Futures Slide Ahead Of Mega Tech Earnings

US equity futures fell on Tuesday, as investors braced for the first earnings from the megatech giant “generals”, which incidentally are mostly lower premarket; bond yields are 3-5bp higher and the USD is higher.

Contracts on the S&P 500 and Nasdaq 100 both fell 0.5% in New York as of 7:45 a.m. after Wall Street benchmarks ended Monday’s session broadly unchanged.  Commodities are mixed with weaker oil after several days of gains. Yesterday, FRC reported after the bell with deposits declining 41% QoQ vs. -9% survey; stock is down 21% after close. Today, the focal point will be GOOGL and MSFT’s earnings after-market: investors will look for cost outlook and revenue growth. GOOGL closed +0.5% yday and +20.1% YTD; the implied move is 4.6%; MSFT closed -1.4% yday and up 17.5% YTD pre-market; the implied move is 3.3%. Further, keep an eye on the April Conference Board Consumer Confidence and Richmond Fed survey data.

In premarket trading, Alphabet and Microsoft are slightly lower ahead of their results after the market close today.  Weighing on the sentiment were shares of US regional lenders, which dropped as much as 22% in premarket trading, after peer First Republic reported a slump in deposits that was worse than expected, sparking worries that the bank is still contending with challenges. Other US regional lenders fall too: PacWest Bancorp -2.2%, Western Alliance Bancorp -2.5%. Other results were mixed, with General Motors Co. and PepsiCo Inc. gaining after beats, while United Parcel Service Inc. sank as guidance disappointed. Here are some other premarket movers:

• Chinese stocks listed in the US fall, setting the Nasdaq Golden Dragon China Index up for its longest streak of losses in a year as geopolitical tensions dent risk appetite. Alibaba (BABA US) falls 1.4%, Baidu (BIDU US) -2.4%.
• Luminar Technologies rises as much as 5.9% as Jefferies initiated the company with a buy rating, saying it is best positioned to capture a dominant share of the nascent lidar market.

The first tech giant results due today will move markets: so far in 2023 the Nasdaq 100 has strongly outperformed the broader US market, rising about 19%, while the S&P 500 and the Dow Jones have added only 7.8% and 2.2% respectively. The tech-heavy index has posted the best start of the year since 2012 as investors bet that softer economic growth will lead the Federal Reserve to soften its hawkish stance.

Meanwhile, an earnings recession looms: profits for information technology companies in the S&P 500 are projected to fall 15% in the first quarter, which would be the biggest contraction year-over-year since 2009, according to data compiled by Bloomberg Intelligence. The largest tech-related companies have been the biggest contributors to the the S&P 500’s advance this year, by virtue of their size and outperformance. Apple, Microsoft and Nvidia alone account for nearly half of the index’s gains, according to data compiled by Bloomberg.

“What will be crucial for the outlook in tech is the rate expectations, and currently the market is pricing in swift cuts by the Fed for the second half of this year, which we do not agree with,” Ann-Katrin Petersen, a senior investment strategist at BlackRock Investment Institute, said on Bloomberg TV. “This sector is very rate-sensitive, so it might have digest this potential for a reversal in Fed rate expectations for the second half of this year.”

“Markets seem to be convincingly anticipating that there will be no recession, that inflation will fall and that at the same time, the Fed and the ECB could lower rates,” said Frederic Rollin, senior investment adviser at Pictet Asset Management. “We’re not saying it’s impossible but that would be the best outcome possible.” 

In the run-up to the Fed’s May 3 decision, investors are looking to figures on economic growth and consumer spending that will help determine the pace of the Fed’s rate increases this year. Economists expect Thursday’s GDP data to show US economic output decelerated to 2% annual growth in the first three months of 2023 from 2.6% in the fourth quarter.

