Market movers today
After a week of thin Easter trading, focus will be on the uptrend in oil prices (more below) and on news from the ongoing US-China trade talks; for more on our expectations of what a trade deal could bring market-wise, see Global Research – What a US-China trade deal will bring to the markets . The start of Japan’s Golden Week will likely keep volumes thin in that region this week.
The oil market will stay in focus after the comments by President Trump yesterday that the US plans to end Iran sanction waivers by 2 May. Notably, attention will centre on whether other OPEC members will ensure adequate oil supplies after a further fall in Iran oil exports, as indeed suggested by Saudi Arabia yesterday.
On the data front, we have a rather quiet day with the only notable release being the euro-area consumer confidence for April. Later this week the Riksbank meets (Thursday) and next week brings Chinese PMI, a Fed meeting and the US jobs report.
Danish consumer confidence data is due today; see Scandi section p. 2 for details.
Selected market news
A continued uptick in global oil prices is setting the scene for markets following a week of thin Easter trading. Notably, over the weekend, the US administration announced that it would not renew waivers on sanctions on Iranian oil exports. This effectively means that a range of countries that have been allowed to take up oil from Iran, despite the US withdrawing from the Iranian nuclear deal in May last year, will no longer be allowed to do so starting from 2 May this year. While Saudi Arabia and the UAE reportedly aim to make up for a good deal of the 1.9 mb/d that Iran currently supplies, Brent crude oil rallied past USD74/bbl yesterday. Indeed, the US removal of waivers is just one of a string of recent supply concerns hitting the oil market. Adding to strains, Iran has threatened to close the Strait of Hormuz – a key gateway for Middle East oil to the rest of the world.
Risk sentiment has held up reasonably well so far in the wake of the sustained oil uptick, with major equity indices little changed over the Easter period. Trading has been mixed overnight in both the US and Asian sessions. Over the past few trading days, US 10Y yields have settled just above 2.55% while the German 10Y bund again fell below 0.025% after PMIs came out on the weak side of expectations in the euro zone (and the US) ahead of the Easter period; EUR/USD dropped below 1.13 as a result. We stress, however, that some key signs of stabilisation are visible in the euro-zone figures, as notably, the PMI ‘new orders’ rose for the first time since December 2017. Hence, we still hold the view that the euro-zone economy is bottoming out in Q2 and will regain some momentum in H2 19, with annual growth of 1.3% for 2019.