Macro-News round-up

🌐 US: Yesterday, the New Home Sales data was released, resulting in 693k against the expected 668k. A continued lack of previously owned homes on the market helped sales of new single-family homes in the United States rise in March from February’s downwardly revised figure, but progress may be restrained by rising mortgage rates. Existing house sales will decline while new home sales will likely stagnate in the near future due to the recent spike in mortgage rates and decline in mortgage applications.

📊 US PMIs: Yesterday afternoon, the US PMI data was released. The results were worse than expected for both the manufacturing and services sectors. Manufacturing PMI 49.9 vs. 52 expected. Services PMI, 50.9 vs. 52 expected. However, this data could be well received by the market. For starters, most of the resilient inflation is spent in the services sector, a weakening of both PMIs could mean lower future inflationary pressure, which would mean that the Fed could continue its pledge to cut rates, and therefore, the stock markets would rise based on this interpretation of the data. In fact, the U.S. stock markets performed very well during yesterday’s session, reaffirming this theory.

🚗 TESLA Results: For the first time since 2020, when the COVID-19 outbreak impeded manufacturing and delivery, Tesla’s quarterly revenue decreased. In contrast to $23.33 billion a year earlier, the corporation reported sales of $21.3 billion for the three months that ended in March on Tuesday. Due to further price reductions, Tesla’s average revenue per vehicle delivered in the quarter decreased by over 5% from a year earlier to $44,926.

📈 US stocks continued to rise. The NASDAQ increased by 1.59% and the S&P 500 by 1.2% thanks to a tech recover. Chinese equities were not unanimous. The CSI 300 dropped 0.7% while the Hang Seng increased by 1.92%. Overnight, the EURUSD surged back up to 1.0702 in reaction to the PMI data that was lower than anticipated.

🇦🇺 Australian inflation: Australia’s inflation rate was released early this morning. Unfortunately, it shows a rebound to 3.6% for the first quarter 2024, 3.4% was expected. Still, it is an improvement on the previous period, when inflation was 4.1%. The important message here is that with sticky inflation like this, the Reserve Bank of Australia will not be able to ease monetary policy, and indeed, its currency has strengthened against the dollar in recent hours, with AUDUSD trading above 0.65. But be calm, it has powerful resistances approaching the 0.6650 zone.

🇪🇺 Europe: In yesterday’s report we commented on the relative improvement of the European PMIs. Today, Germany published the IFO survey on business climate and expectations. The results are slightly better than expected, which would indicate a more positive climate. However, in today’s 10-year bond auction, the German 10-year bond yield has risen to 2.54%. This would indicate a slight outflow of investment from Germany, as given the ECB’s stance on rate cuts, yields should be falling, not rising.

🌍 Geopolitics: A new “Ukraine” in Asia? The US and Philippines kicked off their largest Balikatan military exercises this week, with 11,000 US and 5,000 Filipino troops participating, plus forces from Australia and France. China criticized the drills as an attempt to “flex gunboat muscles” and stir tensions in the disputed South China Sea. Former Philippines president Rodrigo Duterte warned of risks from aligning too closely with the US against China and questioned if America would defend the Philippines in a conflict. The US could be seeking to militarize the Philippines as a proxy against China, reminiscent of processes in Ukraine before its war with Russia. Escalating tensions through military posturing in disputed waters risks a crisis comparable to the ongoing Ukraine conflict.

🕊️ Despite the approval of the aid package, after hard negotiated in the United States, voices are not entirely unanimous in Europe regarding Ukraine. A few days ago, Hungary’s Prime Minister Orban gave a speech in Brussels to the other European partners, this is one of his appointments: “Today, in Brussels, there is a pro-war majority shaping the warmongering mood in Europe. This war vortex threatens to drag Europe into the abyss. Hungary stands firmly for peace, committed not to enter the Russian-Ukrainian war as long as we govern”.