European Outlook: Japanese stocks headed south in Asia overnight, with the Nikkei losing more than 1% as the Yen strengthened and risk aversion continues to weigh on markets. Once again exporters and financials were mostly hit. Other Asian markets are narrowly mixed, U.K. futures are slightly higher, but U.S. futures are also down. Geo-political concerns continue to weigh on sentiment and curtail risk appetite, which is also pushing out Eurozone spreads, with French markets also jittery ahead of the Presidential election as leftist EU-critic Melenchon continues to catch up in the polls. Oil prices continue to climb and the front end Nymex future is trading at USD 53.51 per barrel. The European calendar has April inflation data from Spain and Portugal as well as U.K. labour market data.
US reports: U.S. Jobs openings climbed 118k in February to 5,743k, from a revised 86k increase in January to 5,625k. The rate was edged up to 3.8% from the 3.7% that had been in place for months. However, the rest of the report was on the weaker side. Hiring’s declined 110k to 5,314k following the 121k increase in January to 5,424k. The rate slipped to 3.6% from 3.7%. Quitters also declined, falling 102k to 3,084k after surging 101k to 3,186k. The rate fell to 2.1% from 2.2%. The slippage in some of the January data are consistent with the downward revisions seen in Friday’s employment report. But the data are still in line with a solid jobs environment.
Eurozone industrial production dropped -0.3% m/m in February, largely due to a -4.7% m/m decline in energy production, which came after a 2.0% m/m rise in January and to a large extend reflects weather conditions over the first two months of the year. The unexpected contraction doesn’t necessarily mean a slowdown in underlying growth conditions and the annual rate bounced back to 1.2% y/y from just 0.2% y/y reported initially. Confidence numbers though have been encouraging and still suggest that the recovery continues, even if weather and Easter effect are likely to distort GDP numbers over the first two quarters of this year.
German ZEW investor confidence jumps to 19.5 in April, from 12.8 in March. The stronger than expected reading lifted the 3 months’ trend rate for the first time since January and with the current conditions indicator also improving the data suggests that the German recovery remains on track.
Main Macro Events Today
- BOC Policy Report and Rate Statement – No change in the 0.50% rate setting is expected in today’s announcement, along with a modestly improved growth and inflation outlook that is tempered by ample caution amid still elevated downside risk to the economy.
- UK Unemployment Rate – The jobs report expected to show the unemployment rate also remaining unchanged at 4.7%.
- President Trump – President Trump is going to give an interview on Fox Business Network at 10 GMT, regarding healthcare, tax reform and Syria issue.
- US Crude Oil Inventories – Expected to fall to -0.7M from 1.6M last week.
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