While U.S. cash markets are closed today, the rest of the world, as well as U.S. futures, are busy levitating amid renewed optimism that China has finally managed to contain its latest Covid breakup after Beijing says the outbreak is now under control and the country has calmed down. more virus braking. The upward momentum was also driven by the best week on Wall Street since November 2020, which was catalyzed by speculation that the Fed will pause its hike plans in September (and then proceed to be relieved once the recession is official). At 730 a.m. ET, emini futures traded up 30 points or 0.70%, while Nasdaq futures rose 1.2%. Oil rose in response to the easing of Chinese blockades and while the European Union was working on a plan to ban Russian crude oil imports, while the dollar fell for a third day.
While U.S. markets are closed, the S&P 500 eliminated its May losses and broke a series of seven weekly falls as institutional investors rebalanced their portfolios at the end of the month.
“It looks like the risk is back in business,” said AJ Bell Investment Director Russ Mold. “The reopening of key economic centers in China and suggestions that the US Federal Reserve could slow the pace of rising interest rates are helping to boost sentiment, at least in the short term.”
Traders will be wondering if the bottom of the sale is close, as investors have been buying the fall after one of the worst starts of the year for stocks. However, as Bloomberg points out, there is a wall of worries about falconer central banks underscoring fears of a recession, escalating war food inflation in Ukraine, and China’s blockades slowing activity. economic.
“We are in the midst of a rebound in the bear market,” Mahjabeen Zaman, chief investment officer at Citigroup Australia, told Bloomberg Television. “I think the market will be marketed within reach trying to figure out how quickly this recession will come or how quickly inflation will go down.” He added that Treasury yields are expected to peak this year.
European stock markets enjoyed a fourth day of gains, extending their longest earnings streak since late March and pushing the Stoxx 600 index to a maximum in more than three weeks. Luxury stocks outperformed on Monday as China’s reopening plans boosted sentiment. The Euro Stoxx 50 was up 0.9%, while the Spanish IBEX was down 0.2%. Consumer products, technology and travel are the best performing sectors. Shares of crypto-European stocks rose as the price of Bitcoin rose to nearly $ 31,000 as risk appetite returned with China easing Covid restrictions. . Shares such as Northern Data rose to 5.1% Argo Blockchain 2.6%, Arcane Crypto + 6.3%, Safello Group + 2.8%.
Spanish inflation accelerated unexpectedly, while German regional inflation data also pointed to a worrying outlook, weakening hopes that the record rise in inflation in the eurozone has peaked and increasing pressure on the ECB to act. German bunds fell further in two weeks.
Asia-Pacific stocks rose as China reversed some tight restrictions caused by the pandemic and after U.S. 10-year Treasury yields limited a third week of falls. The MSCI Asia Pacific Index extended gains to 2.1%, the biggest jump this month, led by technology and consumer discretionary stocks. The benchmarks in Japan and Taiwan advanced further. Chinese stocks, including tech names, rose as local authorities eased restrictions on movement in key cities after virus cases fell. The Asian move is close to clearing losses in May, which would mark its first monthly advance this year, as the reopening of China’s economy boosts the region’s growth prospects. This, together with the stabilization of global bond yields, has supported regional action. Still, concerns about a slowdown in global growth and high inflation remain, with foreign investors pouring into Asian technology markets this year. With U.S. markets closed on a public holiday Monday, traders are focusing their attention on China’s purchasing managers’ index figures for May, scheduled for release on Tuesday.
“The focus will be on how much the data has improved from May to April, as the number of cities under some kind of blockade” has fallen to 26 out of 44, representing 20% of national GDP, Charu Chanana, Saxo market strategist. Capital markets, he wrote in a note.
European bonds fell after Spanish inflation reached a higher-than-expected level, while German regional inflation data also pointed to a worrying outlook, with more impressions of the CPI in the region. euro on Monday and Tuesday afternoons. Money markets raised their stakes on rising ECB rates, with a price rise of 114 bp at the end of the year. The bond yield curve is flattening, yielding less than 5 years, cheapening ~ 9 bp to about 0.75%. Peripheral spreads are expanding in Germany with 10 years of BTP / Bund expanding from 3 bp to ~ 195 bp. The Gilts follow the same example, with a 10-year yield of about 6 bp up to 1.975%. US 10-year banknote futures are down 12 ticks to 119-24+ with US Treasury bonds closed for US holidays.
