Forex News

Spain's trade shortfall narrowed slightly to EUR 2.4 billion in February 2024 from EUR 2.5 billion in the same month last year. It was the smallest trade deficit in eleven months, as imports slipped by 3.1% year-on-year to EUR 34.2 billion, mainly dragged down by lower purchases of raw materials (-20.9%), energy products (-19.8%), and chemical products (-9.5%). Similarly, exports fell by 3% to EUR 31.8 billion, primarily due to reduced shipments of chemical products (-24%), energy products (-17.5%), and non-chemical semi-manufactured goods (-7.9%).

Brent crude futures dipped below $87 per barrel on Friday amidst conflicting reports from Iranian and Israeli media regarding recent strikes. Earlier, the price had spiked to over $90 due to fears of a potential escalation in conflict between the two nations. Despite Israel's reported strikes on Iran, Iranian outlets denied the claims and emphasized the safety of the Isfahan nuclear facility. The Iranian military also stated they were not seeking retaliation. Traders had been on edge awaiting Israel's response to last weekend's aggression, with tensions further fueled by Iran's warnings against attacks on its nuclear sites. This uncertainty led to a more than 4% decrease in the Brent crude oil for the week, following a 0.7% decline in the prior period.

Greece’s current account recorded a deficit of EUR 3.16 billion in February 2024, wider than EUR 1.34 billion in the corresponding month of the previous year. The goods shortfall rose to EUR 3.10 billion from EUR 2.28 billion a year ago, with exports slipping 10.3% to EUR 3.91 billion and imports rising by 5.7% to EUR 7.02 billion. Moreover, the primary account balance shifted to a gap of EUR 0.28 billion from a surplus of EUR 0.51 billion; and the secondary income balance also swung to a deficit of EUR 0.15 billion compared with a surplus of EUR 0.1 billion in February 2023. On the other hand, the services surplus rose slightly to EUR 0.38 billion from EUR 0.35 billion.

Government bond yields are trading lower on Friday. Top losers are Russia 10Y (-9.50bps), Australia 10Y (-6.20bps) and Mexico 10Y (-5.55bps). Gains are led by South Africa 10Y (7.80bps), India 10Y (4bps) and South Korea 10Y (2.50bps).

The euro steadied around $1.065, hovering near its lowest point in five months, thanks to the European Central Bank's dovish stance in contrast to the Federal Reserve's approach and as investor sentiment favored safer currencies amid concerns regarding potential Middle East tensions escalation. ECB policymakers' statements hinted at a readiness to commence reducing borrowing costs as early as June, with market participants now foreseeing a total of three rate cuts by the end of 2024. Conversely, Federal Reserve officials conveyed that the US central bank is not eager to decrease interest rates, citing persistently high inflation and indications of economic resilience.

Spain's consumer confidence indicator rose to 82.5 in March 2024, the highest in seven months, from 78.5 in February. The positive uptick was driven by improved future expectations (89.1 vs 86.3 in February), and satisfaction with the current state of the economy (76 vs 70.1).

The IBEX 35 dropped to 10,630 on Friday, erasing previous gains and following the negative cue of its European peers, as the reported attack on Iran painted the markets red and triggered flight to safety. Additionally, the more restrictive stance by Fed members weighed on the sentiment. The largest falls were seen by Banco Sabadell (-2.9%), Unicaja (-2.7%), Sacyr (-2.5%), BBVA (-2.5%), Grifols (-2.4%), and Bankinter (-2.4%), Also, heavyweights Banco Santander and Inditex shed 1.8% and 1.6%, respectively. The index was on track to decline by 0.5% over the week, marked by escalated geopolitical tensions in Middle East and remarks from Fed and ECB officials.

Top currency losers are Mexican Peso (-1.67%). Gains are led by Swiss Franc (0.42%). In addition, there was a slight change on British Pound (0.04%), Euro (0.02%), Dollar Index (-0.06%) and Japanese Yen (0.13%).

