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After the better start to March in Asia yesterday, markets reversed course, with the Hang Seng down 0.9% and the Nikkei flat. US indices also had a mixed day yesterday, thanks to a fresh rise in Treasury yields. Inflation and interest rates are once again the major concern of investors around the globe, which has stymied the rally in global equities. Only the FTSE 100 seemed immune yesterday, following comments from the BoE governor that suggested there was no pressing need to keep raising rates. Today sees eurozone inflation data released, keeping the focus on global prices. 

 

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Comments from the Atlanta Federal Reserve chief about a slowing of rate hikes helped Asian indices to move higher, reinforced by optimism about China's parliamentary meeting next week. Raphael Bostic said that he preferred slower rate hikes to help support the economy, while investors are looking for China to support its economy with generous stimulus when it sets its growth target for 2023. As the final session of the week begins, the US ISM non-manufacturing PMI is the main event of the day, with European futures pointing higher while their US peers edge lower. 

 

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While Chinese markets continued to shed ground, other indices in Asia made headway, rising despite yet another rate increase by the RBA. Australian interest rates reached a fresh ten-year high, moving to 3.6%, up another 25bps. However, references to further rate 'increases' instead of 'tightening' were interpreted in dovish fashion, as markets begin to contemplate a more cautious outlook, and the Australian dollar dropped back from the highs against the dollar seen last Friday. The main focus today will be testimony to lawmakers by Jerome Powell, which may provide some concrete hints about the next few moves in US interest rates. An ECB policymaker called for a fresh push higher in eurozone rates yesterday, reminding investors that we have not yet reached the end of the global hiking cycle. Futures point towards a muted start across European and US indices as markets await Powell's comments.

 

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The dollar is carrying all before it once again, as markets react to yesterday's testimony from the Fed chairman. Single-handedly, Jerome Powell has caused expectations around the next Fed meeting to move to a 50bps hike from 25bps, an impressive performance. Given the strength of his hawkish views it seems that, barring a sudden and dramatic deterioration in the data, the US central bank keep hiking rates at 50bps in May and June. Powell's testimony continues today, though it seems unlikely that he can provide anything more dramatic than yesterday's comments. The Bank of Canada will be the first to try its luck against the dollar this afternoon, but given that it is expected to hold rates at their current levels it is unlikely that they can give the Loonie much of a boost. 

 

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Markets come into the payrolls data in jittery mood, as losses across stocks intensify. The jobs data was already a key event, given how important it is expected to be for the upcoming Fed decision, but with bank stocks plunging in the US yesterday and then in Asia overnight overall sentiment is suddenly much more fragile. Startup lender SVB Financial and the travails of crypto bank Silvergate have suddenly brought worries about the banking system to the fore. While this is not a rerun of 2008, it has hit markets just as they were digesting Powell's hawkish turn from earlier in the week. The pace of job creation in the US is expected to slow from last month's impressive number, while wage growth and the unemployment rate are forecast to hold steady. 

 

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US authorities have come to the rescue of the banking system in the US, stepping in to cover all depositors at failed banks SVB and Signature, while providing a new programme (the Bank Term Funding Program, or BTFP) for banks that will allow them to access liquidity to meet depositor needs. This has now thrown open the question of what the Fed will do at its next meeting and subsequent policy decisions. One view appears to be that hikes are now off the table, just a week after Jerome Powell's appearance in front of lawmakers saw the chances of a 50bps hike surge. Others might argue that this actually allows for more rate hikes, given that the problems for banks caused by higher interest rates are now accounted for by the new lending programme. It is likely to be a volatile week while the ramifications of the weekend's events become clear. 

 

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The atmosphere has calmed since Monday, but remains febrile given the potential for more bank problems as well as the entrenched high inflation in the US. Stocks recovered yesterday but a mixed open is expected today for the US and Europe. Attention now moves to the UK Budget, where measures designed to support renewed economic growth are expected, and then to tomorrow's ECB meeting. This is still forecast to deliver a 50bps rate hike.

 

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A wave of selling engulfed European markets yesterday, as the woes of Credit Suisse took over as the main driver for risk off moves. Asian stock markets saw fresh selling too, as the prospect of a European banking crisis worried investors. Today sees the ECB release its latest decision, and markets seem to expect the bank to ease the tempo of its hiking in response to the turmoil this week. US claims are also published today, another key piece of data ahead of next week's Fed meeting. 

