Investors await developments after US imposes steel and aluminium tariffs, with Spanish confidence vote and US non-farm payrolls in spotlight
Deutsche Bank, which on Thursday reportedly saw its US business put on a Federal list of problem banks, has now had its credit rating cut by S&P. The agency said:
S&P Global Ratings today lowered its long-term issuer credit ratings on Deutsche Bank AG and its core subsidiaries to ‘BBB+’ from ‘A-’. The outlook is stable. We removed the ratings from CreditWatch negative. ..
The lowering of our long-term issuer credit rating reflects that Deutsche Bank’s updated strategy envisages a deeper restructuring of the business model than we previously expected, with associated non-negligible execution risks.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Normally on a day like today, markets would be focused on the US jobs figures due later and the manufacturing surveys which will give the first snapshots of how the global economy performed last month.
Related: US on brink of trade war with EU, Canada and Mexico as tit-for-tat tariffs begin
European Opening Calls:#FTSE 7695 +0.21%#DAX 12654 -1.01%#CAC 5424 -0.07%#MIB 22100 +1.45%#IBEX 9534 -0.34%
The expected tit for tat response from the EU, Mexico and Canada is setting the scene for a trade war, which is not conducive to global growth. However, the losses have not been as large as we would have expected just a few months ago. The market is becoming more familiar with this administrations’ negotiating tactics and as a result, rather than seeing a move straight into risk off trading, we are seeing some investors take a wait and see approach. The traditional safe haven Japanese yen moved lower versus the dollar, as did gold and European bourses are pointing to a stronger start on the open.
After a strong year of economic activity in 2017 the manufacturing sector got off to a slightly softer start at the beginning of this year, across the board. In some of the recent April data there is evidence that this softness has evened out a little and started to stabilise. In Europe activity was able to rebound a little in part, while in the US we also saw increasing evidence of rising prices with prices paid at 7-year highs. If this trend continues in today’s numbers then that should be supportive of a rebound in Q2. Expectations for Spain, Italy, France and Germany manufacturing are for 54, 53, 55.1 and 56.8.
In the UK we also saw a decent rebound after a soft March number, which may well have been weather related. Activity in May is expected to have steadied at around 53.5, a slight decline from the modest rebound seen in the April numbers with particular attention likely to be on cost price inflation which still looks fairly robust.