Major US stock indices closed mixed, as Facebook (FB) and Microsoft (MSFT) went up after the companies published strong quarterly reports, supporting the Nasdaq index, while 3M (MMM) shares fell after publishing disappointing quarterly results / forecasts put pressure on the Dow.

The Facebook report (FB; + 6.3%) released the day before showed that the company's profit for the first quarter of the 2019 fiscal year reached $ 1.89 per share, which was higher than the average forecast of analysts at $ 1.61. Quarterly social network revenues amounted to $ 15.077 billion (+ 26.0% y / y), while the average forecast of analysts assumed $ 14.973 billion.

Microsoft (MSFT; + 3.6%) reported that in the first quarter they earned $ 1.14 per share, which was above the analysts' average forecast of $ 1.00. The quarterly tech-giant revenues were $ 30.571 billion (+ 14.0% y / y), while the average forecast of analysts assumed $ 29.860 billion.

3M (MMM; -13.06%) reported a profit of $ 2.23 per share, which was below the analysts' average forecast of $ 2.50. At the same time, its quarterly revenue amounted to $ 7.863 billion (-5.0% y / y), while the average forecast of analysts assumed $ 8.025 billion. The company also reported a decrease in the forecast earnings per share figure for the whole 2019.

The focus was also on data from the Department of Commerce, which showed that orders for durable goods in the United States increased in March. According to the report, orders for durable goods rose by 2.7% in March after falling by a revised 1.1% in February. Economists had expected durable goods orders to grow by 0.8% compared with the 1.6 percent reduction originally announced in the previous month. Excluding the sharp increase in orders for transportation equipment, orders for durable goods rose by 0.4% in March after a decrease of -0.2% in February.

Most of the components of DOW finished trading in positive territory (18 out of 30). Outsiders were 3M Company (MMM; -13.06%). The growth leader was Microsoft Corporation (MSFT; + 3.63%).

Most sectors of the S & P recorded a decline. The largest decline was in the industrial goods sector (-1.6%). The health sector grew the most (+ 1.2%).

At the time of closing:

Dow 26,461.95 -135.10 -0.51%

S & P 500 2,926.17 -1.08 -0.04%

Nasdaq 100 8,118.68 +16.67 +0.21%

Krishen Rangasamy,  analyst at National Bank Financial, suggests that for the Canadian economy, recruiters do not seem to be bothered by the country’s economic slowdown.

• The labour market has indeed shown resilience with paid employment averaging 52K/month in Q1 according to the Labour Force Survey (LFS), the best quarter since 2010Q2. This morning’s Survey of Employment, Payrolls and Hours (SEPH) suggested solid employment gains as well during the first quarter.
• True, we only just got February data for the SEPH, but the first two months of the quarter averaged a massive 56K/month.
• Declining numbers of employment insurance beneficiaries corroborate evidence from the LFS and SEPH that the Canadian labour market is indeed in good shape.

• Britain must leave the EU quickly and cleanly
• If there was a binary choice between no-deal and no Brexit, I would choose no deal
• Democratic risks of no Brexit are higher than the risks of no-deal

• Expects a pickup in the second half of the year
• Spanish economy is doing well, expects growth slightly above 2% this year
• Germany has fiscal space to deal with economic deceleration
• There are a wide range of potential tools available
• QE is something we can use again if needed
• Have never discussed the possibility of buying stocks
• ECB will define conditions and pricing of TLTROs in June

U.S. stock-index futures traded mixed on Thursday as solid reports from Microsoft (MSFT) and Facebook (FB) helped lift the tech-heavy Nasdaq index, while a slump in shares of industrial conglomerate 3M Company (MMM) weighed on Dow futures.

Global Stocks:

The Commerce Department reported on Thursday that durable goods orders rose by 2.7 percent m-o-m in March after tumbling by a revised 1.1 percent m-o-m in February (originally a 1.6 percent m-o-m decline).

Economists had expected durable goods orders to climb by 0.8 percent m-o-m.

According to the report, the March gain in durable goods orders was attributable to a rebound in orders for transportation equipment.

Excluding orders for transportation equipment, durable goods orders rose by 0.4 percent m-o-m in March after dropping by a revised 0.2 percent m-o-m in February.

