EUROPEAN MIDDAY/US MORNING REPORT: MONDAY – 28TH – MAY – 2018
* It has been a quiet morning in Europe with both UK and US markets closed for their respective public holidays.
* Italian markets have been the main focus after PM candidate Conte abandoned his attempt to form a government. Banking stocks are leading the FTSE MIB lower (-1.1%) while borrowing costs have spiked with the 10-year yield up 21 basis points to 2.67%. The Euro Stoxx 600 is slightly lower (-0.1%)
* The Euro has been resilient in currency space as the collapse in talks was centred around the rejection of a Euro sceptic Finance Minister. The Dollar Index is flat while moves elsewhere have been relatively modest. The Japanese Yen and Canadian Dollar are trading towards the bottom of the G10 pile.
* Oil prices sharply lower amid report of Saudi/Russia deal to raise output.
* Spanish PM Rajoy said he has no plans to resign.
* Swedish Retail Sales Data (Apr):
- Retail Sales M/M +0.6% versus -0.1% expected, previous +1.2% revised to +1.7%
- Retail Sales Y/Y +3.6% versus +2.0% expected, previous +2.9% revised to +2.7%
* Italian PPI Data (Apr):
- PPI M/M -0.4% versus +0.4% expected, previous +0.4% revised to +0.2%
- PPI Y/Y +1.3% versus +2.0% expected, previous +2.0% revised to +1.8%
* US and North Korea preparing Trump-Kim summit (BBC)
- A US team is holding talks with North Korean officials to prepare a possible meeting between President Donald Trump and the North’s leader Kim Jong-un.
- The talks in the village of Panmunjom, in the demilitarised zone between the two Koreas, are the latest sign that the summit could take place after all.
* Italy’s president refuses to certify minister, denying the prime minister the ability to form government (CNBC):
- The Italian president refused to certify a minister put forward by populist parties, sowing new uncertainty in the country.
- The impasse may trigger a new election.
* Russia, Saudi Arabia Near Deal to Lift Output, Giving Moscow New Sway (WSJ):
- Russia and Saudi Arabia are hammering out the terms of a deal to jointly increase oil production—a move that sent prices sharply lower on Friday and that extends, at least for now, a crucial role for Moscow in influencing global prices.
* Looking ahead, US markets are closed today for Memorial Day while the economic calendar is empty.