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Major US stock indices predominantly declined, as market participants showed caution in anticipation of the start of the corporate reporting season.

JPMorgan and Wells Fargo will start the reporting season tomorrow, announcing their results before the start of the trading session. Analysts warn that the upcoming quarterly reporting season may be the first to show a decline in corporate segment profits from 2016.

Pessimistic economic growth forecasts from global central banks put pressure on the market. The minutes of the March meeting of the Federal Reserve System (Fed) on Wednesday showed that interest rates this year are likely to remain unchanged, given the risks to the US economy due to the slowdown and uncertainty regarding trade policy and financial situation.

However, further decline was limited by favorable reports on trade negotiations between the US and China. According to the Wall Street Journal, China made new concessions and agreed to open its cloud computing sector to foreign companies.

In addition, the focus of market participants was the March data on producer price index and weekly statistics on primary applications for unemployment benefits. The number of Americans applying for unemployment benefits dropped to a 49.5-year low last week, indicating a steady strength in the labor market that could withstand fears of a sharp slowdown in economic growth. Meanwhile, the US Department of Labor reported that producer prices rose at a maximum rate in five months in March, while the producer price index for final demand rose by 0.6%, which was caused by a rise in gasoline prices. Despite the larger than expected increase in the overall index, basic wholesale inflation was low-key.

Most of the components of DOW finished trading in positive territory (18 out of 30). Outsider - UnitedHealth Group Inc. (UNH; -4.28%). The growth leader is The Boeing Company (BA; + 1.48%).

Most sectors of the S & P recorded an increase. The industrial goods sector grew the most (+ 0.8%). The largest decline was shown by the health sector (-1.2%).

At the time of closing:

Dow 26,143.05 -14.11 -0.05%

S & P 500 2,888.32 +0.11 +0.00%

Nasdaq 100 7,947.36 -16.89 -0.21%

• March FOMC marked the end of policy normalization
• Fed needs to tread carefully to sustain expansion
• Market-based inflation expectations point to inflation being below the Fed's target in 2019 and in next 5 years
• Treasury curve has flattened significantly. Meaningful, sustained inversion would send a bearish signal

Statistics Canada reported on Thursday the New Housing Price Index (NHPI) was unchanged m-o-m in February, following a 0.1 percent drop in January.

Economists had forecast the NHPI to be flat m-o-m in February.

According to the report, builders in 9 of the 27 census metropolitan areas (CMAs) surveyed reported gains in prices for homes they sold in March. London (+0.6 percent m-o-m) and Windsor (+0.6 percent m-o-m) recorded the largest increases, primarily due to higher construction costs.

At the same time, four of Canada's largest new housing markets saw slowing demand, as builders reported flat prices in Toronto and Calgary, and declining prices in Vancouver (-0.3 percent m-o-m) and Edmonton (-0.1 percent m-o-m) in February, the report said.

In y-o-y terms, NHPI edged up 0.1 percent in February, after dropping 0.1 percent in the previous month.

U.S. stock-index traded flat on Thursday, as market remained in a wait-and-see mode in front of the 1Q earnings reporting season, which starts in tomorrow.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

The data from the Labor Department revealed on Thursday the number of applications for unemployment benefits fell to a 49-1/2-year low last week, pointing to sustained labor market strength.

According to the report, the initial claims for unemployment benefits decreased 8,000 to 196,000 for the week ended April 6, the lowest level since early October 1969.

Economists had expected 211,000 new claims last week.

Claims for the prior week were revised upwardly to 204,000 from the initial estimate of 202,000.

Meanwhile, the four-week moving average of claims dropped 7,000 to 207,000 last week, the lowest level since early December 1969.

Apple (AAPL) initiated with a Neutral at Credit Suisse; target $209

HP (HPQ) initiated with a Neutral at Credit Suisse; target $21

IBM (IBM) initiated with an Outperform at Credit Suisse; target $173

Tesla (TSLA) target lowered to $240 from $270 at ROTH Capital

The Labor Department reported the U.S. producer-price index (PPI) surged 0.6 percent m-o-m in March after an unrevised 0.1 m-o-m increase in February.

For the 12 months through March, the PPI rose 2.2 percent compared to a 1.9 percent jump recorded in the prior month. That was the largest 12-month rise since a 2.5-percent advance in December 2018.

Economists had forecast the headline PPI would increase 0.3 percent m-o-m last month and 1.9 percent over the past 12 months.