Citigroup strategists led by Beata Manthey said that even if the European GDP outpaces that of the US, European equities and earnings will come under pressure as the region’s profits are more cyclical relative to American peers. Citi strategists prefer the US stock market over Europe as the US tends to perform more defensively than other markets during EPS slowdowns

In Europe, bank stocks are leading the broader market lower after updates from UBS and Santander prompted sharp declines in their share prices. The Stoxx 600 is down 0.5% and on course for its largest one-day drop in a month. European banks dropped after Banco Santander and UBS reported 1Q earnings that failed to impress analysts, at the start of a busy week for the region’s banks. The Stoxx 600 Banks Index was 2% lower, second- worst performing sector in Europe, while the Financial Services Index, in which UBS trades, was 1.2% lower. Banco Santander declined 4% as analysts note earnings beat was driven by trading, while deposit outflows in Spain were steeper and interest income missed in a few regions. Here are the most notable European movers:

• Novartis gains as much as 2.7%, reaching a two-month high, after reporting 1Q results that Citi said were solid, with sales for new prostate cancer drug Pluvicto beating estimates
• ABB climb as much as 3.9% after it reported beats across the board according to Citi, as the Swiss engineering and automation company increased its revenue guidance for the year
• Vodafone shares rise as much as 2.7% after its biggest shareholder Emirates Telecom initiated discussions with the UK carrier around non-executive board composition
• Kuehne + Nagel rises as much as 6% after it posted a beat driven by sea logistics division, analysts said, who also flagged some economic challenges looming for the logistics giant
• Whitbread shares rise as much as 5%, climbing to the highest since November 2021, after the hotel and restaurant group reported full-year adjusted pretax profit that beat consensus
• Wartsila gains as much as 6.9% after the power plant services company reported first-quarter results, with analysts highlighting the good order intake as the main positive
• UBS falls as much as 5.4% after reporting earnings that disappointed analysts who pointed to the possibility of consensus cuts on the back of weak net interest income guidance
• Banco Santander slides as much as 4.6% as analysts say the Spanish lender’s first- quarter earnings beat was offset by steeper deposit outflows in Spain and a net interest income miss. The wider European banking sector is the worst-performing Stoxx 600 subindex after UBS and Santander’s 1Q misses kick off a busy week for the region’s banks
• Associated British Foods shares drop as much as 7% after the food processing and retailing company reported interim adjusted operating profit that missed estimates

Earlier in the session, Asian stocks declined for a third day as investors continued to sell Chinese shares on economic and geopolitical risks. The MSCI Asia Pacific Index declined as much as 0.8% Tuesday, with Tencent and Alibaba among the biggest drags. Key indexes of Hong Kong-listed stocks fell by more than 1.7% as top leaders highlighted risks to China’s economy and as Beijing’s relations with the US remained strained.

“Given geopolitical tensions, people are unsure about the long term and impatient to ‘buy and wait,’” Bank of America strategists including Winnie Wu wrote in a note dated Monday. “Investors discount the good data for ‘low base’ for being ‘unsustainable,’” as bottom-up corporate earnings and guidance remain soft, they added. Stocks also declined in South Korea and Taiwan, while equity benchmarks in Japan advanced. Australia, New Zealand and Indonesia were closed for holidays. The MSCI Asia gauge is down 1.4% so far in April, while its 90-day historical volatility has slumped to the lowest in more than one year.  This week will be the busiest of the current Asian earnings season, with more than 800 firms in the MSCI Asia gauge scheduled to report, giving investors fodder for portfolio picks as they await the next Federal Reserve policy decision in early May.

Japanese stocks gained as better-than-expected earnings from major companies including Nidec boosted optimism. The Topix rose 0.2% to close at 2,042.15, while the Nikkei advanced 0.1% to 28,620.07. Mitsubishi Electric contributed the most to the Topix gain, increasing 3.3% on a plan to spin off its auto business. Out of 2,158 stocks in the index, 1,236 rose and 792 fell, while 130 were unchanged. “Nidec earnings were better than expected and associative buying is also taking place for other stocks” said Shingo Ide, chief equity strategist at NLI Research Institute

Amid the risk-off mood, investors favored perceived safe-haven assets with Treasuries on the front foot and US 10-year yields down 5bps at 3.44%, while the Japanese yen and Swiss franc sit atop the G-10 intraday rankings.

