One very obvious driver for the markets today as the National People’s Congress kicked off in China. The government catching equity markets off guard by abandoning the annual GDP target for the first time. They  have promised more stimulus which is the good news but markets were spooked as they put the relationship with Hong Kong under scrutiny with plans for a new Security Law

With markets quieter given Ascension Day, and another blistering day of sun in the UK it’s hard not to let your mind drift to thoughts of a beach and a Pina Colada. Excitingly, that may not actually be too far off as EasyJet today has announced that they will be restarting some flights from the 15th June! Where will your first port of call be?!

The hottest day of the year so far sees blue skies, bright sunshine and a market that is taking it’s time to decide where to go next. Having tested the recent lows on Friday before roaring back towards month highs on Monday we are now settling into some very clear ranges across a lot of markets. The earnings season all but done so it will be stimulus (or lack of it) and Covid 19 headlines that dictate where we go from here.

A more nuanced session today after yesterday’s rip. Stimulus spec and news of possible vaccines obviously helping markets yesterday but the reality is the vaccine test will take a lot more trialling before it arrives. Short sellers finally got the chance to get their teeth into names they think will underperform and as the regulatory protection disappeared we had some of the old favourites (especially banks) come under pressure.

European equities started the week on a positive tone and we are seeing all sectors  and indices trading in the green. Volumes are poor though and none of the indices are trading above their AVATs. The rest of the week’s direction is likely to come from any comments from Governments and Central Banks. Especially after Powell’s comments over the weekend and after Andy Haldane (BoE’s chief Economist) said during an interview that the bank will study options for the forward path of monetary policy including negative rates.

It’s been a couple of weeks of resilient market moves in the face of negative economic news where many people looked to “buy the dip” (confirmed by HL/LN this morning adding an extra 94,000 net new clients). Nonetheless, it feels like equities are running out of steam and we are starting to get an idea of where they are heading next.

Another day of earnings which were broadly better than expected, macro data that was again horrendous and Covid 19 headlines which in the last 24 hours have been negative. The last two points outweighing earnings so far today as Europe followed the late wobble in the US to trade negatively from the beginning. Worries of how lockdown is going to look and whether some countries are moving too quickly definitely dominating right now.

European equities have stalled within the +/- 1% range for some days now. Volumes have been pretty mixed throughout the trading session although it is worth pointing out some individual stocks. VOD LN (trading +80% above its 30d AVAT – on numbers), MT NA (+400% vs 30d – on share sale) and CTEC LN (+160% vs 30d – on the GIC placing). Feels like fears over a second wave are starting to weigh slightly so all we can do is wait for further news to confirm anything on that front.  

Feels like we are getting used to “the new normal” where countries report fewer cases each day and very slowly relax quarantine restrictions (in the case of London, often with a lag to what people are already doing). Boris Johnson announced last night a new message being “stay alert” as opposed to “stay at home”. There has been some confusion about the purposefully vague messaging, but what’s clear is that changes will be cautiously gradual. EU equities tried to stay in the green at the open but lost all of the early gains pretty quickly (with airlines leading the way down). Volumes are slightly higher today but overall they remain poor.

After three days of no major moves across markets (note the S&P moved less than 1% in the past 3 days – first time since Feb’s peak), the storyline hasn’t changed much today. Countries continue to announce their plans to open their economies and investors are taking a break while they digest results and recent economic data. We saw a pickup in volumes on the FTSE 100 and the IBEX this morning but overall they remain poor.