On FX, the dollar fell for a third day compared to major peers as paradises lost their appeal amid improved mood. The Bloomberg dollar account index fell 0.2%. JPY and CHF are the ones with the weakest performance in G-10 FX, SEK and NOK outperform. China’s yuan outperformed after the nation reported fewer cases of Covid-19 in Beijing and Shanghai. China’s reopening moves caused an indicator of emerging market stocks to peak since May 5th.
Bitcoin recorded its biggest gain in two weeks, rising to close to $ 31,000, and Ethereum recovered $ 1,900.
In commodities, oil rose as China eased anti-virus blockages and the EU worked on a plan to ban Russian crude imports; Brent is heading for its sixth monthly gain, the longest winning streak since April 2011; Gasoline prices in the United States rose to another new record. WTI rose 0.5% to trade above $ 115, while Brent rose above $ 120.
Local gold is below the best levels, about $ 4 to $ 1,857 / oz. Most base metals are marketed in green; LME nickel is up 6.5%, ahead of its peers.
There is nothing on the U.S. calendar due to the Memorial Day celebration.
Jim Reid of DB concludes the night’s wrapper
Everything was going great at lunch time on Saturday. In my big 36 hole tournament I was ready and ready to jump out of the top ten. However, I had one of my worst rounds in years as he grabbed my back and then, immediately afterwards, I saw Liverpool lose the most important game of the season. I went to bed wondering if Liverpool could recover from this and if my back would allow me to play the competitive type of golf I want again. It was a low moment. Then, in another competition on Sunday, I loosened my back and did my best round of competition since I can remember. I slowly finished second and lost my cup. A bit like Liverpool.
It will be a somewhat hectic week with the United States off Memorial Day today and the UK closed on Thursday and Friday to celebrate the Queen’s Platinum Jubilee. However, this week there is a lot of important data in terms of both growth and inflation with the US monthly employment report (Friday) and a lot of May CPI for Europe. Industrial activity will also focus on the Chicago PMI, the Dallas Fed’s manufacturing activity index (Tuesday), the ISM index (Wednesday) and several European PPIs.
On Wednesday, markets will also focus especially on central banks with the start of the Fed’s balance sheet depletion, the BoC decision and the publication of the Beige Book. In Asia, next week will be full of data for Japan and China’s PMI will be unveiled.
Given the recent rise in bond markets, one of the most important impressions could be today’s German inflation with estimates slightly higher than last month, which was to some extent the highest combined since 1950. regional impressions this morning and then the country. ample aggregate at lunchtime. As for the EU, the harmonized reading consensus stands at 8.1% three tenths more than these record levels. As we print, the NRW region in Germany has seen the year-on-year rate rise four-tenths from last month to 8.1%. France, Italy and the eurozone will see their CPI tomorrow.
Production prices will also be released across the continent, with the April PPI in Italy (today), France (tomorrow) and the eurozone (Thursday). Finally, labor market indicators for Germany (tomorrow), Italy and the euro area (Wednesday) will be published throughout the week.
In the U.S., all roads lead to payrolls on Friday with our U.S. economists projecting earnings of 325,000 compared to last month’s reading of 428,000 that fell above the average estimate of 380,000 on Bloomberg. The JOLTS and ADP reports will be presented on Wednesday and Thursday, respectively. The JOLTS report is our favorite to analyze the rigidity of the labor market, but it is one month behind the less useful payroll report.
Another important set of indicators will come for industrial activity, such as the Chicago PMI and the Dallas Fed’s manufacturing activity index tomorrow, the ISM manufacturing index on Wednesday and factory orders from April Thursday. These follow the mistakes of the PMIs, the Richmond index and durable goods orders last week, so markets will be paying attention to whether these metrics will also be softer than expected. Finally, the Conference Board’s Consumer Confidence Index tomorrow will be assessed in conjunction with labor market data to assess consumer strength.
From central banks, investors will be waiting this Wednesday when the Fed begins the balance sheet to assess the preliminary impact on the markets. On the other hand, the Bank of Canada’s decision will also be made on Wednesday, following a move of +50 bp at the last meeting on April 13. Analysts expect 50 bp more. Finally, the Fed will also publish its Beige Book on that day, and its ideas on current economic conditions will be digested along with other timely US indicators. In the speakers, this week, …