JPMorgan Chase and Wells Fargo Earnings, EU Industrial Production
While the euro traded firmer in the night from Thursday to Friday, over reports of a significant transaction between a Japanese and European company, the dollar was overall also trading stronger compared to other major currencies, as seen in the performance of the US Dollar Index (USDX). Given the strength of the dollar, many emerging market currencies, like the South African rand (ZAR) or the Indian rupee (INR) retraced from recent highs. The Turkish lira (TRY) was also weakened, reaching the highest level in the USD/TRY pair since March 22. Declining foreign currency reserves and disappointments over the currently planned economic reforms were some of the factors working possibly against the Turkish currency.
Major stock index futures opened lower on Friday, further retreating from this week’s high. One of the few major indices trading overall almost unchanged was the UK 100 index. Data from Wednesday indicated for Britain better manufacturing output and industrial production results than expected by surveyed analysts given the uncertainty over Brexit.
Bitcoin prices came down from the recent high, testing the $5,000 threshold. Other cryptocurrencies like EOS or Litecoin retreated even further after the rally from last week.
For Friday consumer price inflation numbers from Spain are expected. The EU will release its industrial production statistic for February and from the US data on import and export prices as well as the University of Michigan consumer sentiment survey will be released. On Friday the first quarterly earnings from major Wall Street banks like JP Morgan Chase are expected, with more to follow next week.
The euro rebounded against the dollar to the highest level in 2-1/2 weeks on Thursday night and was trading higher despite the overall also strengthened dollar. Some reports indicate that this move could coincide with the announcement that the Japanese company Mitsubishi UFJ is completing the takeover of the aviation business, currently owned by a German bank.
Fundamental data revealed little surprises as the German consumer price index (CPI) stood expected at 1.3% and the French CPI was also unchanged at 1.1%. US data on new jobless claims was slightly better than expected with 196 thousand new claims (expected 211 thousand).
For Friday CPI data from Spain is expected, as well as industrial production figures from the European Union. From the US numbers on import and export prices will be reported.
While many European indices, like the German DAX closed overall slightly higher on Thursday, a clear downside was seen at the start of the trading session on Friday.
Reports indicate that after the threats of US President Trump to impose tariffs on European imports and counter-threats by the EU, European official indicated that talks with the US will go ahead, focusing on trying to avoid tariffs in the automotive sector.
One of the best performing major German stocks on Thursday were Lufthansa and Deutsche Bank. A Lufthansa spokesperson disclosed on Wednesday that the company officially started the process of selling its catering business LSG. The German banks Deutsche Bank and Commerzbank were also on top as reports indicate heavy resistance against the proposed merger of the two companies as Commerzbank’s supervisory board is positioning itself against such a move.
Oil prices came down from the recent five months high, but as per the levels seen by Friday morning could still be high enough to settle higher for the sixth week in a row. In its recent Oil Market Report, the International Energy Agency (EIA) indicated that especially the production cuts of Saudi Arabia in agreement with other OPEC countries and Russia allowed to reduce the global supplies of crude oil by 340 thousand barrels per day in March.
On Friday the US Baker Hughes oil rig count will be published. Last week the number of operating oil rigs rose for the first time in six weeks by 15. A recent report from Reuters showcased that even though oil prices have been rising, shale oil companies in the US are struggling financially and seeing pressure from investors, being even forced to lay off staff.
US indices settled almost unchanged on Thursday with a very minor downside seen especially in the tech index NASDAQ (US Tech 100).
Shares of many companies in the emerging cannabis business (Global Cannabis ETF -2.47%), such as Canopy Growth Corporation (-5.16%) or Tilray (-6.26%) closed significantly lower. In the other end of the spectrum industrial stocks (US Industrial ETF +0.95%) closed ahead of most other sectors.
As expected, the ride-hailing company Uber announced its IPO on Thursday. Some analysts however are concerned over the continued losses of the company, at around three billion dollars in 2018, adding doubts about whether the $90-100 bn. valuation sought would be realistic. Uber’s rival Lyft’s IPO was not seen as a success, as shares closed at around $61 per share on Thursday, compared to the $72 IPO price.
On Friday the first major banks like JP Morgan Chase and Wells Fargo are kick off the earnings season with their quarterly numbers. On Monday other big banks like Citigroup Goldman Sachs and on Tuesday Bank of America are due to publish their numbers.
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