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

Tesla (TSLA) downgraded to Neutral from Outperform at Wedbush; target lowered to $275

American Express (AXP) upgraded to Overweight from Equal-Weight at Morgan Stanley; target raised to $140

Facebook (FB) upgraded to Buy from Neutral at UBS; target raised to $240

The data from the Labor Department revealed on Thursday the number of applications for unemployment benefits rose by the most in 19 months last week but the underlying trend continued to point to labor market strength.

According to the report, the initial claims for unemployment benefits increased 37,000 to 230,000 for the week ended April 20. The rise in claims for the week was the most since September 2017.

Economists had expected 200,000 new claims last week.

Claims for the prior week were revised upwardly to 193,000 from the initial estimate of 192,000.

Meanwhile, the four-week moving average of claims rose 4,500 to 206,000 last week.

Freeport-McMoRan (FCX) reported Q1 FY 2019 earnings of $0.05 per share (versus $0.46 in Q1 FY 2018), missing analysts’ consensus of $0.08.

The company’s quarterly revenues amounted to $3.792 bln (-22.1% y/y), generally in line with analysts’ consensus estimate of $3.765 bln.

FCX fell to $13.55 (-0.22%) in pre-market trading.

Yandex N.V. (YNDX) reported Q1 FY 2019 earnings of RUB16.35 per share (versus RUB11.96 in Q1 FY 2018), missing analysts’ consensus of RUB16.70.

The company’s quarterly revenues amounted to RUB37.284 bln (+40.3% y/y), beating analysts’ consensus estimate of RUB36.032 bln.

YNDX rose to $38.37 (+1.99%) in pre-market trading.

Int'l Paper (IP) reported Q1 FY 2019 earnings of $1.11 per share (versus $0.94 in Q1 FY 2018), beating analysts’ consensus of $0.93.

The company’s quarterly revenues amounted to $5.643 bln (+0.4% y/y), missing analysts’ consensus estimate of $5.735 bln.

IP rose to $46.33 (+4.61%) in pre-market trading.

Altria (MO) reported Q1 FY 2019 earnings of $0.90 per share (versus $0.95 in Q1 FY 2018), missing analysts’ consensus of $0.93.

The company’s quarterly revenues amounted to $4.389 bln (-6.0% y/y), missing analysts’ consensus estimate of $4.600 bln.

The company also issued in-line guidance for FY 2019, projecting EPS of $4.15-4.27 versus analysts’ consensus estimate of $4.22.

MO fell to $52.26 (-4.48%) in pre-market trading

3M (MMM) reported Q1 FY 2019 earnings of $2.23 per share (versus $2.50 in Q1 FY 2018), missing analysts’ consensus of $2.50.

The company’s quarterly revenues amounted to $7.863 bln (-5.0% y/y), missing analysts’ consensus estimate of $8.025 bln.

The company also issued downside guidance for FY 2019, projecting EPS of $9.25-9.75 versus its prior guidance of $10.45-10.90 and analysts’ consensus estimate of $10.52.

MMM fell to $202.31 (-7.65%) in pre-market trading.

Visa (V) reported Q1 FY 2019 earnings of $1.31 per share (versus $1.11 in Q1 FY 2018), beating analysts’ consensus of $1.24.

The company’s quarterly revenues amounted to $5.494 bln (+8.3% y/y), generally in line with analysts’ consensus estimate of $5.462 bln.

V rose to $162.17 (+0.42%) in pre-market trading.

Tesla (TSLA) reported Q1 FY 2019 losses of $2.90 per share (versus -$3.35 in Q1 FY 2018), $1.93 worse than analysts’ consensus of -$0.97.

The company’s quarterly revenues amounted to $4.542 bln (+33.2% y/y), missing analysts’ consensus estimate of $5.177 bln.

TSLA fell to $255.50 (-1.22%) in pre-market trading.

• Cannot give exact time when Brexit deal will be brought back to parliament
• Doesn't want to set rigid deadline but it cannot be allowed to drift
• We need to get this Brexit deal done before new EU parliament comes in in July
• Rules out any referendum on Scottish independence before 2021

Microsoft (MSFT) reported Q1 FY 2019 earnings of $1.14 per share (versus $0.95 in Q1 FY 2018), beating analysts’ consensus of $1.00.

