Relative calm in markets on peace talk hopes

Good morning

European and US markets were mixed yesterday but Asian markets made gains again overnight, the Nikkei was up over 2%, winning back losses made since the start of the Iran war.  The US dollar remains on the back foot with GBPUSD holding in the high-1.35s and EURUSD just touching 1.1800, while USDJPY sits at 158.80 having had a brief test to 158.25 overnight on comments from Japan FinMin Katayama who said she had held thorough talks with US TrySec Bessent over FX levels and remained ready, willing and able to take ‘bold’ action if necessary. 

UK GDP this morning beat expectations at 0.5% although this comes from pre-Iran war and as such is perhaps too backward looking to be of much use.  GBP was barely moved, GBPEUR is just above 1.1500 having dipped to 1.1490 yesterday but that is hardly news.  Meanwhile ECBs Schnabel has said ECB are well-placed with low rates and low inflation which will give them time to assess the impact of the Middle East without being pushed into any rash decisions. 

Oil prices are pretty stable with WTI at $92 and Brent at $95.50 as the US blockade of Iranian ports continues.  Iran has warned that they will block movement in the Persian Gulf, Sea of Oman and Red Sea if the blockade continues but with peace talks due to take place there is a hope that Iran will allow ships to pass through the Strait of Hormuz without interference. Optimists are looking for a peace deal but this hasn’t stopped the Pentagon from reportedly contacting GM and Ford with a view to expanding production of weapons and military hardware. 

The main mover has been AUD which initially found support on generally better risk sentiment but was pushed further by a higher inflation figure overnight, coming in at 5.9% against 5.2% last time.  AUD strength was also helped by some reasonable employment data which saw a headline gain of 18k jobs, driven by a rise in full-time employment at the expense of part-time jobs, the reverse of last month’s release.  AUDUSD rose to within a few pips of 0.7200, almost matching the high we saw in March, which in turn was the highest since June 2022.  AUDNZD is up to 1.2160 and GBPAUD down to 1.8880 from a high this week near 1.9150.  RBA rate rises still firmly on the agenda.

In other news, US footwear firm Allbirds had a pretty spectacular day’s trading yesterday.  It announced back in March that it had sold its footwear business for $39m and yesterday announced it was rebranding as NewBird AI and will offer AI infrastructure to firms currently unable to access the computing power they require.  The stock price jumped form around $2.50 to around $24 before closing $17, nearly a 600% rise.   As with anything, timing is key.  Had you bought in the last few months you’d be very nicely in the money but long-term holders will have seen Allbirds share price hit a high of almost $578 in late 2021 giving it a market cap of some $4bn.

In sport, Arsenal scraped through to the Champions League semi-finals with a dull 0-0 draw at home to Sporting, while Bayern Munich also proceeded to the next round by beating Real Madrid 4-3 helped by two very late goals in a thrilling match.  Bayern will face PSG in the semi-finals, Arsenal will take on Atletico Madrid.  Having made it to the semi-finals, Arsenal’s attention now turns to Sundays key Premier league match against title rivals Man City.

This evening Aston Villa and Notts Forest are playing in the Europa League, Villa with a 3-1 lead after the first leg, Forest are level after a 1-1 draw at Porto.  Meanwhile Crystal Palace take a three goal advantage into their UEFA Conference League match against Fiorentina. 

EU inflation numbers this morning but they usually come and go with the minimum of fuss.  Once again we have several central bank speakers on the agenda, with little in the way of major data.  Tomorrow’s calendar looks pretty quiet as well but we’ll be watching for any news form Iranian peace talks.

Have a great day…

-  10.00 EU HICP

-  11.00 Buba monthly report

-  12.30 ECB minutes

-  13.30 US philly fed survey, initial jobless claims

-  13.35 Feds Williams speaks

-  14.00 ECBs Schnabel speaks

-  14.15 US industrial production

-  15.35 Feds Miran speaks

-  16.40 BoEs Taylor speaks

-  17.45 ECBs Nagel speaks

-  19.30 ECBs Lane speaks

-  20.00 BoEs Taylor speaks