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Archives of “May 7, 2021” day
rssEuropean shares close higher. France’s CAC trades closes at a new high going back to 2000
Solid week for the major indices as well
The European shares a closing higher with the German DAX rising 1.2% leading the way. The major indices also closed higher for the week.
A look at the provisional closes shows:
- German DAX, +1.2%
- France’s CAC +0.3%
- UK’s FTSE 100, +0.7%
- Spain’s Ibex, +0.8%
- Italy’s FTSE MIB, +0.35%
For the week, the major indices also are ending higher on the week
- German DAX, +1.6%
- France’s CAC, +1.65%
- UK FTSE 100, +2.3%
- Spain’s Ibex, +2.6%
- Italy’s FTSE MIB +1.8%
The CAC index is closing at the highest level since October 2020.
Iran nuclear talks will continue this weekend and they’re a big risk for oil
A deal is a risk for oil
There are positive indications on an Iran nuclear deal, something that could add 2 million barrels per day to global oil supply.
A fourth round of negotiations began today in Vienna and both sides sound optimistic.
Here’s what a senior State Dept official said in a media briefing yesterday:
Let me just start by saying that there’s been a lot of reporting about whether this is the final round, whether this is the decisive one, whether a deal needs to be reached in the coming weeks. And I would simply say that we feel that the last three rounds have helped to crystallize the choices that need to be made to – by Iran and by the United States in order to come back into a compliance-for-compliance return – well, returning to mutual compliance with the JCPOA. We think that those – that it’s a pretty clear set of choices that needs to be made, because we’re not inventing something new. It is written in the JCPOA. And if Iran makes the political decision that it genuinely wants to return to the JCPOA as the JCPOA was negotiated, then it could be done relatively quickly and implementation could be relatively swift.
It seems to me that the old nuclear agreement is on the table. Iran took that deal before and so I don’t know why they wouldn’t take it again.
The official said that from the US side, there is no hesitation:
Helthy
Chinese companies don’t lose money. No one should doubt the transparency of this market.
Dollar mixed, US futures steady so far on the session
Little change in the major currencies space
It is all about the US non-farm payrolls report today as the market feels rather lethargic at the moment. The dollar is trading more mixed, holding a slight advance against the commodity currencies while trailing behind the euro and pound.
That said, changes are relatively minor with EUR/USD keeping around 1.2080-90 after ECB policymaker Kazaks talked up scaling back PEPP purchases.
European stocks are faring well, keeping a modest advance, but US futures are not doing a whole lot as they keep steady and little changed on the session.
S&P 500 futures are up 0.1%, holding thereabouts since Asia Pacific trading. Meanwhile, 10-year Treasury yields are flat on the day at 1.57% and that isn’t giving traders much to work with during European morning trade.
Tick tock. Tick tock. The payrolls data can’t come soon enough.
Global tapering has begun – BofA
BofA notes that gold funds attracted its largest inflow in three months in the week to Wednesday but warns of the outlook
Citing EPFR data, BofA highlights that gold funds garnered $1.6 billion in the week to Wednesday, the largest inflow in three months. However, the firm warns that “the bad news is global tapering has begun”.
As such, that could see bond/real yields start to march higher eventually and weigh on gold as well. Adding that the stronger the macro environment is in Q2/Q3, the quicker and bigger the taper will be from major central banks.
This not just only applies to gold if you consider the context. Obviously, the Fed is the key one to watch here and if they start to move towards that direction later in the year, it will also present a world of hurt for risk assets in general.
That said, if the Fed doesn’t “go with the plan” and sticks to its guns as we approach Jackson Hole in August, perhaps bond markets will have some rethinking to do.
China April exports +32.3% y/y (US dollar terms)
China trade balance data for April 2021, surplus of 276.5bn yuan
Exports
- +32.3% y/y in USD terms
- +22.2% y/y in yuan terms
Imports
- +43.1% y/y in USD terms
- +32.2% y/y in yuan terms
China’s exports to the US +49.3% (yuan terms).
Do note that April 2020 was a tough month for China, the COVID-19 outbreak impacting. This has led to very strong y/y figures (base effects). Nevertheless, still great numbers.
CNH – offshore yuan at its strongest since late February
There is no stopping the yuan, the PBOC set the reference rate for onshore (CNY) stronger again today.
CNH is gaining further during Friday trade hitting his (ie lows for USD/CNH) not seen since late Feb. USD softness is one factor, the Fed continues to insist it will not be tightening for a good while to come (despite some concerns raised in its stability report out earlier in this season)
USD/CNH:
Interesting definition. From ‘The Sophisticated Investor’ – Burton Crane 1959.
