US equity futures continued their Monday ramp, rising 0.5% alongside advancing stocks in Europe after investor focus shifted to earnings and the economic outlook, and away from fading geopolitical and trade war risks. The result is another sea of green in our futures screen this morning.
US Futures shrugged off weakness in Asia to point to a higher U.S. open as traders awaited results from companies including Goldman Sachs, while Europe’s Stoxx 600 Index rebounded from Monday’s drop.
The dollar initially flirted with the lowest level in two months in the wake of President Donald Trump’s latest verbal foray into exchange rates, before U.K. wage growth including bonuses missed estimates and a survey showed German investor confidence tumbling. The pound and euro edged lower (after another notable ZEW miss, see below) as the dollar rebounded sharply.
Stocks were encouraged by the limited fallout from a U.S.-led strike on Syria over the weekend – except for the occasional daily Israeli airstrike on Syria – while the U.S. government’s announcement it has not decided on additional sanctions on Russia suggested tensions between Moscow and DC are easing.
Meanwhile, investors are counting on Q1 earnings, expected to post the biggest Y/Y earnings increase since 2011 thanks to Trump’s tax reform – to fuel a recovery in equities and are looking for hints on the monetary-policy outlook from Federal Reserve officials due to speak this week, including incoming New York Fed President John Williams.
As Bloomberg adds, corporate earnings should offer some distraction for investors after a torrid period for stocks, but there remain no shortage of other catalysts waiting in the wings to roil markets. Trump’s latest intervention in currencies comes at a time of already elevated geopolitical tension, and ongoing fears of a lurch toward global protectionism.
Meanwhile, the macroeconomic backdrop leave quite a bit to desired as overnight China’s Q1 GDP print just met estimates (on a Y/Y basis and missed Q/Q) while industrial production in March came in below forecasts.
China Q1 GDP YoY MEET at 6.8%, versus +6.8% exp. and +6.8% prior.
China Retail Sales YoY BEAT at 10.1%, versus +9.7% exp. and +9.4% prior.
China Industrial Production YoY MISS at 6.0%, versus +6.3% exp. and +6.2% prior.
China Fixed Asset Investment YoY MISS at 7.5%, versus +7.7% exp. and +7.9% prior.
However, Q1 GDP QoQ disappointed, rising only 1.4% QoQ (versus expectations of a 1.5% QoQ jump
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