In rates, treasuries rise with gains led by belly of the curve, extending 5s30s spread through Monday’s range. Bid has support from risk-aversion as earnings reports roll in. US yields richer by 3bp-5.5bp across the curve with belly-led gains steepening 5s30s spread by ~1.5bp on the day; 10-year yields around 3.44%, richer by ~5bp vs Monday’s close with bunds slightly outperforming and gilts lagging by 1.5bp in the sector. Auction cycle comprises $42b 2-year note sale at 1pm and 5-year and 7-year sales Wednesday and Thursday. WI 2-year yield at 4.00% is ~4.5bp cheaper than March result, a 2.7bp tail. Focal points of US session include housing data, while final auction cycle of the February-April financing quarter begins with 2-year note sale. European bonds have also benefited, with 10-year borrowing costs falling by 6bps in Germany and 4bps in the UK.    

Markets are now pricing the peak for US interest rates in June, and then a decline to end the year below 4.5%. The small shifts in Fed projections underscore the lack of direction at the start of a busy week for economic data and corporate earnings. Data published Monday showed US manufacturing data was weaker than economists forecast, while uncertainty over the debt ceiling persisted. Later this week, US GDP data is forecast to reveal slower growth, and the so-called core PCE deflator, the Fed’s preferred inflation gauge, is expected to show price growth cooled.

“The data justifies a 25 basis-point hike,” said Erick Muller, head of product and investment strategy at Muzinich & Co. in London. “But it’s going to be difficult for central banks to raise rates and then quickly within a few months to start reversing that.”

In FX, the Bloomberg Dollar Spot Index is up 0.2%; the Japanese yen and Swiss franc outperformed Group-of-10 peers. Large flows went through at the 8am London fix in EUR/JPY and EUR/CHF as European stocks fell at the open. The Australian dollar and Norway’s krone are the weakest.

In commodities, crude futures edge lower with WTI falling 0.3% to trade near $78.50. Spot gold is flat around $1,990.

Bitcoin is flat; Coinbase filed a petition to push the SEC to create new rules on crypto, according to Reuters.

To the day ahead now, and data releases from the US include the Conference Board’s consumer confidence for April, new home sales for March, and the FHFA house price index for February. Otherwise, we’ll hear from BoE Deputy Governor Broadbent. Finally, earnings releases include Microsoft, Alphabet, Visa, General Electric, General Motors, Pepsi and McDonald’s.

Market Snapshot

• S&P 500 futures down 0.5% to 4,140
• STOXX Europe 600 down 0.5% to 466.76
• MXAP down 0.6% to 159.78
• MXAPJ down 1.2% to 510.13
• Nikkei little changed at 28,620.07
• Topix up 0.2% to 2,042.15
• Hang Seng Index down 1.7% to 19,617.88
• Shanghai Composite down 0.3% to 3,264.87
• Sensex little changed at 60,097.44
• Australia S&P/ASX 200 down 0.1% to 7,321.99
• Kospi down 1.4% to 2,489.02
• German 10Y yield little changed at 2.45%
• Euro down 0.2% to $1.1029
• Brent Futures up 0.2% to $82.89/bbl
• Gold spot up 0.1% to $1,990.30
• U.S. Dollar Index up 0.13% to 101.48