 

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The banking crisis appears to be easing, as troubled lenders First Republic in the US and Credit Suisse (CS) in Europe receive support. The SNB will provide CS with a liquidity backstop, and First Republic will receive a $30 billion deposit from other major US banks. This allowed markets to shrug off the ECB's 50bps hike, the impact of which was also dimmed by hints that the bank will not look to hike again in the near future. Oil prices have rallied overnight from their one-year lows after reports of a meeting between Saudi Arabia and Russia that may have discussed stabilising the market. After the rollercoaster of the past two weeks, markets will be pleased to see a quiet day ahead, with just the Michigan confidence data on the agenda. 

 

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Post-Fed strength in markets was somewhat undermined by comments from Janet Yellen about the US not planning to insure all uninsured bank deposits, prompting a reversal on Wall Street. But stocks have managed to claw their way higher in Asia, even though the prospect of further Fed hikes still hangs over global markets. Attention now turns to the Bank of England and the Swiss National Bank. The former will find itself under more pressure following the rise in UK inflation yesterday, while the latter will find itself inevitably focussing on the health of the Swiss banking system following the merger of Credit Suisse and UBS, though it is expected to hike by 50bps. European futures are slightly lower, while US futures point towards a more positive start. 

 

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The pace of activity slowed in global markets overnight, as a sense of exhaustion after a manic week set in. The tone was generally cautious, with most indices in Asia ending the session in the red, which follows on from yet another volatile day in the US. This week has seen the 2-10 yield curve un-invert following an earlier inversion, normally a sign that a recession is on its way as short-term yields drop sharply in anticipation of rate cuts. Japanese inflation excluding food and energy rose to a forty-year high of 3.5%, while banks continue to borrow heavily at the Fed's discount window, a sign that stresses remain despite the actions taken by regulators. Today is flash PMI data, with figures released from around the world, as well as US durable goods data. 

 

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The weekend seems to have had a restorative effect on market sentiment, and the brief panic of Friday over Deutsche Bank seems to have been a moment of madness that has now passed. A calmer session in Asia saw a mix of gains and losses, but no cataclysmic selling to rival last Monday. In the US, First Citizens bank has bought Silicon Valley Bank, bringing that saga to a close. The main concern now is that the ongoing deposit flight from banks will result in a major contraction of lending activity, and push the global economy towards a recession. Today sees a quiet start to the week, with just the German IFO index on the calendar. 

 

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It was a broadly positive session in Asia overnight, with indices making gains. Alibaba's plan to split into six units is seen as marking the end of China's crackdown on the tech sector, providing the foundation for modest gains in tech stocks. European futures point towards a higher open after yesterday's indecisive session, despite growing recession fears. Geopolitical tensions are once again on the agenda, as the US House Speaker is expected to meet with the Taiwanese premier, a move likely to draw a response from China. Overall it seems like another day of limited macro drivers, with just pending home sales and crude oil inventories on the calendar. 

 

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Asian markets racked up another positive close overall, although the Nikkei came under pressure and ended down 0.5%. Banking crisis fears continue to ease, and while investors are still watching for any fresh pressure, they are certainly glad that the problem seems to have been dealt with. The focus now goes back to the broader economy, with US initial jobless claims and German CPI on the agenda for today, followed up by US PCE data tomorrow. Another positive open is expected for European markets. 

 

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The end of Q1 is upon us, and while it has been choppy, stocks are generally looking at a second consecutive quarter of gains. That they have managed this despite bank failures and continued interest rate hikes provides an interesting counterpart to the 'doom and gloom' commentary that is so much in evidence now. The impressive recovery from the lows of the past two weeks suggests that, for now at least, investors are likely to keep allocating funds back into equities, while an absence of further bank crises would help maintain a more positive atmosphere. Eurozone CPI and US PCE prices mean that the focus is still on inflation for the final day of the quarter, and after yesterday's drop in Spanish inflation hopes will be high that perhaps other signs of weakening price growth will be seen. 

