By Jamie McGeever
ORLANDO, Florida, April 21 (Reuters) – Oil and the dollar rose on Tuesday and U.S. stocks fell, as investors baulked at signals from Washington and Tehran that peace talks have not yet been confirmed. This comes a day before the U.S.-Iran ceasefire deadline, which President Donald Trump extended after markets closed.
In my column today, I look at why China’s exchange rate may not be as chronically undervalued as many analysts say. True, China’s external surpluses are large and widening global imbalances, but much of this is offset by China’s huge financial account capital outflows.
Before you read on, don’t forget to sign up for my upcoming LSEG webinar on April 23, where I will talk about safe havens in uncertain times with my ROI colleague Mike Dolan.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Iran yet to decide on whether to attend talks as ceasefire deadline ticks down
2. Warsh says he made no rate-cut promises to Trump, plans ‘robust’ Fed reforms
3. Record surge in gasoline receipts boosts U.S. retail sales, but weakness is looming
4. Can Europe take advantage of its savings buffer over U.S.?: Mike Dolan
5. EXCLUSIVE-Meta to start capturing employee mouse movements, keystrokes for AI training data
Today’s Key Market Moves
• STOCKS: Asia rises. KOSPI rollercoaster in action – hits new high, now +26% in April, on track for best month since 1998. Europe down ~1%. Wall Street’s big three indexes -0.6%.
• SECTORS/SHARES: All but one S&P 500 sectors fall, only energy up. Six sectors fall 1% or more, energy +1.3%. Airlines -1.7%, American Airlines -4% for a second day, United -3% after the bell. Apple -2.5%.
• FX: Dollar up. Euro biggest G10 decliner; CLP, ZAR, HUF among biggest EM decliners.
• BONDS: JGB yields dip, European yields climb. U.S. yields +9 bps at short end, delivering biggest curve flattening in two weeks.
• COMMODITIES/METALS: Oil +3%, gold -2%.
Today’s Talking Points
* Duel on the Hill
Fed chair nominee Kevin Warsh’s confirmation hearing was a contentious affair as he blamed the central bank for the post-pandemic inflation surge, fended off questions from senators on Trump’s influence over policy decisions, and refused to directly say that Trump lost the 2020 election.
There could be quite a bit of change afoot at the Fed if Warsh is confirmed – he called for “regime change” to include a new “framework” for controlling inflation, and a possible overhaul of how it communicates with the public. Monetary policy independence remains “essential” though, Warsh said.
* Trump’s art of the … no deal?
Trump is not one for keeping his views on private sector businesses or executives to himself. Several CEOs and execs have come into his line of fire, and share prices have often moved significantly, in both directions.
On Tuesday, it was the airline sector’s turn to be in the spotlight, as Trump said he opposes a potential merger between United and American, and also said he would “love somebody to buy” Spirit Airlines, which is in bankruptcy.
* Apple fluffs
Talking of upheaval, huge news from Apple late Monday that CEO Tim Cook is stepping down in September to become executive chairman, and will be succeeded by company veteran John Ternus. Shares fell 2.5% on Tuesday, the biggest fall in two months, since just before the Iran war started.
The focus now is what Ternus does on AI. As analysts note, Apple’s press release on his succession didn’t mention AI once. Does this mean Apple will look to embed AI capabilities into existing devices rather than pursue a single transformative product? If so, it could be risky in a world in which innovation is king.
What could move markets tomorrow?
• Developments in the Middle East
• Energy market moves
• Japan trade (March)
• South Korea producer price inflation (March)
• Indonesia interest rate decision
• Turkey interest rate decision
• UK PPI, CPI inflation (March)
• Euro zone consumer confidence (April)
• European Central Bank officials scheduled to speak include President Christine Lagarde, and board members Philip Lane, Piero Cipollone, Sharon Donnery, and Frank Elderson
• U.S. Treasury sells $13 billion of 20-year bonds at auction
• U.S. earnings on tap include Tesla, Lam Research, GE Vernova, IBM, AT&T, Texas Instruments, Boeing
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
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