April 17 (Reuters) - A look at the day ahead in European
and global markets from Wayne Cole.
It's been a careful start to the week in Asia with stocks
and bonds little changed and the dollar holding most of Friday's
bounce. The caution is understandable given the week holds
updates on Chinese economic growth and global PMIs, along with
the Fed's Beige book and at least eight Fed speakers.
Analysts are generally optimistic for the China data given
the stunning strength of recent trade figures. House prices out
over the weekend also surprised with the fastest growth in 21
months, a comforting sign since housing has been a major weak
spot for the economy and a vulnerability for banks.
The central bank did its part by bolstering liquidity in the
financial sector by rolling over maturing medium-term policy
loans with higher cash offerings for the fifth month.
The fund injection should help replenish liquidity gaps
created by upcoming tax payments by banks and companies, as
policymakers seek to gin up activity.
Citi's economic surprises index for China data is at its
highest level in 17 years, and the market sees upside risk for
Tuesday's releases on GDP, retail sales and industrial output.
Meanwhile, the CME Fedwatch Tool caused a brief stir this
morning when it showed the probability of a Fed hike on May 3 at
a dead cert 98%. That may have been a fat finger as it's now
back at a still safe bet of 83%, so it seems investors have
concluded the bank crisis isn't enough to prevent one more hike.
Markets have shifted even further on the ECB to price in a
46% chance it will hike by a full 50 basis points on May 4. The
first week of May is shaping up to be a doozy.
Analysts at Barclays note this week's corporate earnings
would have more macro relevance than usual, given they will
provide information on how resilient corporate balance sheets
are to potential future financial pressures.
"Quarterly bank results, especially for U.S. regional banks,
should also offer a first glimpse of the fallout from the March
turmoil and the related tightening of lending conditions," they
add.
Goldman Sachs and Morgan Stanley had both been
expected to report a drop in profit, though that might not be
inevitable given last Friday's upside surprises on earnings.
State Street , M&T Bank and Charles Schwab report later today and it will be interesting to see if
the banking stress had more impact on them than on the larger
institutions.
Key developments that could influence markets on Monday:
- Ongoing G7 foreign ministers summit in Japan
- ECB's Christine Lagarde speaks in New York
- Speeches by Bank of England Deputy Governor Jon Cunliffe
and Federal Reserve Bank of Richmond President Thomas Barkin
- The, often volatile, Empire Manufacturing Survey and the
NAHB housing survey are due
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U.S. earnings outlook China's slow recovery China economic surprises index ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Wayne Cole; Editing by Muralikumar Anantharaman)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
