Morning Report – Thursday 30th April

Main Headlines

A recession in the Eurozone looks to be underway. First-quarter GDP prints due to be released today will show the region is heading for its biggest slump in 75 years. There is no change expected today when the ECB announces its rate decision however, it may increase the size of the Pandemic Emergency Purchase Programme.

The Fed vowed to keep policy extremely loose, warning the pandemic “poses considerable risks to the economic outlook over the medium term.” The FOMC kept rates near zero as expected while leaving its guidance vague. Jerome Powell predicted the next jobs report will show unemployment in double digits, and second-quarter growth will fall at an unprecedented rate.

The Nikkei 225 led gains across Asia on optimism over efforts to contain the pandemic. U.S. equity futures edged higher after the S&P 500 rose 2.7% to reach a seven-week high. Nasdaq contracts got a boost from strong tech results. Hong Kong and Seoul were shut for a holiday. Oil futures jumped on Norway’s decision to cut output and signs U.S. production is slowing. Treasuries inched higher.

GBP

The Bank of England announced 10 billion pounds of corporate buying in the 200 billion-pound QE expansion, above our initial expectations. The BOE would own 20 billion pounds out of 137 billion of eligible securities, which supports the sterling credit market, despite this being a smaller share than in the ECB program. The utilities and consumer sectors should benefit most.

EUR

The euro is drifting lower as investors position themselves ahead of ECB’s monetary policy decision and press conference. The ECB will also decide if more than EUR 1 trillion in asset purchases and generous lending is enough to keep companies and households afloat during this historic slump. President Lagarde is expected to reiterate her pledge to do everything necessary as most of the 19-nation euro members face more severe recessions this year than during the global financial crisis. Investors will be paying close attention as a verbal slip up in March sent bond markets tumbling.

USD 

The flood of Americans filing for unemployment continues, if at a less horrific rate. Initial jobless claims due to be released today, probably dropped to 3.5 million last week, economists predict, from 4.43 million in the prior period. That would bring the six-week total to about 30 million people. More broadly, the pandemic may hurt up to 57 million workers in the U.S. once furloughs and reduced hours and pay are included. The dollar and gold were steady.

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

• 6:30 a.m.: France 1Q GDP
• 7:00 a.m.: Germany March Retail Sales
• 7:45 a.m.: France April CPI
• 8:00 a.m.: Spain April CPI, 1Q GDP
• 8:55 a.m.: Germany April Unemployment
• 10:00 a.m.: Italy April CPI
• 10:00 a.m.: Euro-Area March Unemployment, April CPI, 1Q GDP
• 11:00 a.m.: Italy 1Q GDP
• 12:45 p.m.: ECB rate decision
• 1:30 p.m.: ECB’s Lagarde speaks
• 1:30 p.m.: U.S. Initial Jobless Claims, March PCE Deflator, Personal Income & Spending

Corporate Events

Earnings include Apple, Amazon, Visa, Comcast, Amgen, McDonald’s, Shell, Gilead, BASF, Audi, Orange, Lloyds Bank, Swisscom, Swiss Re, Sainsbury

Corporate Highlights

Microsoft’s sales and profit both rose, buoyed by cloud. Revenue of $35.02 billion topped estimates.

Facebook’s revenue rose 18% and it said business was steady in the first few weeks of April.

Tesla had its first quarterly profit to begin a year, though it burned through $895 million in cash.

SoftBank Group added $1.4 billion to estimated losses in the fiscal year ended March, bringing the total to 900 billion yen ($8.4 billion), after more WeWork write-downs.