According to the report, over 60 percent of the March advance in the index for final demand can be traced to a 1.0-percent m-o-m climb in prices for final demand goods. Meanwhile, the index for final demand services moved up 0.3 percent m-o-m.

Excluding volatile prices for food and energy, the PPI increased 0.3 percent m-o-m and rose 2.4 percent over 12 months. Economists had forecast gains of 0.2 percent m-o-m and 2.4 percent y-o-y, respectively.

TD Securities' analysts suggest that the risk of Brexit getting kicked into the very long grass rises materially if the UK PM Theresa May fail to get her deal over the line in late April.

• "If Brexit remains unresolved on 2 May, it's likely that the Conservative Party will fare poorly in local elections. Pressure will mount on Theresa May to resign, and we think that betting markets are wrong to think that she is most likely to leave after Brexit later this year.”
• “While she can't be booted out until mid-December, the party will search for ways to push her earlier. One such possibility is a change to the rules governing confidence votes within the Conservative Party.”
• “In this scenario, a Conservative Party leadership race would kick off sometime in May, and is likely to be a long one. MPs will be eyeing up a long-term stint at the head of the party. With a leader selected over the summer and the party's annual Conference at end-September, it's unlikely any fundamental Brexit progress will be made in the coming months.”
• “In this scenario, the new UK leader ends up returning to the EU in October to ask a further extension, likely to end-March 2020 to break the impasse.

Analysts at TD Securities expect the U.S. producer price index (PPI) to advance 0.3 percent m-o-m in March, up from the 0.1 percent m-o-m recorded in February.

They also added that “if realized, this would be the strongest monthly print since October, likely reflecting this year's steady pick-up in energy prices. That said, the annual headline rate is likely to remain unchanged at 1.9 percent. Core PPI inflation, on the other hand, is likely to print a softer 0.2 percent m-o-m and a stronger 2.4 percent y-o-y in March”.

Danske Bank's analysts point out that the EU has granted an extension to 31 October but some EU leaders already appear open to the possibility of a further extension if needed. In adition, they noted:

• “The Conservative backbenchers want to get rid of Theresa May.”
• “Look out for local elections on 2 May and European elections on 23 May. Mood for a snap election is low.”
• “No signs of an imminent breakthrough in cross-party talks.”
• “We expect EUR/GBP will remain in the 0.85-0.87 range for now. Markets likely to focus on other things than Brexit now.”

TD Securities' analysts note that the minutes from the FOMC meeting in March revealed that "several" policymakers saw the next policy move in "either direction," but "some" expected the next move to be higher and there was no explicit discussion of decreases.

• “Our base case still is for a high probability that the Fed remains on hold for this year and next. However, we think the market is too aggressive in pricing cuts for this year, and is underpricing the risk of a rate hike over the next 12 months.”
• “Treasuries only briefly reacted to the minutes and may continue to grind in the 2.40-2.60% range for now. There was little discussion on reinvestments, but some participants suggested discussing the potential benefits and costs of tools that might reduce reserve demand or support interest rate control at future meetings (like the recently-discussed Fed repo facility).”

Deutsche Bank analysts point out that the EU27 agreed to offer the UK a nearly 7-month Brexit extension through to October 31.

“The UK PM May has accepted the offer and this will require the UK to participate in this year’s European elections. However, May has indicated that she still aims to leave by May 22 to avoid EU elections. Maybe she can bring her WA for one final vote sometime in the next 36 hours, but either way the odds of an early election continue to rise. She told EU leaders that’s she’s hopeful something can come of the cross party talks but the mood music domestically doesn’t suggest we’re close. She has previously promised binding Parliamentary votes on various Brexit preference so that should also come back onto the agenda soon.”

Bank of America Merrill Lynch Research discusses the US earnings expectations for 1Q.

"S&P 500 1Q19 earnings season kicks off this week. 1Q expectations have been reset dramatically: bottom-up consensus EPS has been cut by 7% over the last three months (to $37.29), more than double the typical 3% pre-EPS season cut. The good news: in prior quarters of similarly dramatic cuts, EPS beat expectations in all instances, by an average of 3%. Consensus expectations imply EPS of -2% YoY, which would mark the first EPS decline since the EPS recession of 2015-16. We forecast $38.25, suggesting flat growth and a 3% beat. Analyst estimates have fallen the most within Energy (by 30%) over the last three months, while Materials and Tech have also seen large cuts (16% and 8%). Overall for US equities, management's outlooks are likely to serve as a key catalyst for the market this earnings season," BofAML adds.