The company’s quarterly revenues amounted to $30.571 bln (+14.0% y/y), beating analysts’ consensus estimate of $29.860 bln.

MSFT rose to $131.30 (+5.03%) in pre-market trading.

Facebook (FB) reported Q1 FY 2019 earnings of $1.89 per share (versus $1.69 in Q1 FY 2018), beating analysts’ consensus of $1.61.

The company’s quarterly revenues amounted to $15.077 bln (+26.0% y/y), generally in line with analysts’ consensus estimate of $14.973 bln.

FB rose $199.29 (+9.15%) in pre-market trading.

Analysts at Standard Chartered say the softening external environment has been the most commonly cited reason for downgrades to economic growth forecasts in 2019, including in advanced economies.

Taking the U.S. for instance, the Fed has attributed its dovish pivot largely to the weakening global growth outlook. This may be surprising for some given that the US is still the world’s largest economy when measured in market exchange rate terms and private consumption accounts for 69% of US GDP; total trade stands at 27%. Nevertheless, what really matters is momentum, i.e. the contribution to GDP growth.

Over the past few decades, while net exports’ contribution to GDP for advanced economies remained relatively stable in percentage points terms (fluctuating about the mean of 0), trend GDP growth has continually eased. This implies that the importance of the external environment has increased and net exports are increasingly becoming a significant driver of growth in advanced economies.

The next logical question to ask is “who constitutes the external environment?” – China (and AXCJ) increasingly does. China’s share of total world imports increased ten-fold from 1980 to 2018. Over the same period, China’s share of global GDP increased by 8.7x and 5.7x in PPP and market exchange rate terms, respectively, further highlighting the importance of demand from China in the external environment.

Analysts at TD Securities point out that as per their expectations, the Riksbank has delayed their next repo rate hike to around the turn of next year (from the second half of this year), reduced the pace of their reinvestment purchases from Jul-19 to Dec-20, and stopped reinvesting coupon payments.

“The Riksbank's dovish policy path supported a rally in SEK rates across the board. Markets are currently pricing a 25bps rate hike only by end 2020. With respect to QE reinvestments, today's policy announcement marks the first step towards balance sheet normalization. We think EURSEK's spike above 10.65 looks excessive to what is, essentially, a catch-up move. We think investors with short time horizons could chase a pullback move, but the longer-term uptrend seems well entrenched for the cross.”

One investor said the markets could be driven even higher on strong earnings.

“We were running into a market that had gotten so much fear at the end of last year, that earnings estimates came very far down, perhaps too far down,” Timothy Lesko, partner at Granite Investment Advisors, said.

Lesko that he expected a “snap back” from earnings revisions, but companies went further, reporting “much better” earnings and revenues. “It’s been a nice run in the market, and maybe there’s a little more room to go,” he said.

Valuations are in the high teens now, but could trade north of 20 times earnings, he said.

“Maybe there’s 10, 15% left” in the market’s potential rise, Lesko projected, pointing to a “very, very pleasant” interest rate environment.

However, Lesko said the markets could see some softness if the U.S. doesn’t reach trade deals with China and Europe, which have already been priced in.

Several economists, including one from U.S. banking giant J.P. Morgan, have downgraded their 2019 growth forecasts for South Korea, after an official estimate showed the north Asian economy unexpectedly shrank in the first quarter.

Bank of Korea surprised investors and analysts on Thursday by announcing that the economy contracted by 0.3% on a quarterly basis in the period from January to March this year. Compared to a year ago, the South Korean economy grew by 1.8% in the first quarter. That’s below the 2.5% expansion that projected.

Seok Gil Park, an economist at J.P. Morgan, now expects South Korea to grow by 2.4% for the full year, down from the previous projection of 2.6%.

Economists from ANZ wrote in a report that South Korean economic growth in 2019 will likely be lackluster. They downgraded the country’s growth for this year to 2.2% from their previous estimate of 2.5%.

Consultancy Capital Economics was even more pessimistic about the country’s prospects. Its economist, Alex Holmes, expects South Korea to grow by 1.8% this year — lower than his previous forecast of 2%.

