Morning Report – Wednesday 31 March

Jon Robson, Head of Trading

“As market participants wait for details of Biden’s infrastructure spending plan to be announced later today, the greenback is largely holding recent gains, underpinned by vast fiscal stimulus and continued optimism surrounding the strength of the US inoculation programme and wider pandemic recovery.”

Main Headlines

President Biden will today unveil his infrastructure spending plan in Pittsburgh, with an increase in corporate tax and the introduction of a new minimum tax on global earnings expected to fund the bill over 15 years. Biden will hope that the plan will shore up US roads, bridges, rail services and utilities as part of wider efforts to improve economic productivity and tackle climate change. Sources familiar with the infrastructure package indicate that the ambitious spending proposals may amount to $2 trillion over eight years, likely rising to as much as $4 trillion once the second phase of legislative proposals are announced in April.

International trade secretary Liz Truss is set to urge the US and other G7 nations to work together to reform the World Trade Organisation, which has been paralysed because of escalating tensions between the US and China, still officially designated a developing country by the WTO. In an interview, Truss called on the G7 to “get tough with China and their behaviour in the global trading system” and help modernise an organisation that is “stuck in the 1990s”.

GBP

Sterling is stronger against the dollar and unchanged versus the euro this morning. Estimates from the Office for National Statistics indicate that 54.7% of people in Britain have antibodies against Covid-19, though the figures do not include those in hospitals or care homes. A landmark report published by the Commission on Race and Ethnic Disparities has concluded that Britain has become a more open society, narrowing racial inequalities in education and employment.

EUR

The euro is up against the dollar and largely unchanged against the pound in the early morning trade. Amid rising coronavirus infections across Europe, Germany has announced that it will stop the use of the AstraZeneca vaccine in those under 60, just months after recommending the jab for only younger citizens, following reports of a rare blood clot in 31 people. The news is a further hurdle for Europe’s beleaguered inoculation drive, which has been characterised by delays and geopolitical tensions. Meanwhile, Ireland will begin easing some restrictions from April 12 after over three months in lockdown.

USD

The dollar is slightly lower against most majors overnight. The US State Department has released an annual human rights report that accuses Beijing of “crimes against humanity” and called the treatment of Uyghurs “genocide”. Secretary of State Antony Blinken has said that the US is exploring the consequences for human rights violations and possible sanctions on Chinese officials are being examined.

Markets

Asian stocks edged lower Wednesday amid upward pressure on bond yields as investors await more details on the next leg of U.S. stimulus spending. Chinese shares retreated while Australia’s index outperformed. U.S. equity futures steadied after a lower close for the S&P 500 Index. Ten-year Treasury yields advanced again in Asian trading, having touched a 14-month high of 1.77% before subsiding overnight. Gold traded around multi-month lows under $1,700 per ounce. Oil was steady before the April 1 meeting of OPEC and its allies.

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

8:00 a.m.: U.K. March nationwide house prices, 4Q GDP

8:45 a.m.: France Feb. PPI, consumer spending; March CPI

9:00 a.m.: Turkey Feb. trade balance

9:00 a.m.: ECB’s Rehn speaks

9:30 a.m.: ECB’s Visco speaks

9:55 a.m.: Germany March unemployment

11:00 a.m.: Italy, Euro-Area March CPI

11:30 a.m.: Germany sells bonds

1:00 p.m.: Russia sells bonds

3:00 p.m.: ECB’s Villeroy speaks

4:30 p.m.: EIA Crude Oil Inventory Report

Corporate Events

Deliveroo trading debut

Earnings include H&M, Micron, Walgreens Boots Alliance

 

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