Markets in Asia began the week with gains as the region reacted to the disappointing jobs data stateside where the NFP’s missed expectations massively calling for further support and continued stimulus efforts. The ASX 200 was up by around 1% after mining sectors benefitted from lifted commodity prices whilst the Nikkei 225 was up by 0.6% as participants took the recent state of emergency extension within their strides as it was widely expected beforehand.
Following on from the disappointing Labour market report, President Biden reiterated how important economic actions are and noted that the American Rescue Plan was set out to support the country over the next year as the nation recovers from the effects of the Pandemic.
Major bourses in Europe began the session mixed after the initial optimism witnessed earlier on faded as market participants look towards the US for further direction. The FTSE 100 is up over 0.8% as it attempts to catchup from the nations bank holiday yesterday.
Last week, the DXY continued lower though rebounded on month end flows as financiers began to reposition themselves for the month of May. The DXY finished the month down about 2% as appetite for the greenback waned overall. The FOMC stuck to their dovish script as FED Chair Powell reiterated that the nation isn’t ‘out of the woods’ yet despite the vaccination drive picking up speed and the most recent labour market report boding well for the nation. The week ahead will see participants eagerly await the latest Non-Farm Payroll report where an additional 975,000 jobs are expected to have been added in the past month.
Asian equity markets traded cautiously as major bourses and US equity futures lacked direction heading into month-end. Going into the week ahead, participants await outcomes from key events including the BoJ, FOMC and US GDP figures.
Last week, the DXY continued lower for the third straight week breaking below 91.50 as market participants sought risk elsewhere. Conversely, EURUSD extended beyond 1.2000 and was lifted on upbeat PMI data where service sector figures crossed into expansionary territory. The ECB meeting did little to spur market action as participants digested comments from ECB President Lagarde on the economic recovery amidst the battle against the virus. On the other hand, the Canadian Dollar was lifted following its monetary policy meeting where the Bank lowered its QE by 1bln CAD per week whilst also revising the GDP and growth forecasts noting that the economy is recovering gradually, and commodity prices have supported growth. Going into the week, USD/CAD trades below 1.2500.
Markets in Asia began the week cautiously and US equity futures marginally retraced lower from record highs with participants on edge ahead of further earnings updates this week, and as Covid-19 uncertainty lingered after the number of global updates this week increased by over 5.2mln, which was a record despite the ongoing vaccination drive.
Last week, the RBNZ maintained the OCR at 0.25% whilst keeping the funding for lending programme unchanged as expected. The bank continued to reiterate their commitment to lowering the cash rate if required as they continue to monitor inflation and employment objectives over the course of the year. Labour market figures in Australia beat expectations as the unemployment rate dropped to 5.6 % from 5.8%. The Australian Dollar benefited from the weaker greenback as the major pair went on to breach the 0.7700 handle whilst GBP/AUD dropped by over 0.5%.
Markets in Asia began the week subdued despite markets stateside closing at record levels last week. Looking to the week ahead, market participants await key data releases including Chinese trade data as well as CPI and Retail Sales from the US.
Within Europe, rising Covid-19 cases continue to threaten the bloc’s recovery attempts as German Chancellor Merkel’s coalition begins to draft legislation to transfer authority to impose restrictions back to the Federal Government from regional leaders. A fresh lockdown is due to be imposed which will see all non-essential retail stores close. Across the channel, the UK transitioned into the next phase of the easing blueprint as non-essential retail, pubs and sporting facilities will reopen today. This comes as the UK continues to plough ahead with their vaccination rollout which has seen over half of the population vaccinated at least once. With footfall set to increase over the next few months, businesses will be eager to welcome customers after having endured another shutdown over the past three months. Within markets, last week saw Sterling slide across the board as the FTSE100 broke to new monthly highs breaching the 6,900 handle. The index still lags behind most major indices having not recovered from its pandemic drop.
Fed Chair Powell continued with his dovish stance last week as he outlined that the US economy is now at an ‘inflection point’. The Fed Chair pointed to the fact that the risk to the economy still remains the resurgence of the virus whilst reiterating that reopening too quickly could do more harm than good. Equity indices continues to digest the overwhelming optimism as the S&P 500 led the charge to close above the 4,100 level for the first time ever.
Markets traded mixed as the region failed to fully maintain the momentum that followed stateside where that S&P 500 and DJIA extended on fresh record highs as market participants digested a stronger than expected NFP Jobs report which was followed up with a beat on ISM Services PMI data.
European equities began the shortened week with gains as the region attempted to catchup with their counterparts. Within Europe, Autos, Banks and Travel & leisure led the way whilst more defensive sectors; Healthcare and Telecoms lag behind as risk appetite picks up
Within FX, the greenback is on the back foot against majority of the G10 space. This comes as the asset lost ground over the Easter break as market participants sought out riskier assets. Looking ahead to the week financiers will digest comments from Fed Chair Powell as well as the release of the FOMC Meeting minutes.
