Earnings take the wheel as markets navigate tariff noise and mixed European data

Notes/observations

- European stock markets start the day higher, though the FTSE later slipped slightly. Most Asian markets gained, but the Nikkei was closed for a holiday.

- Market mood improved slightly due to US indications of easing auto tariffs, possibly starting Tuesday, to reduce tariffs on foreign parts for US-built cars. Focus is shifting to corporate earnings and major economic data, with S&P 500 Q1 earnings expected to grow steadily, though tariff uncertainties are clouding company outlooks.

- In Canada, Mark Carney’s Liberals won the most seats but need coalition partners; Tier1 analysts expect new Canadian govt to push a ~2 % GDP deficit stimulus while renegotiating the USMCA and rolling out technocratic reforms.

- Regarding economic data, German consumer confidence for May rose to -20.6, beating forecasts. UK retail price inflation edged up to -0.1% y/y in April, driven by food inflation at 2.6%. Spain’s initial CPI fell to 2.2% y/y, slightly above expectations. Spain’s Q1 GDP growth eased to 0.6%, with projections indicating a further slowdown due to tariff concerns.

- Hefty amount of EU earnings, HSBC climbed 2.2% after exceeding Q1 expectations and announcing a $3B buyback; AstraZeneca dropped ~9% after halting a key trial; BP fell 4% due to weaker Q1 profits; Associated British Foods slid 8.8% despite steady full-year guidance. Deutsche Bank and Novartis advanced, while Porsche and Volvo Car declined after disappointing results.

- Asia closed mixed with ASX200 outperforming +0.9%. EU indices -0.4% to +0.8%. US futures +0.2-0.3%. Gold -0.9%, DXY +0.3%; Commodity: Brent -1.6%, WTI -1.6%; Crypto: BTC +0.2%, ETH +1.3%.

Asia

- South Korea Mar Retail Sales Y/Y: 9.2% v 4.4% prior.

- China govt said to have advanced this year's stimulus plans but was holding off on fresh measures as it tried to maintain composure, betting on Washington blinking first in a protracted trade war.

- New Zealand Fin Min Willis stated that the Treasury to cut GDP growth forecasts for 2025 and 2026 US and China tariffs would slow global growth which would impact the Govt books.

Europe

- UK Apr BRC Shop Price Index Y/Y: -0.1% v -0.2%e.

- Spain declared a state of emergency as large areas face a night without power after a mystery outage hit Spain and Portugal.

Americas

- Pres Trump said to 'soften blow' of auto tariffs; Set to modify tariffs on foreign autos; Changes would aim to prevent stacking on top of other tariffs he has imposed. Means that automakers paying the tariffs would not be charged for other duties, such as those on steel and aluminum.

- Treasury Sec Bessent stated that he believed to be in agreement on the budget with the House and Senate; Hoped to have the tax portion done by July 4th.

- Treasury Apr to Jun estimated net marketable borrowing will be $514B v $123B initial estimate.

- Canada Ruling Liberals win election (as expected), re-elected to 4th term.

Energy

- Iran said to be pitching a trillion USD investment opportunity to US during nuclear talks aimed at easing sanctions and attracting US firms to its energy and nuclear sectors.

- US insisting Iran cannot develop nuclear weapons so final outcome is still uncertain.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.31% at 524.84, FTSE +0.04% at 8,421.10, DAX +0.71% at 22,414.43, CAC-40 +0.01% at 7,574.35, IBEX-35 -0.36% at 13,398.68, FTSE MIB +0.81% at 37,770.00, SMI +0.66% at 12,108.80, S&P 500 Futures +0.23%].

Market focal points/key themes: European indices opened higher across the board and remained generally positive through the early part of the session; prospects of easing auto tariffs seen supporting market sentiment; sectors leading the way into the green include financials and materials; stocks stuck in the red include energy and health care; oil & gas subsector impacted as Brent heads back to $65/bbl; Alphawave confirms discussions of takeover from Qualcomm; focus on US trade balance coming out later in the day; earnings expected in the upcoming US session include UPS, General Moters, Alfa Laval and Visa.

