US/China tensions continue to bubble away, as tensions ratchet up overnight. China has approved the new Hong Kong security legislation, so don’t be surprised if further vitriol is just around the corner. With Hong Kong’s ‘hub status’ in the cross hairs, the HSI was the main under performer in the region this morning. Fahed Kunwar reminds us that for HSBC and StanChart who make c70% and 40% of profits from Hong Kong, this could be a serious hit to their franchise which is built upon Hong Kong’s open markets.

With summer in full swing before the first official day even kicks in and lockdowns/travel restrictions easing every day, it is almost inevitable not to be more positive about life. Ryanair confirmed this morning that they have seen a surge in bookings since the weekend and expect passenger levels to be back at 2019 levels by summer next year. By the sound of things, people are still willing to travel so hopefully we can all have a cheeky summer escape at some point.

After seeing some fairly hefty moves yesterday (mostly on the news that Spain will be open for tourists from July), today was always going to be an interesting session. European equities are definitely holding up since the open and encouragingly, this time on high volumes. Spanish names seem to be the favourites  with vols up +72% vs the last 20 days. Positive news on Remdisivir’s trial are supporting the cause. Same as comments from the Bank of France Governor, which suggest that we could see more stimulus coming (next ECB meeting week is on the June 4th).

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.

After a last minute rally in the US overnight (as the White House prepares for further stimulus), EU equities followed and are currently set to finish the week on a positive note. Volume wise, they have been rather poor despite having expiries today (CAC the exception). Nearly all indices are trading below their turnover AVATs – doesn’t look like there is any real conviction to the bounce, does it? Good news from the Eurostoxx futures though, which are back trading above the 2745 support after making an all-time low yesterday (phew!).

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.