Investors have welcomed a further easing of geopolitical tensions over the weekend after North Korea pledged to halt its nuclear missile testing. Gains have been limited however by falling oil prices with US crude futures losing close to two-percent at the lows.
We have also seen further gains in both European and US government bond yields with US 10-year borrowing costs flirting with the three-percent level. Incoming data will also have provided support with stronger-than-expected prints for both US manufacturing and service sector PMI and existing home sales. In currency space, the Dollar has been the best performer today as it rose against all of its G10 rivals while the Japanese Yen is at the bottom of the pile.
Of note, Bank of Japan Governor Kuroda said Japan is not intentionally depreciating the currency. We also hear from San Francisco Fed President Williams who warned that a significant trade war would have very negative economic effects although it is still too soon to say if such a conflict will arise.
Still to come today, possible comments from Bank of Canada Governor Poloz and earnings after the bell from Alphabet and Whirlpool.
* San Francisco Fed President Williams warned that a significant trade war would have very negative economic effects although it is still too soon to say if such a conflict will arise.
* French Markit PMI Data (Mar P):
– Manufacturing 53.4 versus 53.4 expected, previous 53.7
– Services 57.4 versus 56.6 expected, previous 56.9
* German Markit PMI Data (Mar P):
– Manufacturing 58.1 versus 57.6 expected, previous 58.2
– Services 54.1 versus 53.9 expected, previous 53.9
* Euro Zone Markit PMI Data (Mar P):
– Manufacturing 56.0 versus 56.6 expected, previous 56.6
– Services 55.0 versus 54.8 expected, previous 54.9
* Italian League chief Salvini has called on Five Star Movement leader Di Maio to talk about forming a government.
* Italian government official said the President has asked the Lower House leader to sound out the possibility of a 5S/PD government
* Canadian Wholesale Trade Sales M/M (Feb) -0.8% versus +0.3% expected, previous +0.1% revised to +0.3%
* Chicago Fed National Activity Indx (Mar) 0.10 versus 0.27 expected, previous 0.88 revised to 0.98
* US Markit PMI Data (Mar P):
– Manufacturing 56.6 versus 55.2 expected, previous 55.6
– Services 54.4 versus 54.3 expected, previous 54.0
* @realDonaldTrump – Mexico, whose laws on immigration are very tough, must stop people from going through Mexico and into the U.S. We may make this a condition of the new NAFTA Agreement. Our Country cannot accept what is happening! Also, we must get Wall funding fast.
* US Existing Home Sales (Mar) 5.60 Mln versus 5.55 Mln expected, previous 5.54 Mln
* Bank of Japan Governor Kuroda said Japan is not intentionally depreciating the currency. He said they will reach their two-percent inflation target within the next five years, adding that to do so they must continue very strong accommodative monetary policy for some time.
US Closing Report
Stocks have also been hampered by rising US government bond yields with 10-year borrowing costs flirting with the three-percent level after some stronger-than-expected US data today – manufacturing PMI, service PMI and existing home sales.
This has kept the Dollar on the front foot in currency space where it has risen against all of its G10 rival while the Japanese Yen remains the weakest. The Canadian Dollar was largely unresponsive to comments from Bank of Canada Governor Poloz who said more economic capacity means the economy has more room to grow before inflationary pressures start to build.
He also repeated that they will remain cautious with future rate moves, guided by data. Elsewhere, oil prices rebounded from earlier lows to settle at $68.64 (+$0.24. We await earnings after the bell from Alphabet and Whirlpool.
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