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Stocks Mixed As Central Banks Keep Cautious Tone

Published 28/04/2017, 11:10 am
Updated 09/07/2023, 08:32 pm

Originally published by Rivkin Securities

The euro declined with German bond yields on Thursday despite higher than forecast German inflation data as Mario Draghi struck a cautious tone in the press conference following the ECB decision to keep monetary policy unchanged. While noting that the Euro-area outlook had improved, “underlying inflation pressures continue to remain subdued” lacking a convincing upwards trend. The euro declined -0.28% against the dollar and both the German two and 10-year yields fell -4.7 and -5.3 basis points respectively.

Meanwhile German inflation rose quicker than expected year-on-year gaining +2.0% from +1.6% previous and expectations for +1.9%. Euro-zone economic sentiment released overnight edged up to 109.6 from 108 previous as the reading sits near decade long highs while consumer and business surveys also moved higher serving to highlight the broadening outlook.

European equity benchmarks were generally lower led by declines in the Euro STOXX 600 and DAX of -0.24% and -0.23% respectively. European earnings season also remains in focus for Q1 with expectations for +5.5% earnings growth and +5.7% revenue growth year-on-year for the first quarter.

The Bank of Japan also left monetary policy unchanged as widely forecast with the policy rate remaining at -0.10% and the ten-year yield target around 0%. The statement accompanying the decision noted that risks remained skewed to the downside although similar to the ECB we are seeing a slightly more positive outlook. The bank also revised down inflation forecasts for 2017 to +1.4% form +1.5% while 2018 remained unchanged at +1.7% and 2019 prices are forecast to rise +1.9%. Today we’ll get a look at the inflation figures for March, released at 9:30am AEDT along within Japanese unemployment.

Japanese yields were flat with the two-year yields remaining around -0.189% while the 10-year hovered above 0% at 0.019%. The yen rose +0.2% against the dollar which is weighing on Nikkei 225 futures which are down -0.26% overnight.

US equities moved higher on Thursday as earnings expectations continue to rise, now up to +12.8% for Q1 from +10.1%. Overnight the Nasdaq 100 rose to a new all-time high, up +0.54% while the S&P 500 remains only modestly below its all-time high of 2,400.98 currently sitting at 2,388.77.

Locally the S&P/ASX 200 edged higher, up +9.45 points or +0.16% at 5,921.48 while this morning we look set to open flat with ASX SPI200 futures down -4 points or -0.07% in overnight trading.

Data releases:

· Japanese Unemployment (MoM Mar) 9:30am AEDT

· Japanese Inflation (MoM & YoY Mar) 9:30am AEDT

· Australian Producer Price Index (QoQ & YoY Q1) 11:30am AEDT

· French GDP (QoQ & YoY Q1) 3:30pm AEDT

· UK GDP (QoQ & YoY Q1) 6:30pm AEDT

· Euro-zone Inflation (YoY Apr) 7:00pm AEDT

· US GDP (QoQ Q1) 10:30am AEDT

· University of Michigan Consumer Confidence Survey (MoM Apr) 12:00am AEDT

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