German DAX up marginally. Francis CAC and UK FTSE 100 down marginally
The European shares are ending the day with mixed results. The provisional closes are showing:
- German DAX, +0.2%
- France’s CAC, -0.2%
- UK FTSE 100, -0.2%
- Spain’s Ibex, +0.2%
- Italy’s FTSE MIB, +0.15%
In the European debt market, the benchmark 10 year yields are all trading to the downside. Italy is leading the way with a decline -6.4 basis points. France’s 10 year is down – -3.8 basis points.
In the forex, the snapshot of the market currently shows the EUR as the strongest, while the GBP is the weakest. The USD has gained in the NY session and trades near NY session highs vs the EUR, GBP, CHF, CAD, AUD and NZD.
Getting to know NFTs
Non-Fungible Tokens (NFTs) are the latest trend in the crypto and digital asset world. But before we analyze their use, let’s dive into some basic definitions in order to be able to understand the scope of this article.
“Fungibility” is a term referring to things that you use on a daily basis. Consider these things to be physical money… or even Bitcoin. Therefore, since bitcoin is fungible this means that you can exchange one for another and get exactly the same thing; only instead of holding money, they use technology to buy or sell digital collectibles, including art, music, video games, concert tickets or anything else related and comes in digital form.
The same term, also refers to the fact that something is original and cannot be replaced by anything else.
NFTs became popular in 2017 with the release of the game called “CryptoKitties”, which allowed players to purchase and “breed” limited-edition virtual cats (eye-roll!) that “lived” forever on the Ethereum blockchain. (more…)
Remarks by Ifo economist, Klaus Wolhrabe
- German economy should grow 2.6% in Q2 vs Q1
- Sees German economy growing 2.8% in Q3
- Expectations in tourism, hospitality has exploded in May
- High hopes for a good summer
- Rising costs for raw materials are increasingly being passed on
- Many companies are saying that they plan to hike prices
This follows the Ifo report earlier. I’m bolding the comments which are tied to inflation, as that may be something for the ECB to consider in case price rises stay the course.
Besides that, the message is one of optimism towards the outlook in 2H 2021 with many anticipating a summer reopening and travel across the region.
There hasn’t been much pushback or warnings against a higher currency by the Chinese local media
While the onshore yuan is still holding just above 6.40 against the dollar, the offshore yuan is already starting to test waters below that and so far the Chinese media is looking rather sanguine about the whole thing. This from the Global Times:
Offshore yuan exchange rate has advanced to 6.3960 yuan against the US dollar, on Tuesday, the highest level since June 2018, reflecting China’s promising economic outlook.
That doesn’t really sound like Chinese officials are going to offer much pushback to the latest moves but we will have to see what the PBOC has in mind when it comes to the fixings over the next few days to be certain of anything.
But if so, then there might be room for the dollar to keep weaker for now especially with technicals also starting to be breached against some major currencies.
Slightly more positive tones in early trades
- German DAX futures +0.2%
- UK FTSE futures +0.2%
- Spanish IBEX futures +0.2%
This mirrors the mood in US futures, where S&P 500 futures are up 0.3% on the day.
The positive mood carries over from Asia with the Nikkei closing up by 0.7% while Chinese equities are performing relatively strong with the Hang Seng up 1.6% and Shanghai Composite up 2.3% near session highs at the moment.
Latest data released by Destatis – 25 May 2021
- GDP (non-seasonally adjusted) -3.4% vs -3.3% y/y prelim
- GDP (working day adjusted) -3.1% vs -3.0% y/y prelim
The preliminary report can be found here. A light change to the initial estimate but nothing that really affects the overall picture and outlook with the market more focused on how things are going to shape up in 2H 2021.
A couple of light releases to move things along
The dollar remains a little vulnerable to start the week, with EUR/USD hovering around its 25 February high @ 1.2243 and that remains a key resistance point to watch for now.
GBP/USD is also closing back in on 1.4200 though further resistance is seen from the 24 February high @ 1.4241 so that will be one to be mindful about moving forward.
Major currencies are little changed for now though the dollar is keeping steadier after having seen USD/CNY near 6.40 before reports of intervention by China authorities.
US equities had a solid session yesterday with futures also keeping slightly higher for now, with the Fed continuing to pledge patience on policy and that inflation is likely to be transitory; though we’ll see if there is anything new during the week.
0600 GMT – Germany Q1 final GDP figures
The preliminary report can be found here. The final release today should not be of any impact as the market focus remains on the 2H 2021 outlook.
0800 GMT – Germany May Ifo business climate index
Prior release can be found here. Business sentiment is expected to pick up with expectations in particular likely to show marked increase in optimism considering the vaccine progress and recent virus trend over the past two weeks.
0800 GMT – SNB total sight deposits w.e. 21 May
Your weekly check of the deposits kept at the SNB by Swiss banks. This data is a proxy for FX interventions.
1000 GMT – UK May CBI retailing, total distributive reported sales
Prior release can be found here. The readings here are an indicator of short-term trends in the retail and wholesale sector of the UK economy.