Last week we heard From Federal Reserve Chair Jerome Powell on numerous occasions as he sought to quell the market driven appetite for US Treasury bonds. As he continually reiterated the Fed’s cautionary stance, it was just enough to halt the continuation of the move and brought renewed US Dollar buying. The UK’s Pound slipped below 1.3700 and the EUR/USD rate fell to near 1.1750 as the greenback surged.
Stocks had a strong end to the week with the S&P 500 and Dow Jones closed near all time highs with the Nasdaq not quite following as the rotation out of the 2020 fastest horses in Tech brough gains to cyclical stocks.
However a ripple of concern overshadows the start to what could be a volatile week as concerns grow of a Hedge fund liquidation of positions following a margin call, bringing a flood of selling to Fridays close.
Banking stocks trade nervously in Europe into the US session as the markets look to see which banks hold exposure to the hedge funds with Nomura and Credit Suisse already warning of profit impacts, with the former opening 15% down in early trading.
It will be interesting to see how this stork pans out especially in a low liquidity week encompassing month and quarter end rebalancing.
As the global vaccination campaign continues to grow in pace with over 250 million US citizens having had at least one vaccination, and roughly 3 million a day being vaccinated the US Markets certainly seem to be looking beyond the virus.
In the UK the cases numbers, deaths and hospitalisations continue to fall and today marks the lifting of moderate social restrictions. Hopes are for continuous progression despite the UK Prime Minister warning of the dangers of a third wave as is being experienced currently in mainland Europe.
Sluggish vaccine procurement and rollout was unaided by the temporary suspension of the AstraZeneca vaccine has blighted the progress in Europe, with case numbers heading in the wrong direction heading into the Easter holidays pressure remains on European governments as they continue to enhance restrictions in Germany, France, Italy and Spain.
Despite this the German Dax had a good week following the global stock markets higher, but concerts remain for the path of the Euro with the downside favoured against the US Dollar and UK Pound.
The Week Ahead:
Tuesday - Start with Japan's Retail Sales and Unemployment data. In the European session we get German CPI and Import Prices before Spanish CPI. In the US session we hear from Quarles and Williams of the Fed
Wednesday - From New Zealand we get the ANZ Business Confidence. Japan's Industrial Production and Housing starts come alongside PMI data from China and Australia's Building Approvals and Private Sector Credit. UK GDP, Current Account and Nationwide HPI and Revised Business Investment comes before French Consumer Spending and Prelim CPI and German Unemployment data, Eurozone and Italian CPI. Stateside we get ADP Employment, Canadian GDP, Chicago PMI and Pending Home Sales.
Thursday - Aussie Retail Sales start a busy day that sees Manufacturing PMI from Japan, Italy, Germany, France, Spain, UK, Eurozone, Switzerland and the US. Additionally we get German and Swiss Retail Sales, US Weekly Unemployment and Construction data and there are OPEC meetings throughout the day.