Breakfast Bites - Thu May 04, 2023

Rise and shine everyone and May the Force be with us!

Yesterday was a big day with the Fed raising rates as expected by 25bps. They did amend the wording of their statement but whether they pause rate increases was left slightly ambiguous. Mayhem and I had a spaces after the event to discuss the Fed meeting. I hope you all caught it. There is a recording available on Twitter for free , in case you missed it.

The big events today are Apple earnings after market close and the ECB rate decision before market open.

We continue to see pressure in the regional bank stocks. And after yesterday’s Fed discussion of no rate cuts this year, it would seem that the market still remains under pressure this morning.

US Futures are down pre-market along with Oil, USD and Bonds. Gold and Bitcoin have a slight bid.

Asia and Australia

• Asian equities recovered from a weak opening Thursday to close mixed. Markets that finished higher included Hong Kong, Shanghai, following its three-day break.

• Caixin manufacturing PMI for China was 49.5 in April, slightly below consensus and prior month's 50.0.

• Washington officials have sent clear message to South Korea chip companies they will be given at least another year's reprieve from export controls to China.

• China tourism returns to pre-Covid levels. Spending grew 128.9% y/y to CNY148B ($21.42B)

Europe, Middle East, Africa

• European equity markets lower.

• ECB set to step down the pace of its tightening cycle with rate hike of 25-bps tipped for today's policy decision. Rationale for smaller rate increase likely to revolve around signs of significant tightening in credit conditions, lagged effect of prior rate increases and signs inflation may be starting to ease.

• Norway's central bank increased the key rate by 25bp to 3.25% and signaled a new hike in June.

• Final Eurozone PMIs for April confirmed that the services sector is driving output in the region.

• Eurostat reported that industrial producer prices declined by 1.6% m/m in March vs (1.7%) expected and (0.4%) prior, driven by lower energy costs.

The Americas

• PacWest under pressure following Bloomberg report after the close on Wednesday that the bank is evaluating potential options, including a sale.

• Former FDIC chair Bill Isaac warns of more pain to come in banking sector

• Markets pricing in probability of dovish Fed pivot as soon as June following Powell's press conference.

• Political leaders on both sides of the aisle downplay potential for short-term debt ceiling deal to give negotiations more time; Republicans skeptical of recent estimates of earlier debt ceiling x-date

• Shopify is selling its logistics unit to supply chain technology company Flexport.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)