Equities

- Consumer discretionary: Electrolux [ELUXB.SE] -10.5% (results; cut North America market outlook), Associated British Foods [ABF.UK] -7.0% (results), Lufthansa [LHA.DE] -1.0% (results), HelloFresh [HFG.DE] +9.0% (results) - Consumer staples: Carlsberg [CARLB.DK] -1.5% (results) - Energy: BP [BP.UK] -4.5% (results) - Financials: Deutsche Bank [DBK.DE] +2.0% (results), HSBC Holdings [HSBA.UK] +2.5% (earnings; buyback) , BBVA [BBVA.ES] -1.5% (results) - Healthcare: Novartis [NOVN.CH] +0.5% (results) - Industrials: Volvo Cars [VOLCARB.SE] -10.0% (earnings; cost cuts; withdrew outlooks), Porsche [P911.DE] -5.5% (earnings; cut outlook) - Technology: Capgemini [CAP.FR] +8.0% (earnings; "has not seen at this stage a material impact on client decisions") - Materials: Norsk Hydro [NHY.NO] -1.5% (results).

Speakers

- ECB’s Cipollone (Italy) stated that tariffs might prove disinflationary for Europe. Further signs that geopolitical considerations were increasingly influence decisions to invest in gold. USD role in trade and financing could weaken and see multiple currencies compete for reserve status.

- Czech Central Bank (CNB) Vice Gov Zamrazilova stated that monetary policy might need to remain stricter than it would otherwise need to due to higher external risks.

Currencies/fixed income

- FX price action was listless despite the rash of economic releases in the session.

- EUR/USD hovering around the 1.14 level as Spanish CPI came in a tad hotter-than-expected and remaining just above the ECB target.

- USD/JPY drifted lower to test 142.40 with focus on the upcoming BOJ rate decision this week. The recent strength in the yen could provide the BOJ with enough rationale to keep policy steady for now.

- 10-year German Bund yield at 2.50% and 10-year Gilt yield at 4.51%. 10-year Treasury yield at 4.23%.

Economic data

- (NL) Netherlands Apr Producer Confidence: -3.3 v -1.5 prior.

- (DE) Germany May GfK Consumer Confidence: -20.6 v -25.8e.

- (SE) Sweden Mar GDP Indicator M/M: 0.0% v 0.6% prior; Y/Y: +1.1% v -0.3% prior.

- (SE) Sweden Q1 GDP Indicator Q/Q: 0.6% v 0.2%e; Y/Y: % v 1.6%e.

- (SE) Sweden Mar Household Lending Y/Y: 2.1% v 1.9% prior.

- (SE) Sweden Mar Trade Balance (SEK): 12.8B v 15.0B prior.

- (SE) Sweden Mar Retail Sales M/M: % v 0.1% prior; Y/Y: % v 2.8% prior.

- (SE) Sweden Feb Non-Manual Workers’ Wages Y/Y: % v 4.2% prior.

- (FI) Finland Feb Final Trade Balance: -€B v -€0.2B prelim.

- (NO) Norway Mar Retail Sales (with auto/fuel) M/M: +0.6% v -0.1% prior.

- (HU) Hungary Mar PPI M/M: % v -0.4% prior; Y/Y: 7.3% v 8.2% prior.

- (ES) Spain Q1 Preliminary GDP Q/Q: 0.6% v 0.7%e; Y/Y: 2.8% v 3.1%e - (ES) Spain Apr Preliminary CPI M/M: 0.6% v 0.4%e; Y/Y: 2.2% v 2.0%e; CPI Core Y/Y: 2.4% v 2.3%e.

- (ES) Spain Apr Preliminary CPI EU Harmonized M/M: 0.6% v 0.3%e; Y/Y: 2.2% v 2.0%e.

- (SE) Sweden Apr Consumer Confidence: 81.6 v 89.8 prior; Manufacturing Confidence : 99.6 v 96.7 prior; Economic Tendency Survey: # v 95.2 prior.

