US stocks closed in the green as the DOW, S&P and NASDAQ recorded gains of 0.03%, 0.35% and 0.69% respectively. The minutes from the March FOMC meeting showed no major surprises and reflected uncertainty on the future trajectory of interest rates. Members noted that time would be needed to assess how economic growth would pan out in the following quarters given a number of uncertainties that have a bearing on the U.S. and global economic outlook still awaited resolution.
Asia slipping NIKKEI +0.08%, HANG SENG -0.92% & CSI 300 -1.98%. US-China trade talks made progress with US Treasury Secretary Mnuchin saying that an agreement has been reached on the trade deal enforcement. March CPI figures for China came out at 2.3% YOY up from 1.5% in February largely due to rising pork prices.
The Brexit deadline was extended until October 31 during a summit which ended in the early hours of today. Despite Prime Minister May’s insistence on a short extension on the basis of “serious” and constructive talks with the Labour Party, the EU decided on October 31 with a June review if need be. The extension puts high prospects of UK participation in European parliament next month something Tories consider unacceptable three years after the Brexit vote and this risks a political backlash from Tory critics and in turn a serious challenge to her leadership. The pound was largely unchanged on the news gaining slightly against the dollar to close at 1.3091 while the yield on 10Y UKTs lost 1.35bps to close at 1.0956%.
The ECB backtracked on plans to tighten monetary policy, amid an intensifying climate of economic gloom. Interest rates remained unchanged in response to downgraded economic growth forecasts by the IMF. ECB President Mario Draghi, pointing to data gathered by policymakers recently, agreed that growth had slowed in the euro zone. The yield on 10Y DBR in response fell 1.5bps to -0.0268% while the Euro gained marginally versus the dollar to close at 1.1274.
Russian currency outperforming peers on Wednesday, gained 1.1% to 64.27 level supported by strong oil and non-resident OFZ bid at MinFin’s auctions. In total MinFin sold RUB 137.1 bn of OFZs – which was a new record for weekly placement volume. Russian Eurobonds appreciated at well, RUSSIA 47 closed 30 bps higher at mid 101 level, corporates mostly advanced by 10-20 bps.