Spain and Portugal suffer huge, unexplained power outages

European stocks were up around 0.5% yesterday, faring slightly better that their US equivalents.  Asian markets were also positive overnight.  Putin has said there will be a three day ceasefire next week, starting from 8th May which coincides with celebrations marking the end of World War II.  Whether this holds remains to be seen, there have been several such ceasefires in the past three or so years, none of which lasted particularly well.  I presume Russia may call a ceasefire, but it may not stop Ukraine from attacking, which then opens the door for Russia to defend itself.  And of course, then accuse Ukraine of not wanting peace.   

Closer to home, a huge power outage across large parts of Spain and Portugal caused widepsread havoc yesterday.  Of course, it looks very much like an attack on infrastructure but that has been denied.  Portugal blames the outage on extreme temperature variations that caused some vibration in high voltage power lines in Spain, while some blame atmospheric conditions which is leading many to think of solar flares.  Power is slowly returning.

In the currency markets, we had a lower US dollar which sent GBPUSD up to 1.3440 and EURUSD to 1.1425, both 35 pisp or so off those highs as I type.  USDCHF sank to 0.8200, below even the lows seen in Jan 2015 when SNB pulled the plug on the floor they had in place at 1.2000 for so long.  Markets are looking for any update on various trade talks, and also looking for tariff amendments on specific items such as auto-parts that could be seen as early as tomorrow.

In Canada, Mark Carney and his Liberals have won the elections in Canda, although it is not yet clear whether they have enough seats for a majority.  USDCAD is 1.3830, just a smidge lower than this time yesterdya, while GBPCAD is higher at 1.8550.

Leeds Utd beat Bristol City yesterday to go back to the top of the Championship withone match remaining.  Bristol are in 5th place in the table but some 30 points behind the two top teams, highlighting the gulf between Leds, Burnely and those teams fighting for the play off spots.  Tonight sees Arsenal take on PSG in the Champions league semi-final.  PSG have beaten both Liverpool and Aston Villa in the latter stages of the competiion, Arsenal will be hoping they can seek some revenge for the English clubs so far knocked out. 

A slightly busier calendar today but still not quite the big stuff that comes later this week.  US JOLTS could be interesting given we know it is watched by the Fed but it will certainly be overshadowed by US GDP, core PCE and nonfarms.   Aussie inflation numbers due out overnight, AUDUSD is up around its highest levels for 2025, helped more by USD weakness than AUD strenghth.  AUDNZD currently 1.0760, GBPAUD 2.0865.

We had some superb weather yesterday and in for more of the same today.  A good friend is back from Australia for a month or so, and the in-laws who have been down under for a while also arrive back today.  Talk about good timing!

-  10.00 EU consumer confidence

-  10.40 BoEs Ramsden speaks

-  14.00 US house prices

-  15.00 US JOLTS job openings, consuimer confidence

-  00.50 Japan trade

-  02.30 AUS CPI

-  02.30 China NBS manufacturing PMI

-  02.45 China Caixin manufacturing PMI

-  07.00 German GDP, retail sale, unemployment

Markets and weather both likely to heat up later this week

Good morning

I hope you had a terrific weekend.  Weather was good, and it looks like we’ll have the same, or warmer, for the coming week.  No time to be stuck inside an office, but my ‘remote working’ hasn’t yet stretched to setting up a a desk outside.  That would be taking things a little too far perhaps.

A great weekend for sport, with the Eubank/Benn fight living up to its hype, although the fact Eubank is still in hospital for checks demonstrates just how gruelling the bout was.  One of the better sporting performances coming from the Spurs stadium this season, that’s for sure.   The London marathon once again produced some super-human performances, the mens race was won in the time of 2 hours, 2 minutes and 37 seconds, a pace that no normal person could keep up with for more than twenty metres or so.  The world record was broken in the women’s race with a time or 2 hours, 15 minutes and 50 seconds, again astonishing.  Congratulations to all participants, really quite an achievement.

In football, Liverpool won the premier title with a 5-1 win over a dismal Spurs team, while Crystal Palace and Man City made it into the FA cup final with wins over Villa and Forest respectively. 

To the markets, where hopes of trade deals to end this tariff standoff continue to help equities with global markets all generally higher Friday and overnight.  Futures prices are a little mixed ahead of this morning European open.  US still seem convinced they are in trade talks with China, while China seem to deny any such discussions. 

The US dollar is a touch higher this morning but still well within the ranges seen late last week, GBPUSD now 1.3300, EURUSD 1.1345, which leaves GBPEUR around 1.1730.   Lots of talk about another ECB 25bps rate cut in June, although ECBs Simkus has said a larger cut could be necessary. 

The Swiss Franc is in focus having pushed above multi-year highs, with USDCHF seeing a low last week around 0.8040, while GBPCHF has dropped from a high at the end of last month near 1.1500 to a low just above 1.0600, although it has since recovered to 1.1045.  Plenty of talk of Swiss rates going negative to slow this CHF appreciation.

Canada goes to polls today in their elections to find a new government.  Mark Carney is favourite but a majority is far from a certainty.  US/Canada trade relationship and Canada’s sovereignty high on the priority list for voters. USDCAD  currently 1.3875, with GBPCAD 1.8455.  Final results should be out by this tomorrow.

