized additional USD 75bln for share buybacks and raised dividend 5% to USD 0.77. - iPhone net sales USD 31.05bln vs Prev. USD 37.56bln. - iPad net sales USD 4.87bln vs. Prev.  USD 4.01bln. - Mac net sales USD 5.51bln vs. Prev. USD 5.78bln. - Sees Q3 revenue between USD 52.5bln-54.5bln.vs. Exp. USD 52.4bln.

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Asia equity markets begin the week with a non-committal tone amid a lack of risk drivers and with some major global… https://t.co/Ql6QPbjkPH