Tech-heavy NASDAQ reached a record 8,151.85 points closing 0.21% end of day following strong results from Microsoft and Facebook. Microsoft’s shares rose as much as 5.1% in the morning in New York, pushing its valuation across $1 trillion before pulling back slightly. The move edged the software giant in front of Apple as the world’s most valuable company. Elsewhere, the DOW and the S&P closed lower at -0.51% and -0.04% respectively. The yield on 10Y USTs was about flat at 2.53%.
Theresa May’s plan to stop Britain’s participation in European elections looks doomed with the prime minister unlikely to put her Brexit bill to Parliament next week, meaning there won’t be enough time to get it ratified before the European Parliament elections later. Failure to keep the UK out of the May elections would be disastrous for the Tories as it highlights the government’s failure to deliver Brexit. As if not enough, Pro-Brexit Conservatives are pressing for a timeline for her departure to pave way for a new leader even if she hasn’t delivered Brexit (a condition she had set for her resignation), while weeks of talks with Labour appear to have stalled. The pound was little changed against the dollar at 1.2900 while yield on 10Y UKTs lost 2bps closing at 1.1543%.
Deutsche bank’s merger talks with Commerzbank collapsed as Deutsche Bank decided the risks and costs don’t justify the complex deal. This comes as Deutsche bank had a weak first quarter, its ninth straight in revenue contraction, underperforming its Q1 2018 results by some marging with revenue at €6.4 billion against €7 billion and investment bank revenue €3.3 billion against €3.8 billion. Subsequently, the bank cut its target for full-year revenue saying it expects business to be flat having previously targeted a slight increase. The euro was little changed at $1.1134 while 10Y DBRs crossed into positive territory closing at 0.009%.
Asian stocks were mixed this morning as the CSI and Nikkei fell 0.5% and 0.7% respectively while the Hang Seng edged up 0.2%. The yuan rose as the central bank set its daily reference rate at a stronger-than-expected level and President Xi Jinping pledged against currency depreciation. The mainland yuan rebounded from the two-month low it hit Thursday last week.
Turkey’s central bank abandoned a commitment to provide additional monetary tightening if needed as it extended its interest-rate pause to seven months with the repo rate remaining at 24%. The lira fell to its lowest since October as investors interpreted the move as a dovish turn by the central bank. The lira depreciated as much as 5.9773 against dollar in the afternoon continuing its trend as the worst performing currency against the dollar this month.
Argentina’s international bonds slumped for a second day after suffering a deep selloff on Wednesday sending the implied probability of default over 60% up from 22.7% just a year back. Markets slid as support for President Mauricio Macri tumbled as the economy endured its second recession of his term. Argentine debt is in turn fast approaching distressed debt levels hovering just a few basis points below the 10% threshold.