- (TR) Turkey Mar Unemployment Rate: 7.9% v 8.2% prior.

- (TR) Turkey Apr Economic Confidence: 96.6 v 100.8 prior.

- (EU) Euro Zone Mar ECB 1 Year CPI Expectations: 2.9% v 2.5%e; 3 Year CPI Expectations: 2.5% v 2.3%e.

- (EU) Euro Zone Mar M3 Money Supply Y/Y: 3.6% v 4.0%e.

- (IT) Italy Apr Consumer Confidence: 92.7 v 94.1e; Manufacturing Confidence: 85.7 v 85.9e; Economic Sentiment: # v 93.3 prior.

- Far East Summary.

- (PT) Portugal Apr Consumer Confidence: -17.9 v -16.0 prior; Economic Climate Indicator: # v 2.4 prior.

- (EU) Euro Zone Apr Economic Confidence: 93.6 v 94.5e; Industrial Confidence: -11.2 v -10.4e; Services Confidence: 1.4 v 2.0e; Consumer Confidence (final): -16.7 v -16.7 advance.

- (BE) Belgium Q1 Preliminary GDP Q/Q: 0.4% v 0.2% prior; Y/Y: 1.1% v 1.1% prior.

- (IT) Italy Feb Industrial Sales M/M: -0.4% v +3.8% prior; Y/Y: -1.5% v +1.7%prior.

- (IS) Iceland Apr CPI M/M: 0.9% v 0.4% prior; Y/Y: 4.2% v 3.8% prior.

Fixed income issuance

- (FR) France Debt Agency (AFT) opened its book to sell EUR-denominated Jun 2049 Green Oat; guidance seen +15bps to 2044 Oat.

- (FI) Finland opened book to sell EUR-denominated Sept 2035 RFGB bond via syndicate; guidance seen +54bps to mid-swaps.

- (DK) Denmark sold total DKK200M in 3-month and 6-month Bills.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 3-month Bills; Avg Yield: 2.03% v 2.03% prior; Bid to cover: x v 1.91x prior.

- (UK) DMO sold £900M in 1.25% Nov 2054 Inflation-linked Gilts (UKTi); Areal Yeld: 2.175% v 2.126% prior; bid-to-cover: 3.31x v 3.06x prior.

- (IT) Italy Debt Agency (Tesoro) sells total €7.5B vs. €6.5-7.5B indicated range in 5-year and 10-year BTP Bonds.

- Sold €3.5B vs. €3.0-3.5B indicated range in 2.95% July 2030 BTP bonds; Avg Yield: 2.74% v 3.05% prior; Bid-to-cover: 1.52x v 1.58x prior.

- Sold €4.0B vs. €3.5-4.0B indicated range in new 3.60% Oct 2035 BTP bonds; Avg Yield: 3.62% v 3.83% prior; bid-to-cover: 1.58x v 1.66x prior.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Apr 2033 Floating Rate Notes (CCTeu); Real Yield: 3.27% v 4.11% prior; bid-to-cover: 1.66x v 1.74x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Apr CPI M/M: No est v -0.1% prior; Y/Y: No est v 2.9% prior.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2032, 2037 and 2053 bonds.

- (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE’s Ramsden.

- 06:00 (IL) Israel Feb Manufacturing Production M/M: No est v -3.0% prior.

- 06:00 (IE) Ireland Q1 Final GDP Q/Q: No est v 3.6% prelim; Y/Y: No est v 9.2% prelim.

- 06:00 (IE) Ireland Mar Retail Sales Volume M/M: No est v 0.7% prior; Y/Y: No est v 1.8% prior.

- 06:00 (IT) Italy Mar Hourly Wages M/M: No est v 0.1% prior; Y/Y: No est v -0.6% prior

- 06:00 (EU) ECB allotment in 3-month LTRO tender.

- 06:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (BR) Brazil Apr FGV Inflation IGPM M/M:-0.1%e v -0.3% prior; Y/Y: 8.1%e v 8.6% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 6.50%.