Top Overnight News from Bloomberg

• China’s upcoming politburo meeting likely to shift the focus away from COVID stimulus and toward policies to ensure the economic recovery can be sustained. BBG
• The world’s car industry will shrink to only 10 companies over the coming decade, a Chinese rival to Elon Musk’s Tesla has said, as intense competition in China’s electric vehicle market spills on to the global stage. Brian Gu, vice-chair of Guangzhou-headquartered Xpeng, said for Chinese companies to be among the last carmakers standing, they would need to have annual sales of at least 3mn vehicles, underpinned by global exports. The world’s largest carmaker Toyota sold 10.5mn cars in 2022, while Tesla sold 1.3mn. FT
• The EU and Japan have pushed back against a US proposal for G7 countries to ban all exports to Russia, as part of negotiations ahead of a summit of the world’s most advanced economies. FT
• The world’s top central banks are cutting the frequency of their dollar liquidity operations with the U.S. Federal Reserve from May, sending the clearest signal yet that last month’s financial market volatility is essentially over. Central banks of the euro zone, Japan, Britain and Switzerland will now revert to their usual weekly tenders, indicating that the extraordinary backstop is no longer needed as markets are functioning as intended. RTRS
• UBS pulled in $28 billion from rich clients in the first quarter. Net new money at the wealth unit included $7 billion in the 10 days after its takeover of Credit Suisse. Profit missed as UBS set aside $665 million for litigation tied to its role in selling mortgage securities before the GFC. The bank said geopolitics and liquidity concerns are depressing client activity and may affect new money in coming months. Shares fell. BBG
• House Republican leaders insist they won’t change their debt ceiling bill to win over holdouts, but they may not have the necessary votes without some tweaks. Politico
• The next big debt ceiling events will be whether McCarthy can pass his blueprint this week (reports suggest it will be VERY close, and there may need to be revisions) while the Treasury will publish a new timeline for the “X date” in the next 1-2 weeks. BBG
• Trump will learn his fate in Georgia over the summer (between Jul 11 and Sept 1) as that’s when the DA said she will decide whether to press charges. NYT
• President Biden formally launched his reelection campaign with a video announcement Tuesday, a long-awaited declaration that puts him on the path to a potential rematch with the man he beat in 2020—former President Donald Trump. WSJ

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower after the mixed performance in the US where sentiment was clouded by a disappointing Dallas Fed Manufacturing survey and the tech sector was among the laggards ahead of the upcoming big tech earnings, with the mood in the Asia-Pac region also contained amid the closures in Australia and New Zealand for ANZAC Day. Nikkei 225 was positive amid softer Services PPI data and after the government raised its view on imports for the first time since July last year, while BoJ Governor Ueda repeated that the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments. KOSPI failed to hold on to early gains after South Korean GDP printed mixed but still showed the economy averted a recession. Hang Seng and Shanghai Comp weakened with Hong Kong pressured by underperformance in tech and after the local benchmark slipped beneath the 20k level, although losses in the mainland were stemmed following another firm PBoC liquidity injection and reports that China urged banks to cut deposit rates.

Top Asian News

• China’s Politburo is likely to shift focus from stimulus to reforms when top leaders meet which could take place this week as China’s economic recovery is well on track, according to Bloomberg.
• China’s Commerce Minister met with the European Commission EVP in Brussels and the sides exchanged views on topics including expanding trade and investment cooperation, according to MOFCOM.
• BoJ Governor Ueda said the BoJ sees it appropriate to maintain YCC and easy monetary policy given the current economic, price and financial developments, while he also said that Japan’s bond yield curve is currently smooth as a whole. Ueda said tightening monetary policy now could push down inflation in the future which is already likely to slow on dissipating effect of import costs and noted that if they see the risk of runaway inflation, they must normalise monetary policy but added that they see the risk of inflation undershooting forecast as a bigger risk than overshooting which is why the BoJ must maintain easy policy for now.
• China’s Foreign Ministry announced that airline companies will no longer check COVID-19 nucleic acid test results of passengers to China before boarding from April 29th, via Global Times.