Not much else on the agenda today, indeed you’ll see a lack of calendar below, not because I have forgotten but because there is no significant releases due out and Fed officials are in their pre-FOMC blackout period.  Still, the rest of the week makes up for that, with employment numbers, GDP, core PCE and ISM PMI from the US and EU GDP and inflation readings.  Aussie inflation, trade and retail sales will keep our friends down under on their toes.

Otherwise we are looking out for any news of a peace deal in Ukraine.  Trump and Zelensky met in Rome, I have to say that although I’m not really religious I thought their publicised meeting at the Pope’s funeral was a bit disrespectful.  Something behind closed doors would have surely been more appropriate.  Anyway all the talk is really how much ground Ukraine will need to concede to find peace and how much Putin really wants peace.  Even Trump has voiced his displeasure about the ongoing missile strikes by Russia on Ukraine.

That’s about all for now.  Mark’s Leeds play this evening, a win puts them back up at the top of the Championship on goal difference, but their opponents Bristol City have their own place in the play-off positions to fight for.  Could be a good game.  European action this week sees Arsenal in the Champions League semi-final, Spurs and Man Utd in the Europa league semifinals despite their terrible league performances, and Chelsea in their Europa conference league semi-final. 

Have a great day…

Some talk of possible US rate cuts get the market excited

Good morning

Global equity markets had another decent day yesterday as talk of US negotiating deals with other countries continued.  Trump also mentioned that ‘we have been meeting with China’ although the details of this are a little sketchy, other than China saying US should cancel all unilateral tariffs before any talks take place.   There was some suggestion that China were looking to drop their own 125% tariffs but we’ve seen no confirmation of this.   

The real key yesterday though was some slightly dovish comments from Feds Hammack who suggested a June rate cut by the Fed could be possible, while Feds Waller said that he’d support a rate cut if it looked as though Trump’s tariffs were putting US workers at risk.  Kashkari added that he was worried about possible rising unemployment but that as yet he’d seen no sign of it.

Given Fed officials have come across a lot more neutral recently, this could mark a shift in attitude and if so is quite a turning point.  Of course, those Fed officials speaking about possible rate cuts could just be laying their CVs at Trumps door for as and when Powell goes, but the fact is we all see risks to the US and global economy and rate cuts could well be needed to support the economy.

Yesterday’s initial claims were a touch higher which put Wallers comments more at the fore, while the US labour market will be in focus next week with the usual JOLTS, Challenger and the big one, the nonfarm payrolls. 

The rate cut talk sent USD lower through the day, GBPUSD traded up to 1.3345 into the NY close and EURUSD came within a pip or two of 1.1400.  Overnight some steady USD buying took both pairs lower to hit 1.3275 and 1.1315 respectively, some talk that Trump wants to ensure the US dollar remains the reserve currency possibly the reason for USD strength.  Those pairs now sit at 1.3305 and 1.1350 which leaves GBPEUR at 1.1720, with markets eyeing the 1.1740 area that has served as resistance for the past three weeks.  Better than expected UK retail sales data this morning seems to have helped GBP hold its gains.

Meanwhile US continues to pressure Russia and Ukraine to find a peace deal.  Trump is threatening to withdraw from talks if the two sides cannot agree a ceasefire.  He says Crimean is really lost and pretty much the best Ukraine can hope for is for Russia to stop their offensive and take no more Ukrainian land.  It remains clear that Trump would settle for new borders to be drawn to reflect land currently held by Russia, it is also clear Trump would love to be the guy who brought peace to the region and I think he’d take that regardless of the cost to Ukraine.

After a reasonably quiet week on the data front this week, next week gets busier.  I’ve mentioned the US employment numbers due out, but we’ll also have other major data in the form of GDP, core PCE and ISM manufacturing PMI from the US.  We’ll see the latest EU GDP and inflation numbers, while down under we’ll have Aussie inflation, trade balance and retail sales.  Nothing really of note from the UK next week but we’ll be looking for any news on trade talks with the US .

To the weekend and plenty of football action with the FA cup semi-finals as well as premier league matches which includes Liverpool v Spurs, which is likely to see Liverpool win the league title, it would certainly be a huge surprise if Spurs could pull anything remotely special out of the bag.  In the Championship, Burnley have the chance to go top if they can beat QPR, with rivals Leeds not playing until Monday.

Boxing fans will be looking forward to the Benn/Eubank fight taking place on Saturday although it is unlikely to reach the levels of their fathers world title fight back in 1990 that saw Eubank Sr beat Nigel Benn.  This fight should have taken place back in Oct 2022 but was cancelled due to Benn Jr failing a drugs test.  Eubank Jr is favourite to win this one.

The weather looks OK for the weekend but as we move into next week the forecast suggests temperatures could get as high as 25°c which has given rise to some rather dramatic headlines in the papers of a mini-heatwave.  Hardly a heatwave, but those temperatures will be very welcome!

Have a great day and a terrific weekend as and when it comes…

-  13.30 CAD retail sales

-  15.00 US michigan sentiment survey

-  20.15 BoEs Greene speaks