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Market Commentary

 

With oil losing some of its euphoric oomph overnight, following the API report of a surge in US oil inventories, and a subsequent report that Iran’s oil minister would skip the Doha OPEC meeting altogether, the global stock rally needed another catalyst to maintain the levitation.

It got that courtesy of the return of USDJPY levitation, which has pushed the pair back above 109, the highest in over a week, as well as a boost in sentiment from the previously reported Chinese trade data where exports rose the most in over a year, however much of the bounce was due to a favorable base effect from last year’s decline.

Additionally, as RBC reported, the 116.5% y/y increase in China’s reported March imports from HK likely reflects the growing trend of “over-invoicing”, which is merely another form of capital outflow.

In other words, which giving the impression that growth is stabilizing, China was really just covering up for even more outflows. Curiously the onshore yuan fell 0.06%, shrugging off the “better-than-forecast” China March exports data, suggesting that at least the FX market may have been paying attention.

Equities, however, were not, and as a result global stocks advanced higher for one more session, wiping out the year’s declines.

Copper and iron ore were among the beneficiaries, while haven assets including the yen and gold retreated.

“The commodity sector is well supported after the good numbers out of China,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Most investors were under-invested or were on the downside, they all thought we should see a bigger correction. Everything can turn around if we see negative numbers from the U.S. banks.”

Additionally, European stocks rose for a fourth day, shares in emerging markets climbed to the highest since November, and China’s equities traded in Hong Kong gained the most worldwide, as the Asian nation’s exports surged. Futures on the Standard & Poor’s 500 Index rose half a percent, as investors awaited earnings from JPMorgan Chase & Co.

Which is probably why there was a sigh of relief, when moments ago JPM reported that it had beat expectations of a $1.25 print, when it announced $1.41 in adjusted EPS, with total revenue sliding by $700 MM to $24.1 billion but also beating lowered expectations of $23.8 billion. The largest U.S. bank by assets reported a profit of $5.52 billion, or $1.35 a share before 6 cents in adjustments, a drop of 6.7% compared to the profit of $5.91 billion, or $1.45 a share, in the same period of 2015.

This is where global markets stand now:

  • S&P 500 futures up 0.5% to 2066
  • Stoxx 600 up 1.9% to 341.1
  • Eurostoxx 50 +2.2%
  • FTSE 100 +1.5%
  • CAC 40 +2.4%
  • DAX +2.3%
  • Dollar Index up 0.57% to 94.49
  • US 10Yr yield up 1bps to 1.78%
  • German 10Yr yield down 1bps to 0.15%
  • MSCI Asia Pacific up 1.9% to 130
  • Nikkei 225 up 2.8% to 16381.2
  • Hang Seng up 3.2% to 21158.7
  • Kospi up 0.6% to 1981.3
  • Shanghai Composite up 1.4% to 3066.6
  • Brent Futures down 0.9% to $44.3/bbl
  • WTI Futures down 1.3% to $41.6/bbl
  • Gold spot down 0.8% to $1245.1/oz

Global Top News

  • China’s Exports Jump Most in a Year, Boosting Growth Outlook: Shipments +11.5%, imports moderate drop to 7.6%
  • Oil Extends Losses as Speculation Swirls Over Doha Output Talks: Iran’s oil minister won’t attend freeze meeting, Seda reporter says
  • Business Groups Warn ‘Brexit’ Would Hurt Trade and Investment: employer groups from four EU partners urge U.K. to stay in
  • Pound’s Rally if Voters Reject ‘Brexit’ Predicted to Be Fleeting: Pioneer, Julius Baer see maximum 4% gain on vote to stay in EU
  • Euro-Area Industrial Production Plunges Most in 18 Months
  • Panama Prosecutor Raids Mossack Fonseca Office, La Prensa Says: newly created prosecutor carried out inspection yday
  • French Govt Maintains Forecast for 1.5% GDP Growth in 2016: sees govt deficit of 3.3% of GDP in 2016 and 2.7% in 2017
  • Bilfinger Says CEO Resigns, To Be Replaced in Interim by CFO: confident will be able to appoint new CEO shortly
  • McCormick Abandons Bid for U.K.’s Premier Foods Over Price: Premier had rejected three advances from U.S. spice producer
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