The business confidence indicator in Hong Kong came in at +2 in the second quarter of 2024, edging up from +1 in the preceding three-month period. The proportion of respondents expecting to be better was 14% (vs 13% in Q1), while those anticipating a worse business stood at 12%. Sentiments became positive for information & communications (1 vs -4) and real estate (8 vs -6). Moreover, sentiment further strengthened for manufacturing (8 vs 2) and financing & insurance (19 vs 14), while unchanged for import/export trade & wholesale (-9). Meanwhile, sentiments became negative for retail (-16 vs 3) and professional & business services (-9 vs 1). Additionally, sentiments weakened for accommodation & food services (7 vs 9) and transportation, storage & courier services (4 vs 5), while more pessimistic for construction (-11 vs -9).

The British pound steadied around $1.24, remaining near its lowest level since mid-November, following disappointing British retail sales data and as investors sought refuge in safer currencies amid concerns over a potential escalation in Middle East tensions, sparked by Israel's limited attack on Iranian soil. According to the latest ONS figures, UK retail trade unexpectedly stagnated in March, signaling weak consumer spending, while the country's inflation rate declined less than anticipated to 3.2%, the lowest level since September 2021. Bank of England policymaker Megan Greene cautioned that Britain's recent wage growth and services price inflation data are too elevated for the central bank to consider cutting interest rates. Meanwhile, the US dollar maintained its strength, bolstered by hawkish remarks from Federal Reserve officials, indicating that the US central bank is not in a hurry to reduce interest rates.

The FTSE MIB fell by 1.1% to hover near the 33,500 threshold on Friday, mirroring the performance of its European peers, as investors shed riskier assets amid renewed concerns over escalating tensions in the Middle East following Israel's attack on Iranian soil. Meanwhile, investors have been processing a deluge of economic data throughout the week, alongside statements from policymakers at major central banks. On the corporate front, nearly all companies are trading in negative territory. Notably, Saipem, Iveco Group, and Tenaris were among the worst-performing stocks, each experiencing a decline ranging from 2% to 3%. Conversely, Campari (+0.7%) stood out as the sole company defying the broader downward trend. Looking at the week as a whole, the FTSE is expected to remain largely unchanged.

The ruble-based MOEX Russia index edged up to 3,460 on Friday, as investors evaluated the heated situation in the Middle East and digested corporate news. The financial and IT sector were leading the gains. Among individual stocks, Surgut (2%), Sovcomflot (1.2%), BSP (1.1%), and TCS (1.1%) advanced the most. Also, MTS added 0.7% after it became known the placement price range for the IPO of MTS Bank would be RUB 2,350–2,500 per share, and Seligdar grew by 0.8%, having achieved a 78% increase in revenues from metals sales in Q1 of 2024. Meanwhile, EN+ (-1.6%), AFK Sistema (-1.4%), and Rusal (-1.1%) declined. Traders remained attentive to Severstal (0%), set to announce dividends on April 23rd. The expectations for dividends have been lowered due to higher capital expenditures. On the geopolitical front, the US introduced new restrictions on exports to Russia. Over the week, the index was set to close flat, affected by losses in metals after the US and UK introduced sanctions.

The JSE All Share index dipped into negative territory on Friday, trading below 72,800, a low level not seen since March 20th. Global investors were spooked by reports that Israel had launched a retaliatory strike on Iran, which raised concerns about an escalation of the Middle East tensions. In the meantime, market sentiment was dented by hawkish remarks from more Federal Reserve policymakers. Meanwhile, the earnings season remains in the spotlight, with more companies set to publish results. On the corporate front, techs Naspers and Prosus, financials and industrials were among the hardest hit, with losses of around 1%. In business news, PSG Financial Services increased its recurring headline earnings per share by 11% for the full year ended 29 February 2024, reflecting its "sound financial position and the board’s confidence in its prospects". For the week, the JSE was set to decline nearly 4%.

Frankfurt's DAX 40 index fell by 0.7% to 17,720 points on Friday, marking its lowest level since March 6th, as investors offloaded riskier assets amidst renewed concerns over a potential escalation in Middle East tensions following Israel's attack on Iranian soil. Concurrently, markets digested more hawkish remarks from Federal Reserve officials. New York Fed President John Williams emphasized that there is no urgency to decrease interest rates, while his colleague Raphael Bostic suggested that policy easing is unlikely until the end of the year. Neel Kashkari also said that policymakers could potentially maintain rates at their current levels throughout the year. On the economic data front, German producer prices experienced a 2.9% year-on-year decline in March, marking the slowest decrease in eight months.

