Morning Report

Morning Report – Wednesday 6th May

Main Headlines

The ECB can continue its bond purchases, but will have to justify its policies within three months after Germany’s top court expressed a number of concerns with the program. The judges’ critical language sets a hurdle for the ECB’s crisis-fighting, though the ultimate impact may be muted. The new 750 billion-euro Pandemic Emergency Purchase Program, a response to the coronavirus outbreak, isn’t covered by the ruling.

Oil’s rebound stalled after WTI extended its winning streak to the longest since July 2019 and Brent breached $30 a barrel for the first time since April. U.S. stock futures were steady, while Asian equities edged up as Chinese markets were rangebound after a long holiday. The offshore yuan rose after a stronger-than-anticipated fixing for the domestic rate. The yen advanced with Japan still on holiday.

A flurry of drug companies stepped up efforts to tackle the virus. Gilead Sciences Inc. is working to ensure access to a treatment drug across the globe. Pfizer Inc. administered the first U.S. patients with its experimental vaccine, and Regeneron Pharmaceuticals Inc. said an antibody treatment could potentially be available as soon as this fall.


Britain had a setback after a spike in fatalities gave it the highest toll in Europe, according to the latest government figures however, experts say it could be months before full global comparisons can be made as each country has different testing procedures. Sterling remains range bound but steady as sentiment globally is on the whole improving.


Angela Merkel and Germany’s 16 state premiers meet today to hash out a plan for a gradual reopening of Europe’s largest economy. The states will push to allow bars and restaurants to open from May 9 if they adopt new hygiene and distancing rules. The larger-than-consensus drop in German factory orders for March illustrates the scale of shutdowns in the euro-area’s biggest economy. The data are consistent with orders having dropped by over a third in the final two weeks of the month. Yesterday’s German court decision giving the ECB three months to defend the legality of its first QE program gave bond investors reason to be cautious. The ECB responded to the ruling criticising its long-standing bond-buying program by pledging to continue doing everything necessary to revive inflation. The Euro headed lower as a result.


Donald Trump said the U.S. must begin to reopen immediately, even if it leads to more infections and deaths. “Will some people be affected? Yes. Will some people be affected badly? Yes. But we have to get our country open,” he said. The White House is already talking about disbanding its pandemic task force.

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

  • 7:00 a.m.: Germany March Factory Orders
  • 8:15 a.m.: Spain April Composite, Services PMI
  • 8:45 a.m.: Italy April Composite, Services PMI
  • 8:50 a.m.: France April Composite, Services PMI
  • 8:55 a.m.: Germany April Composite, Services PMI
  • 9:00 a.m.: ECB’s Muller speaks
  • 9:00 a.m.: Euro-Area April Composite, Services PMI
  • 10:00 a.m.: Euro-Area March Retail Sales
  • 9:30 a.m.: U.K. April Construction PMI
  • 10:00 a.m.: EU Commission Economic Forecasts
  • 1:15 p.m.: U.S. April ADP Employment

Corporate Events

Earnings include Novo Nordisk, PayPal, T-Mobile, CVS, Shopify, Enel, Barrick Gold, BMW, Fresenius, Credit Agricole, UniCredit, Liberty Global, Aker BP, Apache, Marathon Oil, PKN Orlen

Corporate Highlights

  • Disney’s second-quarter profit plunged by more than half as it was bludgeoned on all sides. The worst performance came from the theme-park division, where operating income tumbled to $639 million from $1.51 billion last year.
  • BMW lowered its profit outlook for the year, and now sees an Ebit margin for its automotive segment of between 0% and 3%, from 2% to 4% earlier.
  • Citadel will allow clients to pull a total of $1 billion from its main hedge funds without fees or penalties to help them cope with the economic fallout from the outbreak.