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(Reuters) – A look at the day ahead in European and global markets from Wayne Cole.

It was a cautious start to the week in Asia, with stocks and bonds little changed and the dollar holding on to Friday’s bounce. The caution is understandable as the week features updates on China’s economic growth and global PMIs, along with the Fed’s beige book and at least eight Fed speakers.

Analysts are generally upbeat on China’s data, given the shocking strength of recent trade figures. House prices also surprised at the weekend with their fastest growth in 21 months, a comforting sign as housing has been a key weak spot for the economy and a vulnerability for banks.

The central bank did its part to shore up liquidity in the financial sector by bypassing medium-term policy loans with higher cash offers for a fifth straight month.

The fund injection should help fill liquidity gaps caused by upcoming tax payments by banks and companies as policymakers look to boost activity.

Citi’s economic surprise index for China data is at its highest level in 17 years, and the market sees upside risks to Tuesday’s data on GDP, retail sales and industrial output.

Meanwhile, the CME Fedwatch Tool caused a brief stir this morning when it showed the odds of a May 3 Fed hike at 98% dead cert. It may have been a big thumbs up as it is now back to a still safe bet of 83%, so it seems that investors have come to the conclusion that the banking crisis is not enough to prevent another rise.

Markets moved further on the ECB, pricing in a 46% probability that it will rise by a full 50 basis points on May 4.

Analysts at Barclays say this week’s corporate earnings will be of more macro importance than usual, given that they will provide information on how resilient corporate balance sheets are in the face of potential future financial pressures.

“Quarterly bank results, particularly for US regional banks, should also provide a first look at the effects of the March shock and tightening of lending conditions,” they add.

Goldman Sachs and Morgan Stanley were both expected to report earnings declines, though that may not be inevitable given last Friday’s upward earnings surprises.

State Street, M&T Bank and Charles Schwab all report later today, and it will be interesting to see if banking stress has had a bigger impact on them than larger institutions.

The main developments that can affect the markets on Monday.

– The ongoing G7 Foreign Ministers Summit in Japan

– ECB President Christine Lagarde makes a speech in New York

– Speeches by Bank of England Deputy Governor John Cunliffe and Richmond Federal Reserve Bank President Thomas Barkin

– Often volatile, the Empire Manufacturing Survey and the NAHB Housing Survey are due

(Reporting by Wayne Cole Editing by Muralikumar Anantharamani)

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