European bourses are under pressure, Euro Stoxx 50 -0.6%, continuing the downbeat APAC tone with drivers light ex-earnings; SMI +0.2% outperforms after heavyweights Nestle, Novartis and ABB. Sectors are similarly pressured with Banks hit by UBS and Santander. US futures are lower, ES -0.4%, with attention almost exclusively on earnings. Note, Biden has as expected kicked off his re-election campaign. First Republic Bank (FRC) Q1 2023 (USD): EPS 1.23 (exp. 0.72), Revenue 1.2bln (exp. 1.22bln); Deposits 104.47bln (exp. 136.67bln), down 1.7% from March 31st. Cutting workforce by about 20-25% in Q2. -19.5% in pre-market trade. Nestle (NESN SW) – Q1 (CHF): Revenue 23.47bln (exp. 23.82bln), Organic Revenue +9.3% (exp. +7.25%). Confirms FY outlook for organic growth of 6-8%. +1.3% in European trade

Top European News

• BoE, BoJ, ECB and SNB in consultation with the Fed have decided to revert the frequency of their 7-day operations from daily to once per week, effective 1st May. Decision taken in view of the improvements in USD funding conditions and low demand at recent USD liquidity providing operations.
• ECB’s Lane said current data suggests that they have to raise interest rates again at the upcoming meeting, while he added that beyond the May 4th meeting, further rate hikes will depend on data, according to Reuters.
• German Finance Minister Lindner said they need to strengthen EU fiscal rules, not dilute them, and they are in discussions on the future design of the common European fiscal framework, according to FT.
• EU tweaked patent rules to make it easier for patent holders to seek injunctions, according to the latest draft rules cited by Reuters.
• German Chancellor Scholz to meet with Chinese leadership in Berlin on 20th June.

FX

• Initial cagey and contained trade has picked up slightly throughout the European morning, with the dollar index at the mid-point of 101.19-10151 parameters and dipping within this slightly as JPY advances.
• JPY is the relative outperformer irrespective of dovish Ueda commentary as UST yields dip and the US yield curve flattens, USD/JPY below 134.00 from initial 134.47 best.
• At the other end of the spectrum AUD has come under renewed pressure as base metals flounder further in holiday thinned conditions for ANZAC day, with further declines in AUD/NZD cross evidence of the Aussies recent underperformance and ahead of Q1 CPI.
• EUR and GBP continue to drift but remain above 1.10 and 1.245 respectively with specific drivers limited aside from Central Bank commentary that hasn’t fundamentally altered the narrative.
• PBoC set USD/CNY mid-point at 6.8847 vs exp. 6.8853 (prev. 6.8835)

Fixed Income

• Bonds remain bid after extending rebounds from Monday to 134.40, 101.40 and 115-15 for Bunds, Gilts and the T-note respectively.
• German 2 year supply reasonably well received in contrast to recent sales and ahead of the USD 42bln auction.
• USTs experienced a modest boost back towards earlier highs following a 10k five year block trade at 109.27+, with the US five year yield the incremental domestic laggard following this.
• UK DMO revises the 2023/24 Gilt issuance remit to GBP 237.8bln (prev. 241.1bln)

Commodities

• WTI and Brent futures are choppy but have been ultimately horizontal above USD 78.50 and USD 82.50/bbl respectively since around the settlement yesterday before some modest downside in recent trade.
• Spot gold remains sub-USD 2,000/oz and attempted to top the level before the Chinese cash opened last night.
• Industrial metals are lower across the board as the greenback and soured risk tone pressure the complex
• China March YTD gold output rose 1.9% Y/Y to 84.97 tonnes and gold consumption rose 12.0% Y/Y to 291.58 tonnes.
• Russian Deputy Energy Minister says volatility and uncertainty on global energy markets will increase due to underinvestment, hope to share some results of the new energy strategy in the next few months.

