Increases in Europe after the macro in the US and China
The European stock markets start the last day of the week with doubts, after the new highs yesterday on Wall Street in the hands of macroeconomic data in the US., where leading manufacturing indicators for April (New York, Philadelphia) far exceeded market expectations, approaching all-time highs.
Added to this was the increase in retail sales and the drop in weekly unemployment, showing the strength of the recovery of the American economy and consumption in particular (embalmed savings).
Specific, the index that measures Philadelphia’s manufacturing activity, prepared by the local Federal Reserve, rose in April to 50.2 points from 44.5 points the previous month (reading revised significantly downwards from an initial 51.8 points), also surpassing the 41.5 points expected by analysts. Activity in the sector continued to expand in April at unusually high rates in the region.
The same index, but from the New York region, The Empire State Index, also prepared by the local Federal Reserve, rose in April to 26.3 points from 17.4 points in March, which means reaching its highest reading since October 2017. In this case, analysts expected a reading of 22.5 points.
The Commerce Department published yesterday that retail sales grew 9.8% in the month of March in relation to February. The reading far exceeded that expected by analysts, which was an advance of this variable in the month of 5.5%
In addition, the Department of Labor published yesterday that initial claims for unemployment benefits fell by 193,000 in the week of April 10, to a seasonally adjusted figure of 576,000 requests, its lowest level since the start of the pandemic. Likewise, this is the first week in which this number has dropped from the 600,000 requests since the outbreak of the coronavirus.
“And despite this, we saw how the US 10-year IRR fell 9 bp to 1.54% (this morning 1.58%), its lowest level since the beginning of March, supported according to market sources by a higher demand from Japan, higher geopolitical risk (US sanctions on Russia) and possible short closures. Therefore, a market that seems much calmer with respect to the expectation of an upturn in inflation in the short term, considering it specific and not structural ”, underline the Renta 4 analysts.
Driven by published business results, as well as good US consumer and employment data, Wall Street closed in the green yesterday in a session in which both the Dow Jones and the S&P 500 reached all-time highs.
The Dow Jones rose 0.90% or 305.10 points to 34,035.99 units, exceeding 34,000 points for the first time in history. The S&P 500 also reached all-time highs, climbing 1.11% or 45.76 points, to 4,170.42 units, while the Nasdaq advanced 1.31% or 180.92 points, to 14,038.76 units.
European stocks also gain momentum today after the publication of China’s Domestic Product. The Asian giant’s GDP grew by 18.3% year-on-year in the first quarter of the year, compared with the expected increase of 18.5% year-on-year by the consensus, and after an increase of 6.5% year-on-year in the previous quarter.
Industrial production increased by 14.1% year-on-year, compared to the expected rise of 17.2% by the consensus, and after the increase of 35.1% in the January-February period.
With everything, European stock markets open the session with a mixed trend and slight changes. The Dax is up 0.12% and the FTSE 200 up 0.34%; while the Cac 40 lost 0.02% and the FTSE Mib, 0.12%: The Euro Stoxx 50 fell 0.03%.
For the rest of the day, the inflation data in the euro area will be released, which is expected to rise to 1.3%, low levels and compatible with the maintenance of the expansionary monetary policy of the ECB (minimum rates and PEPP until March of 2022). In the United States, it is foreseeable that consumer confidence at the University of Michigan will continue to improve in April in the current context of strong fiscal stimulus, improved employment and advances in vaccination.
The euro gives way against the dollar and is exchanged for 1,196 greenbacks.
The President of the European Central Bank (ECB), Christine Lagarde, He pointed out yesterday that the euro area economy will need monetary and fiscal policy until well into the recovery. Lagarde described the European economy as supported by these two “crutches” of politics, and that neither of them could be eliminated.
The president of the ECB also stressed that the Eurozone still maintains its uncertainty and that there are various components beyond vaccinations that have increased the divergences between the economies of the US and the European Union (EU).
Likewise, Lagarde stressed that the Eurozone is fighting the pandemic, but that those countries with larger tourism industries will take longer to recover from the economy.
On the other hand, he indicated that the US stimulus will add 0.15% to inflation and 0.3% to GDP before the end of 2023 in the Euro Zone. In terms of policy, Lagarde reiterated that he wants to preserve favorable financing conditions through the risk-free rate, sovereign bonds and interest rates for companies and households.
In the commodity market, oil prices go up. The benchmark Brent oil in Europe rises 0.30%; to 67.13 dollars per barrel, while the US WTI rebounded 0.36% to 63.70 dollars.