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News

European Stocks Start April On A Strong Note

The news shaping the markets today

Russia’s strikes in Kharkiv left 7 dead and 34 injured. However, the talks between Russia and Ukraine sent WTI crude oil futures slightly lower this morning.


Australia’s retail sales grew 1.8% in February, following a 1.6% rise in the previous month, lending support to the AUD/USD forex pair.


Bahrain’s gross domestic product grew by 4.29% year-over-year in the fourth quarter, following a 2.1% expansion in the previous quarter. However, the BHD/USD pair remained flat in forex trading this morning.


Brazil’s trade surplus widened to $7.4 billion in March, from $6.5 billion in the year-ago month. However, this was still below the consensus estimate of $9 billion, which exerted pressure on the BRL/USD forex pair.


Mexico’s manufacturing confidence index fell to 52.2 in March, from 52.4 in the previous month. This being the lowest reading in five months sent the MXN/USD pair lower in forex trading.

 

What’s happening: European stocks closed higher on Friday, as investors monitored talks between Russia and Ukraine.

What happened: European markets settled the first quarter in the red, recording their first quarter of losses in the last two years.

However, April began with optimism around a resolution to the Russia-Ukraine situation and a recovery in the US labour market.

Why it matters: Investors have been assessing developments in the talks between Russia and Ukraine, with little hope of a resolution, despite Moscow’s announcement of a partial military pullback in northern Ukraine.

Markets responded positively to the release of the US jobs report. The Labor Department reported 431,000 job adds for March, indicating continued recovery of the US economy.

Investors shrugged off news of Eurozone’s inflation accelerating to a record high of accelerating 7.5% in March, from 5.9% in February, amid surging oil and gas prices. The figure came in ahead of the market expectations of 6.9%.

The S&P Global Eurozone manufacturing PMI was revised lower to 56.5 in March, versus an initial reading of 57. The figure marked a contraction from February’s final reading of 58.2. Germany’s Manufacturing PMI also came in lower, to 56.9, for March, versus a preliminary reading of 57.6. Spain’s factory activity growth also eased more than projected last month.

European stocks had remained on a downward trajectory in the first quarter, losing around 6.3%. This marked their first quarterly decline in two years. European markets began the new quarter buying undervalued stocks.

The pan-European Stoxx 600 index rose 0.54% to close at 458.34 on Friday, with mining stocks gaining more than 2%. Most sectors settled in the positive zone. The CAC 40 rose 0.37% to close at 6684.31, notching a 2% gain for the week. The FTSE 100, DAX 40 and IBEX 35 gained 0.30%, 0.22% and 0.7%, respectively.

What to watch:Investors will keep an eye on the ongoing talks between Russia and Ukraine. The release of Germany’s balance of trade and current account data will also remain in focus today.

The markets today

Asia-Pacific stocks will be in focus today following the release of Friday’s jobs report from the US

 

Context: Markets in the Asia-Pacific region closed mixed on Friday, following the release of China’s manufacturing data.

Details: The Caixin/Markit manufacturing PMI for China declined to 48.1 in March, from 50.4 in the previous month. The latest reading was the weakest since February 2020.

Economic data released Thursday also showed the country’s official manufacturing PMI contracting to 49.5 in March, from February’s 50.2. The recent data came after China recorded a sharp surge in covid-19 cases.

“The contraction of the PMI clearly was because of the omicron outbreak. If you look at the high frequency indicators, up until the omicron outbreak they were actually improving and quite strong,” Credit Suisse analyst Dan Fineman said in a note to clients.

Investors were also concerned about a decline in sentiment data for Japan’s headline index for large manufacturers to 14 in the first quarter, from 17 in the previous three-month period.

Stocks markets struggled for direction this morning as investors assessed the US jobs report, which was released after the close of Asian markets on Friday. The US economy added 431,000 nonfarm payrolls in March, below market expectations of 490,000. The unemployment rate eased to 3.6% in March, from 3.8% in the prior month.

China’s stock markets gained 0.9% on Friday and will remain closed today and tomorrow. Japan’s Nikkei shed around 0.1%, while Hong Kong’s Hang Seng climbed more than 1% this morning.

What to watch: Investors will keep an eye on rising covid-19 cases in China, Europe and other regions, and the ongoing Russia-Ukraine crisis.

Traders also await the release of economic data on composite PMI, manufacturing PMI and household spending from Japan on Tuesday.

Other Markets: US indices closed higher on Friday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 0.40%, 0.34% and 0.15%, respectively.

Support & resistances for today

Technical Levels News Sentiment
FTSE 100 – 7529.43 and 7544.16 Positive
EUR/USD – 1.1047 and 1.1054 Positive
DAX 40 – 14435.05 and 14472.50 Positive
CAC 40 – 6678.12 and 6694.09 Negative
WTI Crude Oil – 98.49 and 98.87 Negative

 

Market snapshot

What else to watch today

Turkey’s consumer price index and producer price inflation, Brazil’s IPC-Fipe inflation, current account, foreign direct investment and Central Bank of Brazil focus market readout, Spain’s unemployment change and number of foreign tourist arrivals, Mexico’s consumer confidence and foreign exchange reserves, Germany’s new passenger car registrations, Canada’s value of building permits and Bank of Canada’s business outlook survey, US factory orders, France’s new car registrations, as well as Italy’s car registrations.

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