Markets in Asia traded positively as the region picked up on last week’s late surge stateside although bullish momentum was somewhat capped with participants cautious heading into the month and quarter end as well as Friday’s NFP jobs data and impending Easter holiday closures.
The Euro continued to edge lower last week on a firmer US dollar. The single currency continues to disappoint with growing concerns of a third wave circling the bloc. German Chancellor Merkel threatened the use of Federal law to toughen pandemic restrictions given that she is not convinced that the current measures will slow down the rise in cases. EUR/GBP slumped to new yearly lows after giving up support around 0.8550.
On the other hand, Sterling has led the charge as market participants look towards the quarter end. With stage 2 of the nation’s easing methods being implemented and a strong vaccine rollout, the currency continues to edge higher against safe haven assets. GBP/JPY has reclaimed the 151.00 handle after initially slumping below 149.00 last week.
Cryptoassets started the week with gains as Visa announced that they will permit payment settlements using cryptocurrency. At the time of writing Bitcoin is up over 3.5% after reclaiming the $57,000 handle.
Asian equity markets were mixed heading into the week as the region traded tepidly ahead of what is set to be a busy week of Central bank announcements with the Fed, BoE and BoJ all set to take centre stage. Last week saw the greenback trade indecisively as the DXY traded above the 92.00 handle briefly, before finishing the week with a strong Doji. The Canadian dollar was the top performer for the week as the commodity currency benefited from a strong labour market report which saw the unemployment rate trend lower to 8.2%. In addition to this, market participants digested comments from Governor Macklem as the central bank hosted its second-rate statement for the year. CAD/JPY traded to its best levels since 2018 as the cross eclipsed the 87.00 handle. Optimism continued to cycle across markets as US President Biden signed the Covid-19 relief bill into law marking a significant turning point in the nations battle against the virus which has killed more than 500,000 Americans.
Going into the week ahead, the US will host China in what is set to be their first significant meeting since President Biden took office. The meeting will see US Secretary of State Blinken and National Security Adviser Sullivan meet with Foreign Minister Wang Yi and other officials. The meeting will most likely be an opportunity for either side to size each other up in what could potentially set the tone for any talks or developments moving forward. As of now, it has been reported that President Biden will not be looking to remove the tariffs imposed on the nation by the former presidential administration.
Markets in Asia traded mostly lower as the underperformance within the tech space sapped the initial momentum from stimulus progress after the US Senate passed the $1.9tln Covid-19 relief bill which is also set to include $1,400 of stimulus checks and with the House set to vote on the bill on Tuesday.
The week ahead will see two monetary policy meetings with Canada leading the way midweek followed by the ECB on Thursday. Market participants will be keen to gauge the rhetoric from both Central Banks given the broad-based dovish tone recently observed by a number of ECB officials as they tackle an economic recovery amidst a slower than expected vaccination rollout. On the other hand, the Canadian dollar has experienced strength as it remains underpinned by lifted commodity prices. EUR/CAD traded to May lows last week to close almost 2% down.
In the UK, Public Health official Hopkins provided signs of optimism after outlining that new virus variants are unlikely to hamper the nations efforts to ease the current restrictions over the next 3-5 weeks. This comes as the first phase of PM Johnson’s easing blueprint takes effect today with schools set to resume. Gains in the pound have slowed somewhat over the past two weeks since its initial rally year to date. Last week, UK Chancellor Sunak provided the budget for the nation which is set to see 95% mortgages resurface under a mortgage guarantee scheme as well as an abundance of support in the form of loans and grants for businesses that have been impacted by the pandemic.
Asian markets moved higher as bourses picked themselves up from the Friday lull as the bond market rebounded from last week’s turmoil. Sentiment was also encouraged by an improving Covid-19 situation after Johnson & Johnson’s vaccine approval and a slower pace of infections over the weekend. The ASX 200 was up around 1.7% after a positive performance in tech whilst the Nikkei 225 closed 2.2% in the green after PM Suga announced the removal of a state of emergency in 6 prefectures. The week ahead will see a monetary policy meeting in Australia as well as the all-important NFP Jobs report which will be released on Friday where an additional 133K are set to have been added in the past month. In addition to this ISM Manufacturing PMI’s and OPEC-JMMC meetings will also feature in the week ahead.
UK Chancellor Sunak is set to release the annual budget on Wednesday and is said to be looking to provide more support for businesses that have been impacted by the pandemic. Reports suggest that a new £5bln grant scheme will be launched to aid shops, pubs, hotels and many other businesses. In addition to this Sunak is set to layout plans to increase income tax by around £6bln as he looks to plug a hole into the nation’s finances. The UK have currently surpassed the 20mln mark in inoculations as they continue their vaccination rollout.
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