European Closing Report 04 Apr 2018

European cash equity markets are broadly lower at the closing bell while Wall Street opened firmly in the red as the risk of global trade war intensified today (FTSE 0.0%, DAX -0.4%, CAC -0.2%).

European Closing Report (by Sigma Squawk)

Earlier this morning, China announced plans to impose additional tariffs on 106 US products in response to similar moves by the US administration. Perceived safe-haven assets rallied in response although gains in core government bonds, gold prices and the Japanese Yen have all dissipated in recent trade.

Equities have also moved off their worst levels with the NASDAQ turning flat in recent trade. The improvement in risk sentiment was also boosted by a stronger ADP print (241K v 210K) ahead of Friday’s jobs report.

Core EU bonds had earlier been boosted by a slightly softer-than-expected print for Euro Zone core CPI (+1.0% YoY v +1.1%). In FX, the Dollar Index has edged lower with little reaction shows to dovish remarks from St Louis Fed President Bullard who said it is not necessary to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target.

The New Zealand Dollar is the out-performer with the Euro not far behind while the Swiss Franc is at the bottom of the G10 pile. In energy space, oil prices dropped amid the global trade concerns but found some support after a surprise drawdown in US crude inventories.

Key Headlines/Data:
* Chinese media have reported that China are to add reciprocal tariffs on 106 US products, and would have totalled $50 Bln in 2017

* UK Construction PMI (Mar) 47.0 versus 50.9 expected, previous 51.4

* Euro Zone CPI Data (Mar P): – CPI Y/Y +1.4% versus +1.4% expected, previous +1.1% – Core CPI Y/Y +1.0% versus +1.1% expected, previous +1.0%

* Unemployment Rate (Feb) 8.5% versus 8.5% expected, previous 8.6%* US President Trump said the US are not in a trade war with China | Commerce Secretary Ross said the US will not lose if it gets into a trade war with China.

* US ADP Employment Change (Mar) 241K versus 210K expected, previous 235K revised to 246K

* St Louis Fed President Bullard said it is not necessary to raise the policy rate further in order to put downward pressure on inflation, since inflation is already below target* US Markit Service PMI (Mar F) 54.2 versus 54.3 flash/expected

* US ISM Non-Manufacturing (Mar) 58.8 versus 59.0 expected, previous 59.5

* US Factory Orders M/M (Mar) +1.2% versus +1.7% expected, previous -1.4% revised to -1.3%

* @EamonJavers More Kudlow on NAFTA: “don’t hold me to the timing, but we are moving in the direction of a NAFTA deal… I think you are going to see some very positive timing on NAFTA… the stock market’s going to love it.”

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