MNI US OPEN - Alphabet, Amazon, Meta Headline Busy Tech Earnings Week

NEWS

MNI US EARNINGS SCHEDULE - Quarterly Cycle Reaches Crescendo

The quarterly earnings cycle hits a crescendo in the coming week, with 45% of the S&P500’s total market cap set to report. Reports are persistent across the week, but Tuesday is likely the most notable session for the index, as Alphabet, McDonald’s, Microsoft, PepsiCo and Visa are all due. Earnings season so far has been relatively solid, with the average firm tending to beat on EPS and revenues – although EPS metrics have held up well relative to sales.

ECB (MNI): ECB to Raise Rates Until Wage Growth Slows, Wunsch Tells FT

Pierre Wunsch, who sits on the European Central Bank’s rate-setting governing council, will only agree to halt interest rate rises once wage growth starts to fall, the Financial Times reported, citing an interview. “I would not be surprised if we had to go to 4%,” says Wunsch, who is head of Belgium’s central bank. “We are waiting for wage growth and core inflation to go down, along with headline inflation, before we can arrive at the point where we can pause” he said.

CHINA (BBG): China Says It ‘Respects’ Sovereign Ex-Soviet States After Furor

China said it “respects” the independence of the former Soviet Union states and that its position is “unchanged,” after the nation’s diplomat to France sparked a firestorm in Europe by questioning their sovereignty.“ China respects the status of the former Soviet republics as sovereign countries after the Soviet Union’s dissolution,” Mao Ning, Foreign Ministry spokeswoman, said Monday at a regular press briefing in Beijing.

FRANCE/CHINA (BBG): Macron’s Push to Get China’s Help on Ukraine Is Unraveling

French President Emmanuel Macron’s diplomatic efforts to enlist China’s help to intervene in Russia’s war in Ukraine suffered another blow. The Chinese ambassador to France, Lu Shaye, told the French network LCI that the ex-Soviet states don’t have sovereign status as independent nations, a statement that ignores the internationally recognized borders in Eastern and Central Europe. The Biden administration had already expressed irritation with Macron on his outreach to China, according to people familiar with the matter.

CHINA (MNI): Policy Rate Stable, Property Market on Watch

The People’s Bank of China will likely keep policy rates steady over the next one-two quarters as previous easing moves boost credit expansion and real loan rates fall to a record low, despite property markets still requiring policy support, economists and advisors told MNI.

US (BBG): US Urges S. Korea Not to Fill China Chip Shortfall Amid Probe: FT

The US asked South Korea to urge Samsung Electronics Co. and SK Hynix Inc. to resist boosting chip sales to China if Beijing bans Idaho-based Micron Technology Inc. from selling there, the Financial Times reported, citing people familiar with the situation. The US made the request as South Korean President Yoon Suk-yeol prepares to travel to Washington for a state visit Monday, the FT reported, citing four unidentified people familiar with the talks between the White House and presidential office in Seoul.

US/JAPAN (WaPo): DeSantis Meets With Japanese Leader in First Stop of International Trip

Florida Gov. Ron DeSantis met with Japanese Prime Minister Fumio Kishida here on Monday and praised Japan's efforts to bolster its defense spending, in the first leg of the likely GOP presidential contender's trip this week to four of the biggest U.S. allies. The tour is officially billed as an "international trade mission" with Enterprise Florida, an economic development organization in Florida, to build economic ties between the state and Japan, South Korea, Israel and the United Kingdom. But it is also widely viewed as the governor's effort to burnish his foreign policy credentials ahead of a potential 2024 presidential bid.

JAPAN (MNI): Easing, Policy Forward Guidance Likely to Hold

The Bank of Japan will likely not tweak its easy policy settings at the April 27-28 meeting as the shape of the yield curve remains relatively favorable and the recent rise in Japanese government bond yields consistent with movements overseas, MNI understands. The board will keep the forward guidance for its policy rates as elevated downside risk to the economy remains and wage hikes on a macro basis are still unknown, despite major firms already implementing hefty pay increases and smaller firms following.

JAPAN (MNI): Price Outlook Toward 2%, Probability Vital - Ueda

The Bank of Japan is unsure how it could exit its easy policy setting, but the Bank will consider explaining or disclosing an exit strategy, Governor Kazuo Ueda told the Japanese Government Monday. Ueda said the BOJ would focus on the Board’s inflation forecast, particularly the 1.5-year estimate, when determining the strength of underlying price growth.

