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Markets Commentary (mid day)

Global stocks piggybacked on the strong US close and rose despite the lack of good (or bad) macro news, propelled higher by the two usual suspects: a higher USDJPY and a even higher oil, if mostly early on in the trading session.

The OIL  squeeze higher continues, and as the charts below courtesy of Andy Critchlow show, Brent is now 82% higher in the past 82 days

… while crude has had its strongest rally since 2010.

 

 

 

 

However, after rising above $48 for the first time since October, crude finally pulled back modestly and was unchanged at last check while Brent was modestly in the red. This led to equities paring much of their overnight advance.

In FX, in addition to the abovementioned spike in the USDJPY now well in the mid-109.50s, the other prominent mover was Australia’s dollar which advanced after central bank officials suggested authorities will hold off on cutting interest rates.

The Stoxx Europe 600 Index was still set for its third day of gains also following the crude jump above $48 a barrel.

The British pound climbed by the most in four weeks as a poll indicated support is growing in the U.K. for the country to remain in the European Union.

Investors got a reminder of the challenges facing central banks as a report showed U.K. consumer-price growth unexpectedly slowed in April.

  • U.S. data on Tuesday are forecast to show inflation quickened last month.
  • West Texas Intermediate crude was unchanged at $47.74.
  • The pound was 0.6 percent stronger at $1.4486 and
  • the Aussie gained 0.5 percent to 73.25 U.S. cents.
  • US equity futures were unchanged after rising 0.3% around the European open.

“Markets seem to be in a relatively sweet spot with a steadily stronger U.S. dollar and resilient commodities prices,” Angus Nicholson, a Melbourne-based market analyst at IG Ltd., told Bloomberg “Many investors have been predicting a pullback in markets, but despite all the negativity, markets have continued to grind higher.”

European equities have been climbing higher this morning with Germany and Switzerland returning from their elongated break. Risk on sentiment has been supported by the continuation of the upside in oil prices in which Brent crude futures had sustained a move above USD 49/bbl for a large part of the morning.

Additionally, the upbeat tone has also been supported by the gains in Apple yesterday following Berkshire Hathaway

Alongside this, a slew of EUR-denominated bond sales is set to continue this week after near record amount of sales last week. Furthermore, as energy markets continue to climb this could continue to hamper fixed income products as markets inflation expectations adjust to the uptick in prices.

Top European News

  • U.K. Inflation Rate Unexpectedly Declines to 0.3% on Air Fares: Economists had forecast a rate of 0.5 percent, based on the median estimate in a Bloomberg survey
  • Vodafone Beats Estimate With 2.5% Quarterly Network Revenue Gain: Analysts surveyed by Bloomberg expected 1.5 percent growth, on average
  • Iliad First-Quarter Sales Increase 6.6% on Wireless Promotions: Revenue rose to 1.15 billion euros ($1.3 billion)
  • Barclays’ Ramos Emerges as Best-Value South African Bank CEO: Barclays Africa earned 508 rand ($33) in net income for every rand the Johannesburg-based company paid Ramos in base salary, long-term incentives and bonuses in 2015, according to data compiled by Bloomberg
  • Deutsche Bank Names Ex-EDF CFO Thomas Piquemal to Lead M&A: Piquemal, 47, who quit as chief financial officer of French utility Electricite de France SA in March, will be based in Paris and report to corporate and investment banking chief Jeff Urwin

This is where markets are

  • S&P 500 futures up less than 0.1% at 2063.5
  • Stoxx 600 up 0.5% to 337
  • FTSE 100 up 0.6% to 6191
  • DAX up 0.1% to 9963
  • German 10Yr yield up 1bp to 0.16%
  • Italian 10Yr yield down less than 1bp to 1.48%
  • Spanish 10Yr yield down less than 1bp to 1.6%
  • S&P GSCI Index down 0.1% to 367.2
  • MSCI Asia Pacific up 0.7% to 127
  • Nikkei 225 up 1.1% to 16653
  • Hang Seng up 1.2% to 20119
  • Shanghai Composite down 0.3% to 2844
  • S&P/ASX 200 up 0.7% to 5396
  • US 10-yr yield up less than 1bp to 1.76%
  • Dollar Index down 0.04% to 94.53
  • WTI Crude futures up less than 0.1% to $47.74
  • Brent Futures down 0.6% to $48.68
  • Gold spot down 0.2% to $1,271
  • Silver spot up less than 0.1% to $17.16

Top Global News

  • Oil Advances to Seven-Month High as U.S. Stockpiles Seen Falling
  • Saudi Arabia’s Treasuries Holdings Are Unveiled After 41 Years
  • Soros Cuts U.S. Stock Investments 37%, Buys Barrick Gold Stake
  • Hedge Funds Abandon Ex-Darling Valeant and Other 13F Highlights
  • LendingClub Subpoenaed by Justice Department After CEO Exit

Top Asian News

  • BlackRock’s Fink Says ‘All Have to’ Worry About China Debt
  • China to Restrict Trading Halts, Report Says, Boosting MSCI Odds
  • ANZ to Cut About 200 Jobs in Australia as Loan Growth Slows
  • As China Revamps Regulation, PBOC Gears Up for Central Role
  • Aircastle’s Japan Venture to Buy Up to 10 Boeing, Airbus Planes
  • Japan to Seek Cheaper Plans From Operators, Official Says

 

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