ECB, earnings and geopolitical escalations By Reuters

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© Reuters. FILE PHOTO: The headquarters building of the European Central Bank (ECB) in Frankfurt is seen

1 / ECB DAY The European Central Bank meets on Thursday and will likely come under pressure from signs of divisions over the future pace of bond purchases, which have been intensified recently to prevent a rise in borrowing costs from derailing the Recovery. The head of the Dutch central bank, Klaas Knot, believes that the acceleration is temporary, while the director of the ECB, Christine Lagarde, says that the economy is still “on crutches” and that the stimulus cannot be withdrawn. The euro zone is still dealing with lockdowns and a third wave of COVID-19, but business activity appears to be holding on. Friday’s April Flash Purchasing Managers Index should provide new clues to the outlook. Signs of a rapid recovery could raise questions about when the ECB will slow bond buying, testing the recent bond market calm. – ECB’s Lagarde says Eurozone economy remains on crutches Charts: ECB Bond Buying – 2 / GEOPOLITICS GALORE The administration of US President Joe Biden imposes sanctions on Russia has served as a powerful reminder that geopolitical tensions are very much alive. The immediate impact on the market appears to have been somewhat attenuated, but few doubt that the restrictions, including restrictions on Russia’s sovereign debt, mark a turning point and will have long-term effects. Elsewhere, China’s big markets are closely watching the first summit between Biden and Japanese Prime Minister Yoshihide Suga and a possible joint statement that could refer to Taiwan for the first time since 1969. So far, investors have not they have valued a lot of risk from the sudden surge in China. maritime activities near Taiwan, but the prospect of an embittered China is causing Japanese stocks to pause. -As Suga heads to the US, Japanese stocks with ties to China take a beating Charts: China, Russia, Ukraine CDS – 20Russia% 20Ukraine% 20CDS.PNG 3 / FIRST FAANG Netflix (NASDAQ 🙂 reports first-quarter results on Tuesday. It is the first of FAANG’s shares: Facebook (NASDAQ :), Amazon (NASDAQ :), AAPL Netflix and Alphabet, parent of Google (NASDAQ :), and others will follow suit in the coming weeks. Netflix, the darling of stay-at-home stocks, shone through the pandemic. But with vaccines in full swing and consumers eager to get out again, the transmission giant may be approaching darker days. Still, recent efforts to crack down on password sharing could boost subscriber growth. The stock hit a record on January 20, just after fourth-quarter results, but has since declined. Options markets are pricing in a 7% post-earnings move in Netflix shares. That would propel Netflix near the all-time high of $ 593.29 in January, and could well help growth stocks regain their appeal. – Investors Keep Faith in US Value Stocks As Technology Rolles Back Charts: Netflix’s Earnings Share Movement – png 4 / GO EUROPE INC Companies such as Nestlé, ASML and Renault (PA 🙂 will start the European results season. An overall profit increase of 56% is forecast, marking Europe’s best quarter in recent history and pulling it out of a COVID-19-induced recession with an exceptional performance against US companies. earnings increase 25%. The bar is high and with the index at record highs, disappointment can be hard to avoid. However, investors are confident that Europe Inc will pull it off as strong stimulus boosts the global economy, overcoming setbacks in vaccine launch. Perhaps reflected by the 6-month streak of earnings improvement, with shares in luxury giant LVMH climbing all-time highs on Wednesday after broken numbers. – LVMH shares hit record high after strong sales figures Charts: European earnings forecast 2017 2021 – 5 / UK POST-LOCKDOWN The next few days offer the first real sense of how the UK economy has fared since it started to come out of lockdown. A rapid launch of vaccines, which has overshadowed most major rivals, and falling COVID-19 infection rates make Britain a litmus test to determine how confidently businesses and consumers will respond with savings to a reopening of the economy. So a series of data including March retail sales, inflation, employment figures, and flash purchasing managers’ index surveys for April released as of Tuesday should shed light on how ready consumers are. and businesses to start spending again. The inflation figures will also be of interest after the Bank of England’s chief economist, a policy hawk who raised the alarm on inflation and has remained optimistic about a post-COVID-19 recovery, announced that he would resign in June. . – The Bank of England’s Candid and Cautious Chief Inflation Economist to Resign from Graphics: UK Services PMI and Home Savings – 20chart.PNG