- 08:00 (BR) Brazil CONAB Sugarcane Production.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Mar Advance Goods Trade Balance: -$143.0Be v -$147.8B prior (revised from -$147.9B).

- 08:30 (US) Mar Preliminary Wholesale Inventories M/M: 0.7%e v 0.3% prior; Retail Inventories M/M: 0.3%e v 0.1% prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) Feb FHFA House Price Index M/M: 0.3%e v 0.2% prior.

- 09:00 (US) Feb S&P CoreLogic House Price Index (20-City) M/M: 0.35%e v 0.46% prior; Y/Y: 4.70%e v 4.67% prior; HPI (overall) Y/Y: No est v 4.08% prior.

- 09:00 (CL) Chile Mar Unemployment Rate: 8.6%e v 8.4% prior.

- 10:00 (US) Mar JOLTS Job Openings: 7.500Me v 7.568M prior.

- 10:00 (US) Apr Consumer Confidence: 86.7e v 92.9 prior.

- 10:00 (EU) ECB's Holzmann (Austria).

- 10:00 (HU) Hungary Central Bank post rate decision press conference.

- 10:30 (US) Apr Dallas Fed Services Activity: No est v -11.3 prior.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 12:30 (CH) SNB's President Schlegal in Geneva.

- 13:30 (BR) Brazil Mar Central Govt Budget Balance (BRL): +1.5Be v -31.7B prior.

- 15:00 (AR) Argentina Feb Wages M/M: No est v 2.9% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 5.00%.

- 19:00 (KR) South Korea Mar Industrial Production M/M: 0.3%e v 1.0% prior; Y/Y: 3.0%e v 7.0% prior; Cyclical Leading Index Change: No est v 0.1% prior.

- 19:01 (UK) Apr Lloyds Business Barometer: No est v 49 prior; Own Price Expectations: No est v 61 prior.

- 19:50 (JP) Japan Mar Preliminary Industrial Production M/M: -0.4%e v +2.3% prior; Y/Y: 0.7%e v 0.1% prior.

- 19:50 (JP) Japan Mar Retail Sales M/M: -0.6%e v +0.4% prior (revised from %); Y/Y: 3.6%e v 1.3% prior (revised from %);Dept. Store, Supermarket Sales Y/Y: No est v 0.6% prior.

- 21:00 (NZ) New Zealand Apr ANZ Business Confidence: No est v 57.5 prior; Activity Outlook: No est v 48.6 prior.

- 21:00 (PH) Philippines Mar Trade Balance: -$4.3Be v -$3.2B prior; Exports Y/Y: 5.5%e v 3.9% prior; Imports Y/Y: No est v -1.8% prior.

- 21:30 (CN) China Apr Manufacturing PMI (Govt Official): 49.7e v 50.5 prior; Non-manufacturing PMI: 50.6e v 50.8 prior; Composite PMI: No est v 51.4 prior.

- 21:30 (AU) Australia Mar CPI Y/Y: 2.2%e v 2.4% prior; CPI Trimmed Mean Y/Y: No est v 2.7% prior.

- 21:30 (AU) Australia Q1 CPI Q/Q: 0.8%e v 0.2% prior; Y/Y: 2.3%e v 2.4% prior- 21:30 (AU) Australia Q1 CPI Trimmed Mean Q/Q: 0.6%e v 0.5% prior; Y/Y: 2.8%e v 3.2% prior.

- 21:30 (AU) Australia Q1 CPI Weighted Median Q/Q: 0.7%e v 0.5% prior; Y/Y: 2.9%e v 3.4% prior.

- 21:30 (AU) Australia Mar Private Sector Credit M/M: 0.5%e v 0.5% prior; Y/Y: No est v 6.5% prior.

- 21:45 (CN) China Apr Caixin PMI Manufacturing: 49.8e v 51.2 prior.

- 22:00 (SG) Singapore Mar M2 Money Supply Y/Y: No est v 6.3% prior; M1 Money Supply Y/Y: No est v 9.5% prior.

- 23:00 (TH) Thailand to sell THB7.0B in Jun 2072 Bonds.