A look at the day ahead from Dhara Ranasinghe.
The first quarter draws to a close and what a quarter it's
been: an 82 basis-point surge in U.S. Treasury yields on a
stimulus boost the size of which few would have anticipated, a
25% oil price jump, amateurs taking on seasoned hedge funds and
big banks taking big hits from trouble at hedge funds.
But having added some $2.6 trillion in value over the first
three months, MSCI's global equity index is ending the quarter
in a defensive mood. Asian stocks, outside Japan, are down 0.3%,
the Nikkei shed 0.9% and futures point to a weak open for
European bourses. Wall Street futures are flat.
The outlier is the dollar, riding at fresh one-year peaks
against the yen and at multi-month highs versus other major
currencies.
Its gains come as the United States races ahead of the rest
in terms of vaccinations, economic growth and the sheer size of
government spending. And U.S. President Joe Biden will outline
later on Wednesday how he intends to pay for a $3-$4 trillion
infrastructure plan.
That kind of spending will benefit the rest of the world
too; the IMF will raise global growth forecasts for 2021 and
2022, Managing Director Kristalina Georgieva said on Tuesday.
But the Biden plan, and the likelihood of more debt
issuance, also explains this week's bond selloff that's taken
10-year Treasury yields towards 14-months highs at around 1.78%.
In UK markets, trading starts in food delivery company
Deliveroo, whose shares will list at 390 pence each, valuing the
company at 7.6 billion pounds ($10.5 billion). It's the biggest
London IPO for a decade, yet its valuations lag continental
peers Just Eat and Delivery Hero.
Key developments that should provide more direction to
markets on Wednesday:
- Euro zone flash inflation data due; data on Tuesday showed
German inflation topped ECB target in March.
- China's manufacturing expands at the quickest pace in
three months in March.
- Britain's economy grows a stronger-than-expected 1.3% in
Q4.
- Hitachi to buy U.S. software firm GlobalLogic Inc for $9.6
billion.
- Germany to limit the use of AstraZeneca COVID-19
vaccine to people aged 60 and above
- OPEC+ oil producing group is concerned that uncertainties
may impact the recovery in oil demand
- Gold set for worst quarter since 2016.
- U.S. ADP national unemployment, Chicago PMI data due.
- Sweden's H&M swings to Q1 loss
(Reporting by Dhara Ranasinghe; Editing by Sujata Rao)