No news is good news for Middle East

EU mid-market update: No news is good news for Middle East; Wall Street selloff is ripe for correction after 6 days of losses.

Notes/observations

- Risk premium on commodities and safe haven assets continues to unwind after a calm weekend of conflict in the Middle East.

- Light volume of corporate and geopolitical news ahead of a pickup in earnings as week progresses.

- Upcoming earnings: Verizon in US premarket, SAP in EU after close.

- Asia closed higher with Hang Seng outperforming +1.8%. EU indices are +0.1-1.3%. US futures are +0.3-0.5%. Gold -1.3%, DXY -0.1%; Commodity: Brent -0.9%, WTI -0.9%; Crypto: BTC +1.7%, ETH +1.2%.

Asia

- China PBoC Monthly Loan Prime Rate Setting (LPR) left both the 1-year and 5-year rates unchanged (as expected).

- BOJ Gov Ueda noted that accomodative financial conditions to continue for the time being. BOJ would be "very likely" would raise interest rates if underlying inflation continued to go up.

Europe

- ECB Villeroy (France) maintained that that Middle East tensions should not delay June rate cut and more should follow afterwards.

- SNB Chairman Jordan stated that growth remained too low but monetary policy should remain focused on price stability.

- UK Apr Rightmove House Prices M/M: 1.1% v 1.5% prior; Y/Y: 1.7% v 0.8% prior.

- UK Chancellor of the Exchequer (Fin Min) Hunt said to target further 2p cut in National Insurance.

- S&P affirmed Greece sovereign rating at BBB-; Outlook revised to Positive from Stable.

Americas

- House passed $95B aid bill for Ukraine, Israel, and Taiwan. Supplemental bill included legislation on TikTok that would force the company to be sold or face a national ban in the US.

- Federal Reserve released semi-annual financial stability report which noted that persistent inflation was seen as top financial stability risk.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.18% at 500.18, FTSE +1.23% at 7,992.69, DAX +0.23% at 17,783.91, CAC-40 -0.02% at 8,020.52, IBEX-35 +0.80% at 10,815.21, FTSE MIB -1.15% at 33,533.00, SMI -0.24% at 11,269.10, S&P 500 Futures +0.40%].

Market focal points/key themes: European indices open generally higher and stayed upbeat through the early part of the session; easing geopolitical tensions seen helping risk appetite; among sectors leading the way higher are consumer discretionary and real estate; lagging sectors include industrials and materials; FTSE 100 outperforming amidst M&A activity; Tyman receives takeover offer from Quanex; Base Resources to be acquired by Energy Fuels; Blackstone submits rival offer for Hipgnosis; earnings expected in the upcoming US session include SAP and Verizon.

Equities

- Consumer discretionary: Royal Unibrew [RBREW.DK] +1.5% (analyst upgrade).

- Consumer staples: Tesco [TSCO.UK] +2.0% (commences first £450M tranche from £1.0B share buyback program).

- Energy: Galp Energia [GALP.PT] +18.0% (notes Mopane field, off the coast of Namibia, could contain at least 10B barrels of oil) - Financials: Icade [ICAD.FR] +3.5% (Q1 sales, affirms guidance).

- Industrials: Alstom [ALO.FR] +1.5% (Knorr-Bremse Signs to acquire Alstom’s North America Rail Signalling Technology Business), Volkswagen [VOW3.DE] -1.5% (confirms in principle that Volkswagen was targeted by hackers, but points out that the incident happened ten years ago), NKT [NKT.DK] -4.5% (analyst downgrade).

- Materials: Tyman [TYMN.UK] +28.5% (to be acquired).

Speakers

- SNB raised the minimum reserve requirement for banking sector from 2.5% to 4.0%. It noted that the amendments should not affect current monetary policy stance.

- Russia Foreign Min Lavrov stated that Russia and China had distributed a draft agreement on preventing deployment of weapons in outer space.

Currencies/fixed income

- USD was steady in quiet trade as the trading week begun as an improvement in overall risk appetite found some tailwinds. No further deterioration in the Mid-East tensions helped to smooth over nervous investors.

- EUR/USD at 1.0660 area by mid-session.

- GBP/USD at 1.2370.