Iran will not allow any country replace its oil sales in the global market, the Foreign Ministry said, after the US told importers to halt Iranian purchases from May.

Washington has decided not to renew its exemptions from U.S. sanctions against Iran that it granted last year to buyers of Iranian oil.

A senior U.S. administration official said on Monday that President Donald Trump was confident Saudi Arabia and the United Arab Emirates would fill any gap left in the oil market.

"The Islamic Republic of Iran will not allow any country to replace Iran in the oil market. The United States and those countries will be responsible for any consequences," Iranian Foreign Ministry spokesman Abbas Mousavi said.

The spokesman condemned Saudi Arabia, the world's biggest oil exporter, and Bahrain for welcoming U.S. sanctions on Tehran.

The Asian Development Bank sees value in continuing to lend to China, its president said, in response to calls for the institution to stop granting loans to the world's second-largest economy.

ADB President Takehiko Nakao also said the multilateral financial institution's lending to China "is not huge" so it will not crowd out borrowers from poorer countries.

"There is merit in lending to China. One we can have influence over such policies like climate change and the environment, which might have a positive impact on developing countries and to the region," Nakao told reporters.

The Japanese government, which is a founding member of the ADB, has urged the Manila-based lender to stop lending to China on the grounds that it is rich enough to "graduate" from aid.

Nakao said ADB earns from its loans to China and this income could also be used to support its operations in poorer countries.

ADB's committed loans to China have fallen to 12 percent of its total in 2018 from 19 percent in 2013, Nakao said.

• Ample degree of accommodation is still needed

• Risks to Eurozone growth outlook remain tilted to the downside

• Information since March confirms slower growth momentum

Karen Jones, analyst at Commerzbank, suggests that the USD/CHF pair is heading to the 1.0295/January 2015 high and the 1.0343 December 2016 peak, which represents a very tough resistance band for the market and has provoked failure for 5 years.

“We would expect it to hold again. We note a 13 count of the 240 minute chart and would allow for a minor pullback. To the 1.01 area. The market will find initial support offered by 1.01 then the 55 day ma at 1.0033 ahead of the 200 day ma at .9934. The 200 day ma guards the March low at .9895 The March low guards the .9881 6 month support line and the .9716 recent low.”

Citi discusses the recent expectations for S&P to downgrade Italy's rating by Friday.

"The overnight move lower in EURUSD comes as Italian bonds drop amid reports of coalition government tensions ahead of the S&P ratings review this week. However, Italy’s coalition parties manage to reach a compromise on the introduction of debt-relief measures for Rome overnight. Nevertheless, markets remain concerned about the S&P review of Italy’s BBB rating on Friday, which is on negative outlook. Downside risks have risen as Italy’s DEF’s growth estimate of 0.2% for 2019 is below S&P’s 1.1%, and debt forecast of 132.7% for 2019 is higher than S&P’s 128.5%. However, Citi analysts think a downgrade is unlikely because – (1) the fiscal expansion is not been as bad as feared by the agency; (2) there is still a commitment to fiscal tightening in 2020; (3) there is already a downward qualitative adjustment to model-based rating; and (4) the rating is already lower than in 2011 (during the start of euro zone the sovereign debt crisis)," Citi argues.

According to the report from National Statistics Institute, the number of employed persons decreased by 93,400 people in the first quarter of 2019 compared to the previous quarter (-0.48%) and stands at 19,471,100. In seasonally adjusted terms, the quarterly variation is 0.76%. Employment has grown by 596,900 people (3.16%) in the last 12 months.

Employment increased this quarter by 2,600 people in the public sector and decreased by 96,100 in the private sector. In the last 12 months, employment has increased by 489,100 people in the private sector and by 107,900 in the public sector.

Employees decreased this quarter by 95,800. Those with an indefinite contract increase by 89,900, while those with a temporary contract are reduced by 185,800. In annual variation, the number of employees increases by 565,500 (indefinite employment increases by 455,100 people and temporary by 110,400). The number of self-employed workers rises by 1,600 this quarter and by 30,400 in the last 12 months.

The unemployment rate stands at 14.70%, which is 25 hundredths more than in the previous quarter. In the last year this rate has fallen by 2.05 points.

