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Equities
Eurostoxx +0.1%, Germany DAX +0.2%, UK FTSE -0.2% European equities opened little changed.
CAC 40 +0.2% in France & Spain +0.2% for the IBEX.
European stocks had a positive day yesterday, but it’s difficult to gauge the mood in the larger picture because the gains are still being offset by the declines in early April. For example, the DAX is now nearly flat on the month, as the equities market continues to oscillate.
S&P 500 futures are up 0.4 percent, Nasdaq futures are up 0.6 percent, and Dow futures are up 0.3 percent on the day.
Eurozone
Eurozone March final CPI +7.4 percent vs +7.5 percent y/y preliminary & Eurostat’s most recent data – 21 April 2022
The preliminary report can be found here. Despite a slight downward revision, eurozone inflation remains at a record high, rising 2.4 percent month on month.
In the midst of ‘peak inflation’ talk, the focus will gradually shift to month-on-month numbers from now on. That may be more relevant, as whether inflation is at 6% or 7% makes little difference. In either case, it is well above the 2 percent target set by central banks.
Looking at the specifics, the main contributor (up 4.4 percent) is the increase in energy prices, with services (up 1.1 percent), food, alcohol, and tobacco (up 1.1 percent) also contributing.
Stocks
Despite hawkish ECB chatter, European indices continue to rise so far in the session.
Here’s how the major European indices are doing so far today:
Stoxx 600 up 0.4 percent, DAX in Germany up 1.0 percent, CAC 40 +1.4% in France & The FTSE 100 in the United Kingdom is unchanged; the IBEX in Spain is up 0.9%.
Aside from the gloomy mood in UK stocks, equities in the rest of the region are looking brighter. Despite de Guindos’ earlier remarks, the euro and money markets are pricing in a more aggressive ECB.
French stocks are leading gains as Macron solidifies his position as the frontrunner ahead of the weekend election runoff against Le Pen.
However, the gains are also reflective of the current more positive mood in US futures. The S&P 500 futures are up 0.8 percent, the Nasdaq futures are up 1.1 percent, and the Dow futures are up 0.5 percent. This comes after a more mixed performance yesterday, when technology lagged in trading.
It’s still early in the day, but it appears that the push and pull in equities over the last four weeks or so isn’t going away anytime soon.
China
The China Commerce Ministry says it will implement targeted measures to boost consumption.
Remarks by the China Commerce Ministry: Expects consumption to continue to recover and will maintain stable and smooth supply chains for both importers and exporters.
We can only wait and see what these measures will be, but for the time being, it is clear that Chinese policymakers favour a weaker yuan to help with the situation. For the first time since October last year, the onshore currency has fallen below 6.45 against the dollar, while the offshore currency has fallen to its lowest level since September last year.