JAPAN (MNI): Kishida Says Not Mulling Snap Poll After LDP Wins Four Seats In Parliamentary By-Elections

Kyodo News Agency reports that Japanese Prime Minister Fumio Kishida said that he is not thinking about dissolving the lower house and calling a snap election after his Liberal Democratic Party won in four out of five parliamentary by-elections held over the weekend. Japan's ruling party claimed three lower house seats and one upper house seat in the by-elections held on Sunday, with the remaining lower house seat going to the Nippon Ishin no Kai party. The main opposition Constitutional Democratic Party of Japan was defeated in all three constituencies in which it fielded candidates.

JAPAN (MNI): Japan Nippon Life to Boost Yen Bond Holdings in FY23

Japan's Nippon Life Insurance Company plans to increase domestic bonds holdings, including super long-term Japanese government and hedged foreign corporate debt, in the fiscal year starting April 1, the company’s chief fund manager said Monday, adding that he expects the BOJ to widen the range of its 10-year interest rate around June.

SOUTH KOREA (MNI): Yoon Seeks Further Japan Rapprochement Ahead of US State Visit

South Korean President Yoon Suk-yeol has given an interview to the Washington Post in which he seemingly seeks to offer an olive branch to Japan ahead of this week's state visit to the United States. In the interview he talks on the frequently difficult relations between Seoul and Tokyo relating to the Japanese occupation of Korea in the first half of the 20th C, saying that, "I can’t accept the notion that because of what happened 100 years ago, something is absolutely impossible [to do] and that they [Japanese] must kneel [for forgiveness] because of our history 100 years ago. And this is an issue that requires decision. … In terms of persuasion, I believe I did my best.”

RBA (MNI): RBA Ponders How to Respond to Rental Inflation

The Reserve Bank of Australia is debating how to deal with rental costs, which are heavily weighted in consumer price inflation and are set to continue to rise strongly over the next year, but are relatively insensitive to interest rates, MNI understands. One view at the RBA, which left the cash rate on hold at 3.6% on April 4 as it monitors whether more hikes are needed, is that tighter policy will depress inflation in other sectors, pulling average CPI down irrespective of the housing market. But rental inflation should remain strong for some time as the supply of new houses continues to lag demand.

CORPORATE (BBG): Bed Bath & Beyond Plans to Swiftly Liquidate, Shutter Stores

Bed Bath & Beyond Inc., the big-box retailer that for decades provided essential shopping for college dorms, wedding gifts and new homes, will close all of its stores and liquidate inventory over the next two months after its turnaround failed. The Union, New Jersey-based company filed for Chapter 11 bankruptcy on Sunday, a move that came months after saying it was weighing options to restructure debt, with “substantial doubt” about its ability to keep operating.

DATA

GERMAN DATA (MNI): IFO Business Sentiment Edges Up on Stronger Expectations

• GERMANY APR IFO BUSINESS CLIMATE 93.6 (FCST 93.4); MAR 93.2r

German business sentiment edged up for a sixth consecutive month in April, rising 0.3 points to 93.6 in the IFO Survey, boosted by improved expectations (up 1.2 points at 92.2). This was slightly stronger than consensus expectations. Easing energy prices, cooling CPI and less-bleak global demand outlooks likely accounted for the increase, whilst the IFO Current Conditions index eased by 0.4 points to 95.0. Manufacturing sentiment inched up in April, as expectations of future conditions rose considerably, outpacing worsening current conditions assessments. However, with the German manufacturing PMI slipping further into contractionary territory and ZEW expectations taking a substantial hit in April, growth outlooks may be more stagnant.

FOREX: USD Fades Despite Steady Start

• After a steadier start to the week, the USD has faded through to the NY crossover, putting the USD lower against most others in G10. Resultingly, the USD Index is south of Friday's lows, with last Monday's 101.531 the next level of support.
• The state of US-China trade relations remains a market focus after weekend reports from the FT that the USA are pressing South Korea to resist boosting microchip sales to China should Beijing move to ban Micron Technology from the territory. The South Korean President is set to visit the US later today for a state visit.
• JPY is the sole currency to underperform the USD so far Monday, with focus resting on the BoJ rate decision later this week - at which they're expected to retain their ultra-easy policy.
• CHF is among the better performers so far, however price action has been relatively muted. Nonetheless, USD/CHF is within range of cycle lows printed earlier this month at 0.8860. Slippage below here would put the pair at the lowest level since Q1 2021.
• With the FOMC inside the Fed's pre-meeting media blackout period, markets continue to look to glean any further signals from the regional Fed indices today, with both Chicago Fed and Dallas Fed activity indices on the docket. ECB speak is plentiful Monday, with ECB's Vujcic, Villeroy and Panetta already making appearances. Both Vujcic and Panetta are set to speak again.

