Asia

The Shenzhen composite overnight tried to reverse yesterday’s huge losses after Trump’s threat to reinstate his trade war with China. It closed up less than a percent this morning, most other global indexes a sultry red across the board. Days before the Chinese delegation arrives in Washington to dot the i’s on what seemed to be a breakthrough, the US president said he was prepared to increase tariffs to 25% this coming Friday, adding $325bn on hitherto untaxed products. US negotiators claim the move is a response to Chinese backtracking on several key issues, aiming to replace legislation with administrative activities and replacing precise language in the agreement with hazier formulations that will be easier to renege upon. What is clearly a negotiations tactic, however, threatens to cost the US economy hundreds of billions of dollars in addition to the $10 bn already lost in US exports to China in the past year. Meanwhile, Australia’s central bank this morning elected to keep interest rates stable, mentioning in its statement that it was awaiting employment improvements to increase rates. Retail sales, earlier, overtook expectations but still showed a drop from 0.9% to 0.3% in March, while the trade surplus narrowed to $4.95mn.

Europe

The pound sterling continues in its upward trajectory following the spike after BoE Governor Carney’s statement last week that he would raise interest rates once the Brexit issue is resolved. Service & composite PMIs across the Eurozone rose above expectations, except in Spain and Italy where they edged down below expectations. German Factory Orders increased by 0.6% MoM in March, haft the expected and not enough to lift the yearly number out of its 6% contraction.

US

As the US congress prepares to cite Attorney General William Barr for contempt after the latter presented a redacted revue of the Mueller report, the US prepares to impose tariffs on Mexican agricultural imports. And with USD on a downward trajectory, Fed speakers Evans, Harker and Williams yesterday reiterated the central bank’s position that interest rates would be held on hold until inflation strengthens.

Commodities

Oil overnight was trending sideways after its 40 cent bear gap yesterday, gold trading failed to break through the 1285 level for the 3rd time since May began, and Bitcoin broke through the 5800 level overnight, peaking at 5901. Commodity Futures Trading Commission Chairman J. Christopher Giancarlo told the US Congress’ Agriculture committee last week that he is seeing more and more companies applying “to become federally-regulated clearinghouses” for cryptocurrencies, this as Twitter founder Jack Dorsey’s Square payment company, that focuses on Bitcoin payments, reported strong growth in Q1 earnings that same day.

Shares

BMW reported a 75% drop in profits this morning after paying the EU a billion dollar fine on emissions misbehaviour. The German car industry continues to sway under the threat of US tariffs, as part of US Pres. Trump’s trade war against the world.

Events

07:30 AM GMT – UK Halifax House Prices (Apr) & BRC Like-For-Like Retail Sales (Apr) at 23:01
08:00 AM GMT – China Foreign Exchange Reserves (Apr)
12:55 PM GMT – US Redbook Index (May 3), JOLTS Job Openings (Mar) at 14:00, & Consumer Credit Change (Mar) at 19:00
14:00 PM GMT – Canada Ivey Purchasing Managers Index (Apr)
20:30 PM GMT – OIL API Weekly Crude Oil Stock (Apr 26)
23:50 PM GMT – Japan BoJ Monetary Policy Meeting Minutes, & Markit Services PMI (Apr) at 0:30 AM GMT (+1)
02:00 AM GMT (+1) – China Imports, Exports and Trade Balance (Apr)
02:00 AM GMT (+1) – NZ Interest Rate Decision & Policy Statement

For more, visit our Economic Calendar