Geopolitics

• Russia may withdraw from the treaty banning intermediate and shorter-range nuclear missiles, according to a foreign ministry official cited by TASS.
• Russian Foreign Ministry’s head of nuclear non-proliferation Yeramakov said the risks of a direct military confrontation between the two nuclear powers, Russia and the US, are increasing with Washington escalating the risks through its conduct, according to TASS.
• EU and Japan pushed back against a US proposal for the G7 to ban all exports to Russia, according to FT.
• UK Foreign Minister Cleverly is to call for constructive ties with China in his Mansion House speech on Tuesday, according to FT. However, The Telegraph reported that Cleverly is to also say that China must come clean on the ‘biggest military build-up in peacetime’ and is to warn of the danger of ‘tragic miscalculation’ if Beijing’s aggression continues.
• Egyptian Foreign Ministry announced the killing of the assistant administrative attaché at the Egyptian embassy in Khartoum, Sudan, according to Sky News Arabia.
• Deputy Chairman of the Russian Security Council, said “our competitors should not underestimate the possibility of our use of nuclear weapons”, via Al Jazeera.

US Event Calendar

• 09:00: Feb. S&P/Case-Shiller US HPI YoY, prior 3.79%
  • 09:00: Feb. S&P/CS 20 City MoM SA, est. -0.35%, prior -0.43%
• 10:00: April Conf. Board Consumer Confidenc, est. 104.0, prior 104.2
  • 10:00: April Conf. Board Expectations, prior 73.0
  • 10:00: April Conf. Board Present Situation, prior 151.1
• 10:00: April Richmond Fed Business Conditio, prior -17
  • 10:00: April Richmond Fed Index, est. -8, prior -5
• 10:00: March New Home Sales MoM, est. -1.2%, prior 1.1%
  • 10:00: March New Home Sales, est. 632,000, prior 640,000
• 10:30: April Dallas Fed Services Activity, prior -18.0

DB’s Jim Reid concludes the overnight wrap

Whilst it might be an eventful week coming up ahead, so far it hasn’t got off to a particularly exciting start, with the last 24 hours seeing a broadly risk-off tone as investors looked forward to a raft of earnings releases that will start coming through today. That left yields on 10yr Treasuries down -8.2bps by the end of the session, and this morning they’ve shed a further -1.5bps, taking them down to 3.48%. Otherwise, the S&P 500 experienced a modest +0.09% gain, but elsewhere the picture has been more downbeat, with Chinese equities losing ground for a 5th consecutive session this morning, whilst the major European indices also experienced a modest pullback.

One factor that’s spurred the latest moves have been continued concern among investors about a US recession. In part that was down to fresh data out yesterday, with the Dallas Fed’s manufacturing outlook survey ticking down to a 9-month low of -23.4 (vs. -12.0 expected). But another reason were fears about the upcoming debt ceiling deadline that’s likely to arrive in the summer. Indeed, at one point yesterday the gap between the 1m Treasury yield and the 3m Treasury yield was on track to close at its highest level in available data on Bloomberg back to 2001, although it then tightened and is currently at 151bps this morning. Even with the tightening though, those sort of levels are still far steeper than normal for the 1m3m curve, and it speaks to the concern in markets about a potential issue occurring between one and three months’ time, which coincides with potential debt ceiling deadlines.

Speaking of the debt ceiling, DB’s US rates strategist Steven Zeng put out an update on the issue yesterday (link here). His view is that the most likely x-date remains in August in light of April’s tax receipts so far, but there are stressed scenarios that could bring the date forward to late-July. In terms of what to look out for next, Republican House Speaker McCarthy said after the US close that the House will vote on the Republican plan at some point this week. Bloomberg reported last night that he’s still short of the votes to pass it given the very slim Republican majority in the House, but the bill is expected to go to the Rules Committee later today which starts the process of bringing it to a vote. Even if it passed the House, the bill isn’t going to get through the Democratic-controlled Senate, but the idea is that McCarthy can demonstrate to Democrats what the Republicans are willing to get behind, as part of an opening move in any potential negotiation.