BONDS: USTs Higher But Bunds and Gilts Little Changed on the Day

• Core fixed income moved higher on the European open. USTs have remained higher on the day but gilts and Bunds have pretty much retraced all their move higher.
• The main data release of the morning was the German IFO which saw expectations rise more than expected but the current assessment deteriorate on the month.
• Looking ahead the main data releases for the remainder of the day will be the Chicago Fed and Dallas Fed activity indices as well as Belgian business confidence.
• TY1 futures are up 0-6+ today at 114-21+ with 10y UST yields down -3.3bp at 3.541% and 2y yields down -2.8bp at 4.156%.
• Bund futures are up 0.11 today at 133.70 with 10y Bund yields unch at 2.479% and Schatz yields up 1.4bp at 2.924%.
• Gilt futures are down -0.06 today at 100.76 with 10y yields up 1.6bp at 3.771% and 2y yields up 3.2bp at 3.764%.

EQUITIES: Eurostoxx 50 Futures Trade Close to Recent Highs; Uptrend Remains Intact

The Eurostoxx 50 futures uptrend remains intact and the contract is trading closer to its recent highs. The recent extension higher has reinforced the bullish significance of the break of 4268.00, Mar 6 high and a former key resistance. The move confirmed a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on 4381.50, Jan 5 2022 high (cont). Initial firm support lies at 4266.00, the 20-day EMA. The trend outlook in S&P E-minis remains bullish and the latest move lower (from last Tuesday’s high) is considered corrective. Support to watch lies at 4125.73, the 20-day EMA where a break is required to suggest scope for a deeper pullback - this would expose 4083.76, the 50-day EMA. Attention is on the 4200.00 handle where a breach would resume the uptrend and open 4205.50, Feb 16 high ahead of 4244.00, the Feb 2 high and key resistance.

• Japan's NIKKEI closed higher by 29.15 pts or +0.1% at 28593.52 and the TOPIX ended 2.28 pts higher or +0.11% at 2037.34.
• Elsewhere, in China the SHANGHAI closed lower by 25.845 pts or -0.78% at 3275.413 and the HANG SENG ended 115.79 pts lower or -0.58% at 19959.94.
• Across Europe, Germany's DAX trades lower by 34.96 pts or -0.22% at 15845.96, FTSE 100 lower by 17.05 pts or -0.22% at 7897.65, CAC 40 down 21.33 pts or -0.28% at 7555.32 and Euro Stoxx 50 down 15.01 pts or -0.34% at 4393.2.
• Dow Jones mini down 101 pts or -0.3% at 33849, S&P 500 mini down 15.75 pts or -0.38% at 4141, NASDAQ mini down 56 pts or -0.43% at 13034.5.

COMMODITIES: WTI Futures Rebound After Matching Friday Low; $75.83 Marks Support to Watch

WTI futures traded lower last week. This resulted in a breach of support at $79.04, the Apr 3 low and the gap high on the daily chart. The continuation lower has also resulted in a break of both the 20- and 50-day EMAs and this has opened $75.83, the Mar 31 high and a gap low on the daily chart. On the upside, key short-term resistance has been defined at $83.38, the Apr 12 high. A break would resume the recent uptrend. Trend conditions in Gold remain bullish, however, the yellow metal has entered a short-term corrective cycle and is trading below recent highs. Price has breached a firm support at $1986.9, the 20-day EMA, highlighting potential for a deeper retracement. This has opened $1949.7, Apr 3 low. Key short-term resistance has been defined at $2048.7, the Apr 5 high. A break of this level would confirm a resumption of the uptrend.

• WTI Crude up $0.09 or +0.12% at $77.95
• Natural Gas down $0.03 or -1.21% at $2.202
• Gold spot up $1.69 or +0.09% at $1984.23
• Copper up $0.95 or +0.24% at $399.5
• Silver down $0.04 or -0.18% at $25.0307
• Platinum down $21.19 or -1.88% at $1106.89