2 April, 2018
Asian equities kicked off Q2 on a positive note, taking their cue from Wall Street’s rally on Thursday. The gains came despite China imposing retaliatory tariffs on U.S. imports and Manufacturing PMI data falling short of economists’ forecasts.
So far China’s response has only been on the aluminum and steel tariffs, announced by the White House last month, and not on the proposed $60 billion in annual tariffs against Chinese products. This shows Beijing is unwilling to enter a trade war with the U.S., knowing that it has more to lose than to win. However, trade dispute will continue to dominate investors’ decisions heading into Q2.
Many traders remain away from their desks on Monday to spend time with their friends and family, so barring an unexpected announcement from the White House, expect markets to stay calm.
Manufacturing and Service PMIs from Europe, UK, and the U.S. will be closely scrutinized by investors this week. In March, the euro area private sector expanded at its weakest pace since 2017, raising questions on whether the robust economic performance in the Eurozone during 2017 has come close to an end. Another slip in these leading indicators may well reinforce the belief that the global synchronized growth is losing momentum. This will also justify the underperformance in European equities, where the DAX, CAC and IBEX fell 6.35%, 2.73% and 4.4% YTD respectively.
Euro traders will have to give a special attention to the Eurozone preliminary CPI release for March on Wednesday. In February the harmonized inflation came at 1.1%, a 0.2% fall from January’s reading and slipping further away from European Central Bank’s target of just under 2%. Another disappointment on this front will raise the voices within the ECB members, advising against tightening monetary policy which is likely to add further pressure on the EURUSD after falling by more than 1.3% from last week’s highs.
Friday’s U.S. nonfarm payrolls release is undoubtedly the key event of the week. The U.S. is expected to have added 198,000 jobs in March versus 313,000 in February. Meanwhile, unemployment is expected to drop by 0.1% to 4%, the level last seen 18 years ago. However, wage growth remains to be the key market moving piece, after showing an unexpected fall from 2.8% to 2.6% last month. Given that one of the main arguments in markets today is whether the Fed will raise rates by another 2 or 3 times in 2018, this figure will play an important role in pricing interest rates expectations, and thus the dollar’s direction.
Global equity markets failed to resume any kind of strong rebound following Tuesday's surge. Asian equity indices are deep in the red today...
It has been a turbulent trading week for stock markets as trade worries, global growth fears, Italian budget concerns and geopolitical tensions led to a deterioration in risk sentiment.
Dollar bulls were back in action on Wednesday evening after minutes from the Federal Reserve's September meeting reinforced expectations...
Global investors will likely remain on high alert throughout the end of the week to see if the largest market sell-off since early 2018 will...
Tuesday has seen stability in Chinese markets following a very nervous beginning to the new trading week yesterday. Signs of China market stability...
Financial markets have entered the new trading week on negative footing as a mixture of different market themes weigh on investor sentiment...
Chinese equities took a big hit after traders returned from a week-long holiday. Efforts by the People's Bank of China to free more than $100 billion...
The U.S. Treasury selloff on Wednesday was the biggest story in the financial markets. This time it wasn't only the rate-sensitive two-year yields that marched higher...
Global investors remained defensive on Tuesday despite the U.S. and Canada agreeing to a new trade deal ending months of uncertainty...