Financial technologies such as digital currencies are “shaking” the banking system and must be monitored to maintain stability, according to the head of the International Monetary Fund.

Lagarde pointed to the changing business models of commercial banks as evidence that innovations like cryptocurrencies are having a clear impact on financial sector incumbents.

“I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever ... that is clearly shaking the system,” she said.

The IMF boss warned that such financial industry changes must be accompanied by regulation. “We don’t want innovation that would shake the system so much that we would lose the stability that is needed,” she said.

Danske Research discusses EUR/USD outlook in light of today's ECB policy decision and maintains a neutral bias in the near-term.

"The ECB was on the dovish side, with little new information in terms of policy signals, but it opened the door for further policy easing, in particular the tiering system. The pros and cons of the tiering system are still to be assessed, although Mario Draghi was very careful not to use the word ‘tiering’ as such. In our view, the ECB did not provide arguments for EUR/USD to fall much further from here and we stick to our call for the cross to trade around 1.13 in 3M," Danske adds.

China's commerce ministry said that senior trade negotiators from the United States and China discussed the remaining issues in a phone call following the last round of talks in Washington.

Both teams will keep in close communication and work at full speed on the trade talks, ministry spokesman Gao Feng told reporters in a regular briefing

• IEA keeps forecast of global oil demand growth for 2019 at 1.4mln bpd, supported by robust Chinese and Indian consumption

• global oil supply dropped 340,000bpd in March on Opec cuts, lower Venezuelan output

• OPEC crude oil production fell 550,000 bpd in March to 30.1mln bpd

• global refining throughput fell by 2.5mln bpd in March on unplanned outages, especially in u.s.

• Non-opec supply growth decelerated sharply to 2.4mln bpd in Q1, from breakneck pace seen in H2 2018

• Venezuela March crude output down 270,000bpd month-on-month at 870,000bpd

• OECD oil stocks fell 21.7mln barrels m/m in feb to 2.87bln barrels; stocks are 16mln barrels above 5-yr average

• Euro zone's 2019 inflation seen at 1.4pct vs 1.5pct previously

• Euro zone's 2020 inflation seen at 1.5pct vs 1.6pct previously

• Euro zone's 2021 inflation seen at 1.6pct vs 1.7pct previously

• Euro zone's 2019 real GDP growth seen at 1.2pct vs 1.5pct previously

• Euro zone's 2020 real GDP growth seen at 1.4pct vs 1.5pct previously

• Euro zone's 2021 real GDP growth seen at 1.4pct, unchanged

“Heightened uncertainty” over Britain’s divorce with the European Union could be the trigger that sends the pound even lower, making it more attractive for investors to buy, according to UBS Global Wealth Management.

The pound has been trading above the 1.30-level against the greenback over the past month. But increased uncertainty could send the sterling to levels of about 1.24 or 1.15 against the U.S. dollar, said Tan Teck Leng, a foreign exchange analyst at UBS.

“We don’t think that Theresa May is able to get the current deal through the U.K. parliament. It is not likely to happen and with that, it opens the door to general elections,” Tan told.

“Is that higher or lower uncertainty? It is a lot higher because you don’t know the parties, if they were to campaign, are they going to campaign on a harder Brexit or softer Brexit,” he added.

“If you get a no-deal Brexit, it is not going to be 1.24, it is going to be 1.15 or below — that is the reality. Now, what can take the pound down to 1.24? The simple trigger would be just pure heightened uncertainty,” he added.

New Zealand central bank governor Adrian Orr said it’s not yet clear whether an interest-rate cut is warranted in May.

“It is a really mixed picture, it’s just hard,” Orr said. Referring to speculation that the bank could act as soon as May, Orr said: “I don’t know yet,” adding that the bank will continue to evaluate incoming data.

Orr last month said the next move in rates was more likely to be down, prompting investors to quickly price in a cut by August.

“It would be much easier if everything was aligned in one direction,” Orr said. “But with terms of trade at record highs and capacity constraints everywhere, you’re kinda going is it really the environment to be cutting? Likewise on the other side, with inflation below” target “and global economic growth slowing. So you’ve just got to get the weightings right.”

Raymond Yeung, analyst at ANZ, points out that China’s inflation data for March indicate that the supply shocks faced on the consumer and producer fronts have helped to mitigate deflationary risks.

“The broad-based rebound in producer prices in March also implies an improvement investment demand. Although a decreased risk of deflation will reduce the urgency faced by China’s central bank to cut interest rates, any RRR cut will still be driven by market liquidity conditions.”

