Morning Report – Wednesday 29th April

Main Headlines

WTI bounced in Asia after a roller-coaster session in New York following S&P’s decision to exit near-term contracts, which spurred switching by funds. Open interest on both WTI and Brent is higher for July delivery than for June, reflecting storage capacity concerns. The API is said to have reported U.S. crude stocks rose by 9.98 million barrels last week, which would be the 14th weekly increase if confirmed by EIA data today.

Investors returned to risk assets, with U.S. and European stock futures rising and oil rebounding. Nasdaq futures led gains for U.S. contracts after Alphabet’s results. Tech shares also led the charge in Asia, with most markets upbeat despite Samsung’s profit warning. Gold edged up.

GBP

Britons can expect to stay homebound for a bit longer. The government is around three weeks from releasing the tool it says is essential to easing the lockdown, Health Secretary Matt Hancock said. The “test, track and trace” system needed to prevent a resurgence requires the recruitment of 18,000 “contact tracers” to spot people possibly exposed, as well as the release of a mobile phone app that will do part of that job automatically. Sterling remains buoyed as more economies are opening up and risk aversion is diminishing.

EUR

France plans to begin reopening shops on May 11, while Spain aims to remove restrictions over the next eight weeks. Fitch downgrades Italian debt to a notch above junk. Growth data to be released on Thursday from the Eurozone is expected to show that the economy is heading for its biggest slump since WW2 as lockdowns shuttered economies with Italy likely seeing the biggest hit.

USD

The FOMC has cut rates close to zero, so no more reductions are expected at the end of its two-day meeting which starts today. However, the Fed chairman has to decide what to say about how long they’ll stay there and what other steps he can take while also providing a reasonable outlook for when a recovery might kick in. The dollar slid as global sentiment improves with the Bloomberg Dollar Spot Index down for the third day.

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

• 8:00 a.m.: Spain March Retail Sales
• 9:00 a.m.: Italy March PPI
• 10:00 a.m.: Euro-Area April Economic, Consumer Confidence
• 1:00 p.m.: Germany April CPI
• 1:30 p.m.: U.S. 1Q GDP
• 7:00 p.m.: FOMC rate decision

Corporate Events

Earnings include Microsoft, Facebook, Mastercard, Tesla, AstraZeneca, GlaxoSmithKline, Qualcomm, Boeing, Volkswagen, Iberdrola, GE, Daimler, eBay, Spotify, Barclays, Deutsche Bank.

Corporate Highlights

Alphabet’s beat buoyed sentiment. The Google parent posted first-quarter revenue of $33.71 billion compared with a $32.6 billion estimate, though ad sales has slowed sharply.

Starbucks’s same-store sales fell 10% globally, a tad steeper than consensus. The measure fell 50% in China.

Ford predicted it will lose more than $5 billion in the second quarter — about 67% more than estimates — and didn’t provide guidance for the year.