 

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The first calm weekend in about a month was shattered by news of the surprise OPEC+ production cut. The organisation will cut around 1.16 million barrels, in response to declining prices. WTI and Brent surged in overnight trading, though both failed to hold early highs. Goldman Sachs raised its forecast for year-end to $95 for Brent, and other analysts argued that OPEC+ was attempting to put a floor under prices to stop further declines. After a strong end to Q1, the new quarter began on a more mixed footing, with losses in Hong Kong countering gains for the ASX 200 and the Nikkei. If this production cut results in a sustained rise for energy prices then it will bring inflation to the fore again, after a week in which it seemed that price growth was beginning to ease. Final PMIs around the globe are released today, with the US ISM manufacturing number out in the afternoon, though it seems oil will command all the attention today. 

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A more cautious tone prevailed in Asia overnight, as markets digested the drop in US job openings. Hopes that this might lead to a more dovish Fed were diminished by comments from FOMC member Mester, who said rates would still have to rise. A surprise 50bps hike from the New Zealand central bank also showed that the tightening cycle has not yet run its course. Risk appetite has drained away as markets approach this week's key US data, namely ADP payrolls and then non-farms on Friday. After the big gains that ended Q1, it is not surprising to see stocks slow their advances, though they have yet to go into reverse. Aside from the ADP data today, the ISM services PMI is also published. 

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Asian equity markets were mixed on Wednesday as caution dampened sentiment ahead of the release of the US FOMC minutes and March CPI report. Japan machinery orders fell in February and producer prices rose by the least in one and a half years. Nonetheless European equity indices are expected to open near recent highs and in case of the CAC 40 could reach a new all-time record high ahead of the start of the Q1 earnings season which begins on Friday with earnings for US banks such as JPMorgan and Citigroup. The greenback is muted while the price of oil holds its advance on tighter supplies with gold and silver extending their recent gains and the latter trading in near one-year highs.

 

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Aside from small gains for the Nikkei it was a generally cautious session in Asia overnight, with sentiment weighed down by the prospect of continued Fed hikes and the news that Softbank would sell most of its stake in Alibaba. Today is also the last day before earnings season gets underway, and markets will focus on this, especially given that US banks will make up the front rank of major earnings reports. The next move in US rates will depend heavily on credit conditions, so any commentary on this from banks will like drive market reaction into the second half of April. The dollar continues to weaken despite the expectations of more Fed tightening, as markets continue to expect a pause beyond the next meeting, and this has allowed the euro, sterling and others to drive higher, while also supporting oil prices. 

 

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Risk appetite had been on the wane for most of the week, but was given a shot in the arm yesterday following weaker US inflation data and a rise in jobless claims. Both of these provided just enough bad news to give markets fresh hope that the Fed will pause its hiking efforts beyond the next meeting, and so stock markets were able to finish up the day with gains, particularly in the US. Overnight, the Singapore central bank joined the ranks of those that have paused their hiking efforts, leaving rates unchanged. Today sees the release of US bank earnings, as reporting season gets into full swing. With estimates having been pruned in recent weeks and negative guidance abounding, there is the potential for some upside surprises, but the key for today will be the commentary around lending activity and credit conditions, particularly in the wake of March's banking crisis. 

 

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Strong earnings on Friday from US banks saw markets wobble, but a late surge in the US meant that Asian markets began the week in steady form, and futures are pointing higher for Europe as the new week gets underway. A quieter economic calendar means that the focus remains squarely on earnings, though today is a lull ahead of Goldman Sachs, Netflix and others tomorrow and into the rest of the week. In the UK the focus will be on inflation and employment figures as markets ponder what the next move will be from the Bank of England, though continued strength in sterling indicates the steady revival of confidence in the UK economy. 

 

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While Chinese GDP grew by more than expected for Q1, and retail sales there were also ahead of expectations, the news failed to inspire Asian markets, which were mixed at best. The prospect of a fresh wave of big earnings in the US today has kept sentiment in check, although futures have firmed up as the cash open nears. Stocks skirted any declines last week, and notably revived on Friday after a choppy reaction to JPMorgan earnings, so the focus today will be on whether they can continue to remain resilient in the face of a drumbeat of earnings reports. A sharp rise in the number of people claiming unemployment benefits and a higher unemployment rate shows that the UK economy might be entering a softer patch, but sterling has managed to rise off its overnight lows against the dollar. US banks like Goldman Sachs, along with earnings from Netflix and others, dominate the day. 

