As earnings season heats up, Jim Sinegal from Morningstar, says that so far results from the finance sector have been disappointing "because of the legal expenses big banks have to pay". He thinks Wells Fargo has "most potential going forward".
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German IFO better than expected in April. The business climate index climbed to 111.2 from 110.7 last month while consensus had expected 110.4. The current assessment index was mostly unchanged at 115.3 from 115.2 and 115.6 expected, so the improvement in the headline index came from the expectations index, which rose to 107.3 from 106.4. Consensus had predicted a drop to 105.8. Overall a solid report made even better by the fact that it is the expectations index, which is the main driver.
French manufacturing confidence declined to 100 in April as expected. However the drop came about as a result of an upward revision to March from 100 to 101.
Overall business confidence also declined to 94 vs. 96 expected and 95 prior as the order outlook weakened while inventories rose. Not a good report.
The RBNZ hiked again, as expected, and slightly upped its rhetoric on the exchange rate. EURUSD may finally find a bit of direction today on the key German IFO survey and a Mario Draghi speech in Amsterdam.
It is very likely that the existing ranges in the majors remain intact ahead of next week's three ring show which includes the Federal Reserve Open Market Committee (FOMC) meeting, the US non-farm payrolls report and the month-end portfolio rebalancing flows.
Today’s key numbers to watch include updates on France’s Business Climate Indicator, Germany’s Ifo Business Climate Indicator, and US initial jobless claims.
New home sales plummets 14.5% month-on-month to 384,000 in March in the US, far from the consensus expectation of +2.3%. Furthermore the decline in new home sales in February was revised to 4.5% from 3.3%.
Sales declined most in the Midwest to 51,000 from 65,000, a drop of 21.5% m/m, followed by the West and South. The Northeast recorded a minor increase to 27,000 from 24,000.
While the report surprised consensus it would not come as a shock to those watching the housing starts series, which had been signalling a drop in sales (chart 1).
The latest purchasing manager indices for Europe suggest further economic growth and possibly improving employment – with only France going nowhere fast. At the same time, deflationary pressures keep on building, making the European Central Bank's decision to provide further monetary stimulus particularly hard.
Portugal has just finalised its first 10-year government bond auction in three years. The target of EUR 500-750 million was achieved (750mn) at an average yield of 3.5752% and a bid-to-cover ratio of 3.47.