With growing fears in markets about the debt ceiling, investors brought forward the likelihood of rate cuts from the Fed over the months ahead. Looking at Fed funds futures, the rate priced in by the December meeting came down by -9.2bps yesterday to 4.49%, which is its lowest expected level in just over a week. Even so, there’s still a high degree of confidence that the Fed will proceed with another hike at their next meeting a week tomorrow, with futures pricing in an 88% chance of a move this morning. The various shifts in expectations helped Treasury yields to move lower across the curve, with those on 2yr yields down -9.3bps to 4.09%, and those on 10yr yields down -8.2bps to 3.49%.

On the topic of central banks, yesterday also saw growing speculation that the ECB might deliver another 50bps hike at their meeting that’s also taking place next week. That followed comments from Isabel Schnabel of the Executive Board, who said in an interview with Politico that “Data dependence means that 50 basis points are not off the table.” That spurred a modest selloff among European sovereign bonds late in the session, with yields on 10yr bunds (+2.7bps), OATs (+2.8bps) and BTPs (+2.8bps) all moving higher on the day.

When it came to equities, the S&P 500 eventually closed +0.09% higher after previously spending much of the day in negative territory. The marginal gain was driven by energy (+1.54%) and defensives such as Food & Staples (+0.92%) and Utilities (+0.50%). By contrast, tech stocks saw a stronger decline, with the NASDAQ down -0.29% and the FANG+ index down -0.55%, which comes ahead of earnings releases from both Microsoft and Alphabet after the US close today. There wasn’t much in the way of earnings yesterday, although we did hear from Coca Cola (-0.16%), which underperformed the broader market slightly despite beating expectations. After the close, we also heard from First Republic (closed up +12.20%) who announced that customer deposits are down 41% or $105bn in Q1, worse than analysts’ estimates, and are planning on reducing 25% of the lender’s workforce. Outflows have slowed recently with deposits slipping just 1.7% this month through last Friday. Earlier, the bank was trading -22% in after-market trading.

Back in Europe, markets similarly saw little intraday volatility with the STOXX 600 closing -0.01% after trading in a 0.5% range. Sentiment was supported by the latest Ifo business climate indicator from Germany, which came in at 93.6 in April (vs. 93.4 expected). That was a 6th consecutive monthly gain for the index, and takes it up to its highest level since February 2022, before the index saw a significant decline following Russia’s invasion of Ukraine.

Overnight in Asia, the risk-off tone has gathered pace again, with major losses for several indices. That includes the CSI 300 (-0.52%) and the Shanghai Comp (-0.35%), both of which have declined for a 5th consecutive session. Otherwise, the Hang Seng (-1.62%) and the KOSPI (-2.00%) have experienced even larger losses, and that sentiment has spread elsewhere too, with futures on the S&P 500 currently down -0.32%

The main exception to that pattern this morning have been among Japanese equities, with the Nikkei up +0.22%. That’s followed comments from new Bank of Japan Governor Ueda overnight, who said in questions to parliament that it was appropriate to continue with the yield curve control policy, and that tightening policy now could cause inflation to weaken further. Remember that his first decision as BoJ Governor is taking place this Friday, so markets will be paying close attention for any signs of a policy shift.

Finally, on the topic of US politics again, several outlets including the Washington Post, AP and Politico have reported that President Biden could formally announce his re-election campaign for 2024 as soon as today. As it happens, it would mark 4 years exactly since his 2020 launch, and an official announcement would enable the campaign to begin fundraising and remove any uncertainty about whether Biden will run for re-election. However, the reports have suggested that any plans were not fully finalised, and it’s also possible that Biden could wait before making any formal decision, particularly since there’s no major candidate seeking to challenge him for the nomination on the Democratic side.

To the day ahead now, and data releases from the US include the Conference Board’s consumer confidence for April, new home sales for March, and the FHFA house price index for February. Otherwise, we’ll hear from BoE Deputy Governor Broadbent. Finally, earnings releases include Microsoft, Alphabet, Visa, General Electric, General Motors, Pepsi and McDonald’s.