The CAC 40 fell 0.7% to 7,970 on Friday, as investors sought safety amid mounting worries over a potential broader conflict in the Middle East. As the situation unfolds, market participants eagerly await clarity on the nature of the attack. Confirming the incident, a US official's statement contrasts with Iranian media reports denying any foreign assault on Isfahan or other parts of Iran. Adding to the unease, hawkish remarks from Federal Reserve officials soured sentiment. On Thursday, NY Fed President John Williams stressed that the central bank is in no rush to lower interest rates, citing persistent inflationary pressures. Nearly all sectors witnessed declines, with WordLine leading the downturn with a 5% fall, trailed by Renault and Schneider Electric which fell by 4% and 2.16% respectively. On a brighter note, L'Oréal shares surged by almost 5% after the company reported a robust 9.4% increase in Q1 sales on a like-for-like basis, reaching a four-week high of EUR 442.75.

The Hang Seng plunged 161.73 points or near 1% to finish at 16,224.14 on Friday, giving up gains from the prior session and sinking 3.0% weekly after tensions in the Middle East escalated and sent global stocks plunging. Meanwhile, US futures dropped sharply due to uncertainty around the Fed's interest rate path, with several Fed officials offering their hawkish views this week amid re-accelerating inflation. All sectors fell, with tech slipping over 2% after Taiwan Semiconductor Manufacturing Co. revised lower its revenue growth outlook for the industry. Still, markets pared their early sharp losses as China said its youth jobless rate stayed steady at 15.3% in March after hitting a record of 21.3% in June 2023. Meanwhile, the PBoC is expected to hold its key lending rates steady next week as robust Q1 GDP growth in the mainland reduces the need for imminent stimulus. Some underperforming stocks among big-cap were Li Auto (-7.4%), Ubtech Robotics Co. (-6.4%), and Sands China (-4.8%).

The UK 10-year government bond yield dipped slightly to 4.26%, down from the five-month high of 4.3457% reached on April 16th, amidst concerns over potential escalation in Middle East tensions following Israel's limited attack on Iranian soil. Elsewhere, investors have been digesting a slew of economic data this week, along with remarks by policymakers from major central banks. The latest figures from the ONS revealed that UK retail sales unexpectedly stagnated in March, signaling cautious consumer spending. However, British inflation rate fell to 3.2% in March, marking the lowest rate since September 2021, with the core rate dropping to an over two-year low of 4.2%, both figures surpassing forecasts. Bank of England policymaker Megan Greene noted that the recent wage growth and service inflation data were too high for the BoE to contemplate cutting borrowing costs. Meanwhile, US Fed officials have reiterated that there's no rush to cut interest rates.

Top commodity gainers are Cocoa (8.29%), Rice (1.17%) and Corn (0.95%). Biggest losers are Palm Oil (-1.63%) and Wheat (-1.36%).

The yield on the US 10-year Treasury note fell about 5bps to below 4.6% on Friday, following Israel's strike on Iran, causing investors to seek safety. Still, borrowing costs remain elevated and around five-months amid prospects that the Fed will keep interest rates elevated for some more time. In fact, the data continues to point to a resilient US economy with initial unemployment claims below expectations halfway through April and the Philadelphia Fed manufacturing gauge soaring to two-year high. At the same time, inflationary pressures are not over yet, and several policymakers including Chair Powell have been advocating that the central bank needs more confidence on the inflation and is not in a rush to cut the rates. Around 68% of investors bet the first rate cut will happen in September.

The benchmark KOSPI slipped 1.6% to 2,592 points on Friday, closing at its lowest level since early February and logging its biggest weekly fall in seven months, as rising tensions on geopolitical conflict in the Middle East dampened sentiments. The benchmark index posted a weekly fall of 3.4%. Additionally, the recent hawkish remarks from several Federal Reserve officials are putting downward pressure on stocks. On Thursday, Atlanta Fed Bank President Bostic and NY Fed President John Williams emphasized that the US central bank is not rushing to cut rates in the near term. Nearly all sectors closed in the red, with electronic tech stocks posting the largest decline. Among megacaps, notable losses were seen from Samsung Electronics (-2.5%), SK Hynix (-4.9%), LG Energy Solution (-2.7%), Samsung Biologics (-1.1%), and Kia Corp (-1.6%).