 

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Stock markets struggled in Asia overnight, after a mixed earnings report from Netflix which showed that it missed subscriber forecasts but hit the target on earnings and revenues. Asian indices were weaker overall as investors struggled to find a bullish catalyst to continue the drive higher from the March lows. After yesterday's wage data, today the pound has been given a further boost by stronger inflation data for the UK. Prices rose 10.1%, down from the previous month but above forecasts, while core CPI was also stronger than expected. This puts renewed pressure on the Bank of England to hike rates once more. Tesla earnings are published tonight, as well as weekly crude inventory data this afternoon. 

 

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The move higher in risk assets seems to have stalled again, as investors digest the latest round of earnings and await the next set of central bank decisions. Hawkish commentary from some ECB members, and higher inflation readings in the UK, have sent the message that the battle against higher prices is not done yet, and while economic data remains generally supportive, recession fears lurk in the background. Nonetheless, global indices have so far avoided any significant turn lower, holding their ground well. Tesla's quest for market share at the expense of profit margins has not gone down well with investors, and the stock is heading back to the March lows. As well as weekly jobless claims in the US and eurozone consumer confidence, earnings today include reports from American Airlines and AT&T among others. 

 

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Earnings season takes a breather today, as the world's financial markets focus on flash PMIs from around the globe. Over the last month, risk appetite has rebounded from the post-Silcon Valley/Credit Suisse lows, but the bounce has slowed in recent days as markets digest the first earnings reports for Q1. Now they shift back, if only for a day, to economic data. Growth fears are returning, and signs of softness in service PMIs may outweigh the expected recovery in the manufacturing equivalents. In Japan, core inflation rose by more than expected ahead of the BoJ meeting next week, but the Nikkei still managed a brief surge to an eight-month high. This morning's European PMIs are followed up by the US numbers this afternoon, as well as earning from Procter & Gamble. 

 

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Asian markets lost ground ahead of today's earnings from tech giants Alphabet and Microsoft, the beginning of a barrage of big-name earnings this week. Risk appetite has struggled to establish a clear direction, but this is hardly surprising given the mix of concerns about rate hikes and a recession and the busy earnings calendar this week. In addition, with the US looking to block chip sales to China another potential geopolitical crisis is looming. Today's earnings from Alphabet and Microsoft, plus General Motors, Visa and McDonald's, are accompanied by US consumer confidence and new home sales. 

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Stocks have been under pressure ahead of the FOMC decision, with Asian markets following their European and US peers lower. While a 25bps hike is still the broad expectation, there are concerns that still-strong inflation levels will force the Fed into being more hawkish. The looming debt ceiling crisis might well get a mention, but is unlikely to stay the Fed's hand. While First Republic has been rescued, the hunt is on for other victims, and regional US banks remain under pressure. Today also sees the release of the ADP report, resulting in a busy day for investors, with more big events scheduled for tomorrow and Friday. 

 

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Traders go straight from the Fed meeting and their 25-bps hike and pause to the ECB and their rate meeting today. A 25bps hike would leave the door open for more, while a 50bps hike, though ostensibly more hawkish, might then allow the bank to follow the Fed and pause on hikes. Meanwhile turmoil continues in regional US bank stocks, which fell sharply just minutes after Powell declared that the US banking system was sound, and in oil prices, which dived and then rebounded overnight. As if this was not enough, Apple reports earnings tonight, another closely-watched figure. Futures have recovered from their overnight lows, but a choppy day is expected. 

 

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Ongoing turmoil in US regional banking stocks continues to overshadow markets. It was a mixed session in Asia, with Hong Kong gaining and the ASX200 up slightly, while the CSI 300 fell 0.6%. Other markets in Japan and South Korea were closed for public holidays. PacWest has become the latest bank to be in discussions with potential investors, but there is a sense that the crisis will go on. US officials have been looking into trading activity in bank shares, after the wave of falls in regional banking stocks that has threatened to revive March's banking worries. Apple saw its earnings bolstered by iPhone sales, although Mac sales were weaker. Non-farm payrolls dominate the day, with job growth expected to slow from last month

 

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UK investors come back after the Coronation weekend to a market already focused on tomorrow's US CPI reading. There was little in the way of conviction across Asian markets, though the dollar held firm. Friday's impressive payrolls report generated plenty of risk appetite across global markets, but there was little of that in evidence on Monday or overnight. Aside from the inflation reading tomorrow, the still-extant banking crisis in the US and the rumbling debt ceiling problem in Washington remain the key issues for markets, especially now that many of the big hitters in the US have reported earnings. 

 

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