Good morning
US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 30th when we change our clocks in the UK.
US stocks dropped sharply yesterday after warnings from Trump that the US economy may experience something of a ‘transition’. It seems clear his tariffs will push inflation higher, although Trump hasn’t said as much, nor has he confirmed whether the US could be facing a recession. Both DJIA and S&P500 were down 2% and 2.7% respectively, while Nasdaq dropped 4%. European markets were also lower, not quite to the same extent as the US markets, although futures pricing suggests a positive opening this morning. US 10 year bond yields are lower as markets price in more Fed rate cuts.
This equity price drop will not please Trump at all, who would have been hoping his pro-US stance would boost the US markets, and he now has to accept that even if this does prove to be true, it will take some time to materialise. The opposition to his tariffs, both domestically and overseas, has been harsher than he probably expected. For example, Ontario have announced a 25% increase in electricity prices to all power exported to three US states, and has threatened to turn off supplies altogether. Trump has warned Canada that US will ‘get it all back’ come 2nd April. USDCAD is just above 1.4400 as I type, having been up to 1.4470 overnight after yesterdays London close.
The price move won’t please Elon Musk either, his Tesla share price dropped some 15% yesterday in a move that many regard as backlash against his political involvement, leading Trump to defend Musk against ‘left lunatics’ and says he’ll buy a new Tesla today in a show of support. Musk has confirmed that Twitter (I will never get used to ‘X’) has also been attacked, this time by hackers in an attempt to bring the platform down.
The US dollar dropped yesterday, GBPUSD slipped back to 1.2860 while EURUSD hit a low of 1.0805. Both pairs are higher, GBPUD now just a touch above 1.2900, EURUSD just a few pips short of 1.0900. Worth noting the relative strength of EUR. GBPEUR has hit a low this morning of 1.1850, quite a shift from yesterdays highs around 1.1940 and a move that has certainly taken me by surprise. We know the German government 10 year bond yields move had dragged EUR higher early last week but it has been relatively stable since then. The Green Party rejected Merz’s finance package that would have enabled billions of Euros in defence and infrastructure spending, but there has since been some headlines suggesting a deal could be agreed this week.
Perhaps the hope of a Ukraine ceasefire is helping the prop of the single currency. US SecState Rubio has said Ukraine will need to concede some territory for a peace deal, whether this means territory already lost or more territory on top of that remains to be seen, but I’d imagine Putin would want more than he currently has and Trump would most likely give it to him. A Trump envoy, Witkoff, is said to be travelling to Russia to meet Putin, the first face-to-face meeting between US officials and Putin since 2021 when Biden met the Russian leader in Switzerland. Meanwhile Moscow has been hit by a drone attack from Ukraine overnight, Russia says it shot down or intercepted all 337 drones that were launched.
USDJPY was down at 146.60 overnight. It is now 147.10, talk is that the next BoJ rate rise will come in June. BPJPY trades just around 190.00.
In other news, a collision between a tanker carrying jet fuel for the US military, and a large container vessel, has led speculation as to whether the collision was deliberate, indeed whether the Portugese registered Solong had been hacked into. I’m not sure if this is possible, but I think back to the mysterious events surrounding the US container ship ‘Dali’ when it hit the bridge in Baltimore last March having lost all power.
Liverpool are in action in the Champions League this evening, carrying a one goal advantage into their tie with PSG after the first leg. Meanwhile, Sheffield Utd and Burnley could both go above Leeds in the Championship table if they win their respective matches this evening. Burnley still have this incredible record of only having conceded ten league goals from the 36 matches played so far. Quite amazing.
A very light calendar today, just US JOLTS jobs data, but attention will be focussed on US equity markets and Ukraine peace talks. In case it’s a quiet day, Cheltenham starts today and Constitution Hill, unbeaten over hurdles, is odds on favourite to win the 16:00 having won the race back in 2023. It missed last years race due to illness. I have no tips to offer I’m afraid and I’m out and about for much of the day so probably won’t get much of a chance to watch it.
Have a great day……
- 14.00 US JOLTS job data
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