National Bureau of Statistics (NBS) said on Thursday that China's factory-gate inflation picked up for the first time in nine months in March, lifted by price rises in global commodities. Consumer inflation also quickened, jumping to the highest since October 2018 as pork prices soared due to a growing epidemic of swine fever. China's producer price index (PPI) in March rose 0.4% from a year earlier, driven largely by rapid rises in oil and gas prices, and advancing from a 0.1% increase in February. The consumer price index (CPI) in March rose 2.3% from a year earlier, a five-month high. That was more than a 1.5% increase in February

According to the report from Insee, in March 2019, the Consumer Prices Index (CPI) rose by 0.8% over a month, after a stability in February 2019. The rebound in manufactured product prices (+2.1% after −0.4%) and the increase in those of services (+0.2% after 0.0%) and tobacco (+7.3% after 0.0%) were slightly attenuated by a slowdown in energy prices (+1.1% after +1.3%) and a downturn in food prices (−0.2% after +0.2%). Seasonally adjusted, consumer prices increased by 0.1% over a month, after a stability in February.

Year on year, consumer prices rose by 1.1% in March 2019, after +1.3% in February. This drop in inflation came from a year-on-year slowdown in the prices of food, tobacco and services and from a little stronger fall than in February in those of manufactured products. Contrariwise, energy prices accelerated.

Year on year, core inflation fell to +0.5%, after +0.7% in the four previous months. The Harmonised Index of Consumer Prices (HICP) gathered pace by +0.9% over a month in March, after +0.1% in February; year on year, it grew by 1.3%, after +1.6% in the previous month.

“We looked at the matter and decided to shift the date to October. We want an orderly exit of Great Britain and an orderly exit of Great Britain can be best ensured if we give it some time. The decisive point was when will the British parliament consent to the withdrawal agreement and we made it clear that that exit agreement applies and will not be changed.” Merkel said.

Westpac analysts notes that the past month has seen USD/CNY largely mark time, near CNY6.72 as progress reportedly continues to be made in trade negotiations between the US and China, but intellectual property considerations remain a significant impediment to a long-term deal.

“More to the point, even if a deal is announced in the near term, the effect on the economy and currency is likely to be negligible, as the US is likely to only relent on current tariffs as China meets agreed milestones. Further, amid uncertainty, Chinese authorities value ‘stability’ in the currency. We look for USD/CNY to end 2019 at 6.80 and 2020 at 6.40.”

According to the report from Destatis, сonsumer prices in Germany were up 1.3% in March 2019 compared with March 2018. This was a decline in the inflation rate - as measured by the consumer price index - which had been 1.5% in February 2019.

The prices of energy products in March 2019 were up 4.2% year on year, which had an upward effect on the overall inflation rate. In the preceding two months, the increases in energy prices had been much smaller (February 2019: +2.9%; January 2019: +2.3%). In March 2019, food prices were up 0.7% year on year. The increase in food prices thus slowed again; in February 2019, the relevant rate of price increase had been +1.4%. Compared with the overall inflation rate, the prices of goods as a whole increased by an above-average 1.6% in March 2019 year on year, which was due to the rise in energy product prices (+4.2%). In March 2019, the prices of services (total) were up 1.2% year on year.

Compared with February 2019, the consumer price index rose by 0.4% in March 2019. Especially the prices of package holidays were markedly up in March 2019 on the previous month (+7.8%). In addition, price increases were recorded for footwear (+3.7%) and clothing (+3.0%) compared with February 2019. A reason here was the changeover to the spring and summer collection.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1398 (2853)

$1.1375 (2281)

$1.1359 (263)

Price at time of writing this review: $1.1279

Support levels (open interest**, contracts):

$1.1227 (3618)

$1.1187 (2689)

$1.1142 (2648)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 3 is 67444 contracts (according to data from April, 10) with the maximum number of contracts with strike price $1,1500 (6205);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3350 (2624)

$1.3284 (1169)

$1.3233 (888)

Price at time of writing this review: $1.3106

Support levels (open interest**, contracts):

$1.2995 (1169)

$1.2932 (1297)

$1.2857 (2326)

Comments:

- Overall open interest on the CALL options with the expiration date May, 3 is 21456 contracts, with the maximum number of contracts with strike price $1,3300 (2624);

- Overall open interest on the PUT options with the expiration date May, 3 is 20196 contracts, with the maximum number of contracts with strike price $1,2600 (2581);

- The ratio of PUT/CALL was 0.94 versus 0.91 from the previous trading day according to data from April, 10

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.