Wall Street has also slipped into negative territory in recent trade as rising geopolitical and trade tensions plus hawkish FOMC rhetoric provides a weight. The WSJ reported that the trade dispute with the US could prompt China to delay reviews of acquisitions by firms including Qualcomm and Bain Capital.
Furthermore, CNBC warned that Russia could stop exporting titanium to Boeing in retaliation to the Trump sanctions. At the Federal Reserve, Boston Fed President Rosengren signalled he would likely support at least three more rate increases this year. Perceived safe haven assets have moved higher in response with core EU bonds and Treasuries moving into the green while the Japanese Yen pared back some of its earlier decline.
Soft US macro data will also have played its part after Michigan Sentiment dropped to 97.8 (f/c. 100.6) from 101.4. JOLTS job openings also slowed to 6.052 Mln (f/c. 6.110 Mln) from 6.228 Mln. Elsewhere, oil prices have moved higher in recent trade although have yet to trouble this morning’s highs.
Gold is up just shy of one-percent. Still to come today, the Baker Hughes rig count and possible comments from Dallas Fed President Kaplan at 18:00 BST.
* US Corporate News:
– JPMorgan (-2.7%): Q1 EPS $2.37 versus $2.28 expected | Q1 Revenue $27.9 Bln versus $27.6 Bln expected
– Citigroup (-2.6%): Q1 EPS $1.68 versus $1.61 expected | Q1 Revenue $18.9 Bln versus $18.9 Bln expected
– Wells Fargo (-3.2%): Q1 EPS $1.12 versus $1.07 expected | Q1 Revenue $21.9 Bln versus $21.8 Bln expected
– PNC Financial (-3.9%): Q1 EPS $2.43 versus $2.43 expected | Q1 Revenue $4.1 Bln versus $4.2 Bln expected
– Boeing (-2.2%): CNBC – Russia could stop exporting titanium to Boeing in retaliation to Trump sanctions
* German Commerce Ministry said German firms are experience barriers to trade not seen since 2008.
* Boston Fed President Rosengren (non-voter):
– My own views are that labor markets may tighten more than the median SEP forecast suggests, and that inflation is likely to increase a bit more than the current median forecast by FOMC participants. Therefore, I expect somewhat more tightening may end up being needed than is currently reflected in the projected median for the federal funds rate
– The outlook for the economy projected by participants in the March FOMC meeting is quite positive. My own forecast is somewhat stronger in terms of unemployment rates and inflation outcomes than the SEP forecast
* @realDonaldTrump – James Comey is a proven LEAKER & LIAR. Virtually everyone in Washington thought he should be fired for the terrible job he did-until he was, in fact, fired. He leaked CLASSIFIED information, for which he should be prosecuted. He lied to Congress under OATH. He is a weak and an untruthful slime ball who was, as time has proven, a terrible Director of the FBI. His handling of the Crooked Hillary Clinton case, and the events surrounding it, will go down as one of the worst “botch jobs” of history. It was my great honor to fire James Comey!
* Canadian Existing Home Sales M/M (Mar) +1.3%, previous +6.5%
* Michigan Sentiment (Apr P) 97.8 versus 100.6 expected, previous 101.4:
– Current Conditions 115.0 versus 120.0 expected, previous 121.2
– Expectations 86.8 versus 88.1 expected, previous 88.8
– One Year Inflation +2.7%, previous +2.8%
* US JOLTS Job Openings (Feb) 6.052 Mln versus 6.110 Mln expected, previous 6.312 Mln revised to 6.228 Mln
* China Delays Deal Reviews as U.S. Trade Frictions Build (WSJ):
– Amid escalating trade tensions, China is holding up deal reviews that could clear the way for U.S. companies Qualcomm Inc. and Bain Capital to make multibillion-dollar acquisitions of semiconductor companies, people familiar with the matter say.
* St Louis Fed President Bullard said he wants the FOMC statement to be updated to show they are at or near the neutral rates. He added there is too much uncertainty surrounding the trade tariffs to assess the economic impact. He also said that recent inflation data has been unsurprising.
US Closing Report
Financial stocks are leading declines despite better-than-expected corporate updates from JPMorgan, Wells Fargo and Citigroup. Investors may also be reluctant to hold equity positions over the weekend given the current precarious state of geopolitics, especially related to Syria.
Of note, the US State Department have said they now have proof that the Syrian government was behind the chemical attack. A Senior US official said preparations are underway to set up a meeting between Trump and Kim Jong Un although no time or place has been set.
Elsewhere, both Treasuries and the Dollar Index are little changed on the day with little reaction shown to further comments from Boston Fed President Rosengren who said they must be vigilant to not overstimulate the economy.
In energy space, US crude oil futures settled at $67.39 (+$0.32) after the Baker Hughs oil rig count rose by 7 to 815.
* New York Fed GDPNowcast (Q1) +2.79%, previous +2.77%; Q2 at +2.87%, previous 2.91%
* Senior US official said preparations are underway to set up a meeting between Trump and Kim Jong Un although no time or place has been set.
* Baker Hughes: US oil rigs rise by 7 to 815
* Mexican Trade Rep. Kalach said the US has yet to move on five-six toxic NAFTA demands, adding that a deal will depend on political will from the Trump administration.
* Deputy Attorney General Rosenstein has reportedly told his confidantes that he is ready to be fired by Trump.
* Boston Fed President Rosengren said tighter labor markets will raise wages. He added that they must be vigilant to not overstimulate the economy.
* Kyodo: China may ask Japan to team up against the US steel tariffs.
* US crude oil futures settled at $67.39 (+$0.32) | Brent crude futures settled at $72.58 (+$0.56)
* Axios: Paul Ryan endorses Kevin McCarthy to replace him as Speaker.
* US State Department said they have proof that the Syrian government was behind the chemical attack.
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