Observing Easter Monday: EU Session Quiet

Notes/observations

  • European markets are closed for the Easter Monday holiday.
  • Last Friday, Federal Reserve Chair Powell, in response to the release of the PCE deflator data, stated that the Fed is not facing immediate pressure to reduce rates. However, he emphasized that delaying action could lead to unnecessary harm to the economy and labor market. The US jobs report for March is scheduled for release this Friday.

Asia

  • China’s official Mar Manufacturing PMI rose to 50.8 from an expected 50.1, marking the first expansion in 6 months.
  • The Caixin PMI Manufacturing for China in March was 51.1, slightly up from the previous 50.9, signaling the 5th consecutive month of expansion.
  • In Japan, the Q1 Tankan Large Manufacturing Index came in at 11, slightly surpassing the expected 10. Additionally, the Large All Industry Capex was reported at 4.0%, lower than the anticipated 9.5%. The Large Non-Manufacturing Index and Outlook also showed positive figures.
  • South Korea’s March Trade Balance is expected to be \(5.0B compared to the previous \)4.3B. Export and import figures are also anticipated to show slight changes.
  • The final Manufacturing PMI for Japan in March remained at 48.2, confirming the 10th consecutive month of contraction.
  • Japanese Finance Minister Suzuki reiterated the government’s stance on monitoring rapid FX movements closely.
  • Japanese Prime Minister Kishida discussed FX movements with the top FX diplomat Kanda, showing mutual understanding.

Global conflict/tensions

  • Israeli Prime Minister Netanyahu announced plans to relocate over a million Palestinian civilians from the southern Gaza city of Rafah.
  • Protesters in Jerusalem rallied against Netanyahu’s government, demanding an early general election and the release of hostages held by Hamas in Gaza. The coalition faced additional strain due to a court ruling freezing subsidies to yeshiva students.
  • The US is reportedly in preliminary discussions regarding post-war plans for Gaza, clarifying that American troops will not be involved.
  • Over the weekend, Russia launched a drone attack on Ukrainian energy facilities in the southern and far western regions of Ukraine.

Europe

  • ECB’s Holzmann from Austria suggested that the ECB might consider cutting rates sooner than the Fed. A potential rate cut could be based on the June Staff Projections.
  • ECB’s Stournaras of Greece mentioned the possibility of four interest rate cuts in 2024, although this view is not unanimous.
  • In Turkey, opposition candidate Imamoglu claimed victory in the Istanbul election, with Erdogan’s AK Party falling behind the main opposition Republican People’s Party (CHP) for the first time.

Americas

  • Federal Reserve Chair Powell reiterated that the Fed is not pressured to reduce rates immediately but highlighted the risks of delaying action. He expressed optimism about inflation trending towards 2% but emphasized the need for further positive inflation data before considering rate cuts.
  • The US saw the first reacceleration of the Feb PCE Deflator since August 2023, with a year-on-year increase of 2.5%.

Energy

  • Russian Deputy Prime Minister Novak announced that Russian oil companies would decrease production in Q2 in alignment with production share objectives. The focus is on reducing oil output rather than exports during this period.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices such as Stoxx600, FTSE, DAX, CAC-40, IBEX-35, FTSE MIB, and SMI are closed for Easter. The US session will resume later in the day, with PVH expected to report earnings.

Equities

  • Consumer discretionary: Turkish Airlines [THYAO.TR] declined by 0.5% following Erdogan’s AK Party’s loss to the main opposition Republican People’s Party (CHP) in municipal elections.
  • Energy: Gazprom [GZP.RU] rose by 0.5% after resuming operations on the Power of Siberia pipeline.

Speakers

  • The Chairman of the Japanese Bankers Association expressed uncertainty about the current FX levels’ impact on Japan.
  • The US is reportedly compiling a list of advanced Chinese chipmaking factories that will be restricted from accessing key tools, with the list expected to be released in the coming months.

Currencies/fixed income

  • With European markets closed for the Easter Monday holiday, FX markets remained subdued.
  • EUR/USD held steady around 1.0785 despite a decline in French Mar Preliminary CPI readings last Friday, which temporarily alleviated concerns about potential ECB easing in April.
  • USD/JPY maintained stability at 151.30, with 152 being a key resistance level. Japanese authorities continued to caution against unfounded declines in the currency.

Economic data

  • Russia’s Mar Manufacturing PMI stood at 55.7, indicating the 23rd consecutive month of expansion.
  • Turkey’s Mar Manufacturing PMI was 50.0, slightly lower than the previous figure.
  • Greece reported a Mar Manufacturing PMI of 56.9, marking the 14th month of expansion. The Feb Unemployment Rate rose to 11.0% from the previous 10.6%.

Fixed income issuance

  • No new issuances were observed.

Looking ahead

  • Various economic indicators and reports are scheduled for release, including data from Israel, Romania, Portugal, India, Chile, Brazil, Canada, Mexico, Colombia, Peru, Australia, the US, Japan, Ireland, and the UK, among others.