Morning Report – Friday 26 March

Jon Robson, Head of Trading

“The dollar eased back from Thursday’s highs. Given its rapid gains against most currencies in the past few weeks, the greenback could weaken further if there is another spike in Treasury yields. Consumer data due later today will give market participants some indication on the economic recovery’s progress.”

Main Headlines

Biden held his first presidential news conference after waiting 64 days to meet formally with the White House press corps. He pledged to administer 200 million coronavirus vaccine shots by the end of April, repair the country’s infrastructure and move aggressively to expand voting rights — while presenting guns and immigration as secondary priorities. The 78-year-old US president also said he expects to seek reelection in 2024.

Thousands of UK companies are set to be refused business rates relief after ministers pledged to legislate to stop appeals against bills for the property-based tax because of disruption during the crisis. The Treasury said that it would legislate to throw out the claims – which it has been estimated could have cost it £5bn – and will instead set up a £1.5bn fund to help the worst affected companies. The companies that could benefit from the relief include suppliers to the retail, hospitality and leisure industries.

GBP

Sterling is stronger versus the dollar and euro this morning. The government said it is willing to support Liberty Steel’s UK assets in their “entirety” as Britain’s third-largest steelmaker teeters on the edge of collapse, with 3,000 jobs hanging in the balance. U.K. retail sales posted a modest rebound in February after a brutal start to the year, when a lockdown to contain the coronavirus forced non-essential stores to close

EUR

The euro is softer against other major currencies overnight. European Union leaders gave their guarded support to a plan to restrict vaccine exports after it emerged the bloc sent more shots to the rest of the world than it has given to its own people. Divisions over vaccine distribution were laid bare at a summit on Thursday as governments failed to agree on how to provide additional jabs to member states in need of emergency supplies.

USD

The dollar is unchanged against most majors in the early morning trade. The Federal Reserve said that it would lift restrictions on share buybacks and dividend payments for most US banks after June 30, putting an end to limits it introduced in the early months of the pandemic. Jobless claims fell to their lowest level of the pandemic last week as stronger hiring and consumer spending drive a U.S. economic revival.

Markets

A regional share gauge added more than 1%, led by Chinese and Japanese stocks. U.S. and European equity futures pointed higher after the S&P 500 advanced and small-caps rallied, buoyed by Biden’s doubling of a vaccination target. U.S. banks extended gains in after-hours trading as the Federal Reserve signaled an end to pandemic-era dividend curbs. Ten-year U.S. Treasury yields rose slightly after another lackluster auction of seven-year notes. The reaction was muted compared with the upheaval in bonds and interest-rate sensitive stocks following poor demand at last month’s sale. Crude prices veered back up toward $60 a barrel. Efforts to dislodge the massive Ever Given container vessel blocking the Suez Canal will take until at least next Wednesday, raising the prospect of wider disruptions to trade.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: U.K. Feb. retail sales

9:00 a.m.: Spain 4Q GDP

10:00 a.m.: Germany March Ifo Survey

10:00 a.m.: Italy March consumer confidence

10:00 a.m.: BOE Minutes

11:00 a.m.: Italy sells bills

12:00 p.m.: U.K. sells bills

1:00 p.m.: BOE’s Saunders speaks

1:30 p.m.: U.S. February wholesale inventories, personal Income, PCE deflator

5:45 p.m.: BOE’s Tenreyro speaks

6:00 p.m.: Baker Hughes U.S. Rig Count

EU Leaders Summit continues

Corporate Events

Earnings include Meituan

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