- USD/JPY at 154.70 with focus on Friday’s BOJ rate decision and press conference.

Economic data

- (NL) Netherlands Apr Consumer Confidence Index: -21 v -23 prior.

- (DK) Denmark Apr Consumer Confidence Index: -8.6 v -7.6 prior.

- (ES) Spain Feb Home Sales Y/Y: +5.8% v -2.1% prior.

- (CH) Swiss Mar M3 Money Supply Y/Y: -1.6% v -2.7% prior.

- (TR) Turkey Apr Consumer Confidence Index: 80.5 v 79.4 prior.

- (MY) Malaysia Mid-Apr Foreign Reserves: $113.4B v $113.8B prior.

- (FR) France Mar Retail Sales Y/Y: +0.3% v -1.4% prior.

- (TW) Taiwan Mar Unemployment Rate: 3.4% v 3.4%e.

- (TW) Taiwan Mar Export Orders Y/Y: 1.2% v 4.0%e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 481.3B v 477.9B prior; Domestic Sight Deposits: 472.9B v 469.4B prior.

- (PL) Poland Mar Sold Industrial Output M/M: 3.6% v 7.3%e; Y/Y: -6.0% v -2.2%e; Construction Output Y/Y: -13.3% v -6.7%e.

- (PL) Poland Mar Employment M/M: -0.1% v -0.1%e; Y/Y: -0.2% v -0.2%e.

- (PL) Poland Mar Average Gross Wages M/M: 5.4% v 5.4%e; Y/Y: 12.0% v 12.2%e.

- (PL) Poland Mar PPI M/M: -0.1% v +0.1%e; Y/Y: -12.6% v -9.5%e.

- (EU) Euro Zone 2023 Preliminary Govt Debt to GDP Ratio: 88.6% v 90.8% prior.

- (BE) Belgium Apr Consumer Confidence Index: -6 v -5 prior.

- (IS) Iceland Mar Wage Index M/M: 2.4% v 0.2% prior; Y/Y: 8.3% v 6.8% prior.

Fixed income issuance

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.48% v 4.52% prior; bid-to-cover: 1.75x v 3.12x prior.

Looking ahead

- (MX) Mexico CitiBanamex Survey of Economists.

- (AR) Argentina Mar Budget Balance (ARS): No est v 1.232T prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €5.0B in 6-month and 12-month BuBills.

- 06:00 (UK) Apr CBI Industrial Trends Total Orders: -16e v -18 prior; Selling Prices: 20e v 21 prior; Business Optimism: No est v -3 prior.

- 06:00 (IE) Ireland Mar PPI M/M: No est v 1.1% prior; Y/Y: No est v 3.3% prior.

- 06:00 (IL) Israel to sell bonds.

- 06:00 (BE) Belgium Debt Agency (BDA) cancelled planned OLO Bond auction.

- 06:00 (RO) Romania to sell RON500M in 7.20% May 2027 bonds.

- 06:30 (TR) Turkey to sell bonds (2 tranches).

- 08:00 (MX) Mexico Feb Economic Activity Index (Monthly GDP) M/M: +0.5%e v -0.6% prior; Y/Y: 2.7%e v 2.0% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Mar Chicago Fed National Activity Index: 0.09e v 0.05 prior.

- 08:30 (CA) Canada Mar Industrial Product Price M/M: No est v 0.7% prior; Raw Materials Price Index M/M: No est v 2.1% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.9-7.1B in 3-month, 6-month and 12-month bills.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 10:00 (EU) Euro Zone Apr Preliminary Consumer Confidence Index: -14.5e v -14.9 prior.

- 11:30 (EU) ECB Chief Lagarde at Yale.

- 11:30 (EU) ECB’s Villeroy (France).

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Mar PPI Y/Y: No est v 1.5% prior.

- 19:00 (AU) Australia Apr Preliminary PMI Manufacturing: No est v 47.3 prior; PMI Services: No est v 54.4 prior; PMI Composite: No est v 53.3 prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 83.5 prior.

- 20:30 (JP) Japan Apr Preliminary PMI Manufacturing: No est v 48.2 prior; PMI Services: No est v 54.1 prior; PMI Composite: No est v 51.7 prior.

- 23:30 (JP) Japan to sell 2-Year JGB Bonds.