MORNING ROLL CALL
Euro continues its French election momentum, USA equities surge, based on Trump’s tax cut promise, gold falls by one percent
The USA technology based index the NASDAQ, breached the 6,000 level for the first time on Tuesday, closing the day up 0.70%, at 6,025. The DJIA closed up 1.12% and the SPX up 0.61%. The rise was principally due to the promise by Trump to slash corporate tax levels to 15%, further details are due to be released by his administration on Wednesday. Analysts lost no time in crunching the numbers and repriced equities, based on the extra net retained profit and the ability of corporates to deliver increased shareholder value and dividends. In another Trump based market move, his threats to slap a tariff on timber imported from Canada, caused the Loonie to sell off versus the US dollar, USD/CAD ending the day at circa 1.357, up circa 0.5%.
Economic calendar data published on Tuesday was mainly positive for the USA economy; house prices have risen by 0.8% in Feb. whilst the Case Shiller composite reading for the main twenty USA cities, revealed a YoY rise of 5.85%, beating the expectation of 5.78%. New home sales beat the forecast by some distance, coming in at 5.8% up for March, ahead of the forecast for a negative -1.4% prediction. The Richmond Fed Index reading came in at 20, ahead of the prediction of 16. Negative data came in the form of USA consumer confidence, the reading of 120.3 for April, missing the forecast of 122.5.
European markets also enjoyed a positive day’s trading on Tuesday, refusing to give back any gains obtained during Monday’s French election relief rally. Euro STOXX closed up 0.16%, CAC up 0.17%, DAX up 0.10% and the UK’s FTSE up 0.15%. The main European high impact calendar news came from the UK’s ONS, in the form of the public sector net borrowing figure for March, coming in much worse than expected at £4.4b, versus the forecast of £1.5b. The UK’s annual deficit has shrunk, however, the suspicion is that the timing of tax returns aided the overall headline figure, whilst the expectation is that the deficit will worsen considerably in 2018.
WTI oil finally arrested its six day slide, by ending the day up approx. 0.5% at $48.97 per barrel. Precious metals slipped, gold ended the day close to $1263 per ounce, down circa one percent on the day. Silver also sold off, ending the day at circa $17.58 per ounce, down over one percent.
EUR/USD rose by circa 0.4% on Monday to end the day at approx. 1.0928, representing the highest level reached in approx. five months. The euro also enjoyed a positive day versus the majority of its peers, as the French election first round of voting continued the risk on appetite amongst investors. USD/JPY rose by circa 0.9% to close the day out at circa 111.06. Sterling enjoyed a positive day versus the majority of its peers, GPB/USD ending the day at circa 1.2835.
Economic calendar events for April 26th, all times quoted are London (GMT) time.
11:00, currency impacted USD. MBA Mortgage Applications (21 APR). Analysts will be expecting an improvement on the -1.8% reading published last week.
12:30, currency impacted CAD. Retail Sales (MoM) (FEB). Retail sales in Canada are forecast to have fallen to 0.2% in Feb. from a reading of 2.2% reported in Jan.
14:30, currency impacted USD. DOE U.S. Crude Oil Inventories (21 APR). Investors and analysts are predicting a further fall in USA crude oil stockpiles from the -1034k figure reported last week.
