Earnings push US indices higher, DAX at multi-month highs

Summary:
- AUD underperforms on the back of RBA’s rate cut talks
- DE30 at 6-month highs
- Top 3 charts of the week: DE30, AUDNZD, OIL.WTI
- Strong corporate earnings support rally on the US stock market

The document showed that RBA members had discussed a possible rate cut during the meeting held at the beginning of this month. The minutes said that a rate cut would be appropriate if inflation stayed low, unemployment trended up. Simultaneously, the account underlined that given subdued inflation, the likelihood of a near-term rise in rates was low. As a result, the probability for a rate cut by the year-end increased to almost 75% from below 70% yesterday.

Zalando was one of  the best performing stocks from both Euro Stoxx 600 and MDAX indices today. As a reason behind an over 10% surge this morning one can name unexpected profit the retailer has announced in the first quarter of the year. Namely the company said that EBIT was in “single-digit millions of euros” while analysts’ median estimate pointed to a loss of around €10 million. Full Q1 report will be published on 2nd May.

WTI prices have outperformed Brent prices so far this year and this pattern has been even more pronounced in recent weeks. This is a result of market expectations regarding the US shale industry overheating. However, the most recent declines in prices have come mainly from speculation with regard to a possible increase of production limits for OPEC+ countries as soon as in June.

The US industrial output confirmed a slowdown in the US economy by contracting in March by 0.1% m/m after an increase of 0.1% in February and below an expected increase of 0.2%. This also means that output contracted quite heavily in Q1 as February was the sole month of increase.

The previous year was quite volatile on the global stock markets. In turn, asset managers saw some outflows while investment banks saw lacklustre trading revenue and profits. However, BlackRock’s show that the US manager kicked off 2019 on the right footing. BlackRock saw institutional inflows of $29.1 billion and its AUM reached $6.52 trillion.

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