U.S. attempts to drive Iranian oil exports down to zero come against the backdrop of a global market that is sufficiently well supplied to avoid price disruptions, senior U.S. officials said on Thursday.

“There’s roughly a million barrels per day (bpd) of Iranian crude (exports) left, and there is plenty of supply in the market to ease that transition and maintain stable prices,” said Brian Hook, U.S. Special Representative for Iran and Senior Policy Advisor to the Secretary of State, speaking with reporters.

The comments came three days after the United States demanded importers halt oil purchases from Tehran from May - or face punitive action.

• virtuous economic cycle is in place

• consumer prices have remained somewhat weak

• expect CPI to pick up toward 2% gradually

• risks are tilted to downside for economy, prices

• Board member Kataoka opposed assessment of prices in Economic Outlook Report

• it is likely to take time to hit price target

• will adjust monetary policy swiftly as needed to maintain momentum toward 2pct price target

• aim is to boost trust in BOJ by clarifying guidance

• fully possible time frame under forward guidance could spring 2020

• made it clear that the guidance applies for long time

• our forward guidance is based on state of economy and prices

• some had seen rate increase coming right after tax hike -BOJ judgements are data dependent

Sean Callow, analyst at Westpac, points out that the Australia’s below-consensus inflation reading has stoked a fresh wave of pricing for RBA rate cuts.

“A cut to 1.25% had only been fully priced by the Oct 2019 meeting but after CPI it was priced by June, with the chance of a May cut – in the heat of the election campaign no less – around 2/3. The debate over the RBA policy outlook will dominate discussion near term, with little on Australia’s data calendar to provide fresh direction. This is likely to keep AUD/USD on the back foot in the week ahead. Adding to the pressure on AUD/USD in the week ahead should be a firmer US dollar, backed by upward revisions to US Q1 GDP forecasts (due Fri). But downside on the Aussie could be contained by a more positive global mood e.g. record highs for US equities and China’s stronger March data. The RBA will be making note of these developments too.”

The Bank of England is likely to keep interest rates on hold until August 2020 because of a slower global economy and prolonged uncertainty about Brexit, a leading think tank said.

The National Institute of Economic and Social Research pushed back by a year its previous forecast of a BoE rate hike which it made as recently as February.

NIESR economist Garry Young said a weaker global economy, and its knock-in impact on oil prices and other imports, was impacting monetary policy around the world, while in Britain uncertainty about Brexit has also kept the BoE on the sidelines.

"Now we expect the first increase in Bank Rate to be next August rather than this August," he said.

China's central bank has no intent to tighten or relax monetary policy, a vice governor said on Thursday, as the market debates how much more support Beijing will give the economy after surprisingly resilient data was released last week.

The People's Bank of China's use of reverse repos or a medium-term lending facility (MLF) does not signal that it has a loosening bias, Vice-Governor Liu Guoqiang told.

On the contrary, said Liu, if the central bank has not conducted reverse repos for a few days, it does not mean monetary policy is about to tighten. Those tools are designed to adjust short-term liquidity, he added.

Financial market views over China's policy outlook have shifted markedly since the release of better-than-expected first-quarter GDP and March economic data, which suggested the economy may be starting to steady after a flurry of earlier growth-boosting measures.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1273 (381)

$1.1243 (381)

$1.1224 (212)

Price at time of writing this review: $1.1155

Support levels (open interest**, contracts):

$1.1119 (2801)

$1.1082 (2709)

$1.1040 (1844)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 3 is 82265 contracts (according to data from April, 24) with the maximum number of contracts with strike price $1,1500 (5818);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3204 (2109)

$1.3111 (1673)

$1.3030 (280)

Price at time of writing this review: $1.2903

Support levels (open interest**, contracts):

$1.2863 (1990)

$1.2827 (1288)

$1.2786 (1708)

Comments:

- Overall open interest on the CALL options with the expiration date May, 3 is 24494 contracts, with the maximum number of contracts with strike price $1,3500 (2425);

- Overall open interest on the PUT options with the expiration date May, 3 is 22978 contracts, with the maximum number of contracts with strike price $1,2750 (2370);

- The ratio of PUT/CALL was 0.94 versus 0.94 from the previous trading day according to data from April, 24

* - 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.