Stocks remain near 2019 highs; TRY swoons on rising unemployment

Summary:

• Stocks near recent highs but GS drops after update

• What do markets overall expect of earnings season?

• DE30: Deutsche Bank gains on watchdog’s comments

• Turkish Lira falls as unemployment skyrockets

• UK focus shifts to economic data

There’s been some headline news on the tariff front in the last couple of hours which come as a timely reminder that this remains a potential big catalysts for the markets in the coming weeks. The reports state that the US is asking China to shift their retaliatory levies on agricultural products and that Beijing is considering the request. This remains one of the thornier issues on the trade front between the world’s two largest economies and a resolution would be seen as a big step forward. US equities have pulled back a little by the European close but the S&P500 remains fairly well supported and above the 2900 breakout level.

As earnings season kicks into full swing, Goldman Sachs is attracting attention this afternoon after the bank delivered what could be described as a mixed update. On the bright side a $2.25B profit for the first quarter equates to $5.71 a share vs an expected $4.89 but a 13% drop in revenue in a key business unit to $8.81B is a concern. Some drop for the bank’s Wall Street trading and investing and lending segment was expected, but with analysts predicting revenues to come in at $8.9B the decline was greater than expected. Shares have begun lower and are down by around 1.5% at the time of writing.

A more in depth overview of the US earnings season can be viewed here.

Deutsche Bank (DBK.DE) is one of the best performing DAX stocks today. The German financial watchdog is said to have encouraged Deutsche Bank to scale down its presence in the US. Given that the lender struggled on the US market, such a call may be seen as an optimistic development.

The Turkish lira is the weakest currency on Monday as the unemployment rate in Turkey jumped to 14.7% - the highest level in more than 10 years! The lira is down against the dollar nearly 4% in April alone even though most other emerging market currencies advanced in that time-frame. USDTRY trades at 5.80 and is close to a local high of 5.8425 from late March. There is also a strong zone between 5.90 and a psychological level of 6.00.  

With House of Commons in recess for the Easter break, the coming week is unlikely to be dominated by Brexit (thankfully) to the same extent as weeks gone by, with the focus for the UK markets shifting to a series of economic releases. UK Employment figures due out 9:30 Tuesday morning are the first of three significant data points from the UK in as many days, with the latest CPI inflation figures following on before retail sales rounds off the trio on Thursday.  Mining stocks on the FTSE will no doubt be sensitive to the most recent batch of Chinese data, with GDP, industrial production and retail sales all due out overnight on Tuesday. There’s a feeling that the Chinese economy has bounced back in recent months, aided no doubt by a surge in credit, and investors will be hoping for some confirmation of this from hard data out at 3AM Wednesday morning.