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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Early Morning Call: OPEC+ surprise output cuts reignite inflation, global growth fears. USD gains

This latest cut is of around 1.16 million barrels per day.

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USD gains on OPEC+ announcement

The US dollar rose against all major currencies on Monday, as OPEC+ announced a surprise further cut in oil output, reigniting inflation and global growth fears.

This latest cut is of around 1.16 million barrels per day (bpd) taken off the quota which is added to the two million barrels a day already taken out of the system. According to Reuters, this brings total cuts equal to 3.7% of global demand, a move the United States called inadvisable.

The news came a day before the virtual OPEC+ meeting today which had been expected to stick to two million bpd of cuts already in place until the end of 2023.

Equity markets

In the Asia-Pacific region, equity markets were mixed. Japan's Tankan fell to its the worst level in more than two years. The headline index measuring large manufacturers' sentiment fell to one in the first quarter (Q1) from seven in the fourth quarter (Q4), missing a median market forecast of three. They expect to raise capital expenditure by 3.2% in the next twelve months, less than market forecasts for a 4.9% increase.

The survey reveals that many firms are suffering from an array of headwinds, from rising raw material and fuel costs, to slowing overseas growth and slumping chip demand.

In China, the Caixin/S&P Global manufacturing PMI fell to 50 in March, from 51.6 in February, missing expectations of an increase to 51.7, as the sector still suffered a slowdown in production and demand. The new export orders sub-index fell to 49.0 after briefly swinging into growth in February, suggesting global demand remains weak.

At 3pm, ISM manufacturing PMI is forecast to marginally rise to 47.7 in March, from 47.5 the previous month. This would be a fifth straight month of contraction for the manufacturing sector.

Central banks

Several central banks will decide on their interest rates throughout the week.

The Reserve Bank of Australia (RBA) features on Tuesday morning, followed on Wednesday by the Reserve Bank of New Zealand (RBNZ), and the Reserve Bank of India (RBI) on Thursday.

The Australian central bank is expected to raise its rate by another 25-basis points (bp), which would take it to 3.85%. Last quarter, Australia CPI rose to a more than three-decade high of 7.8%. Yet the RBA, as it did in December, signalled again last month a possible end to its current tightening cycle.

The RBNZ is anticipated to scale back the pace of its tightening cycle. Economists expect a 25-basis point hike, taking the official cash rate to 5% on Wednesday. Inflation in the country remains close to a three-decade high of 7.2%. In its last monetary policy statement, RBNZ governor Adrian Orr said the bank still expects the OCR to peak at 5.5% in 2023.

US jobs report

Like every first week of the month, investors await the release of US job reports, starting on Wednesday with ADP employment change. The US private sector is forecast to have created 205,000 jobs in March, after 242,000 in February.

On Thursday, we'll get the weekly jobless claims, and March non-farm payrolls on Friday. Early expectations point to 238,000 job creations, after 311,000 in February. Unemployment is expected to remain at 3.6%, and average hourly earnings to rise by 4.3% year-on-year (YoY).

Equities

HSBC is to hold an informal shareholder meeting in Hong Kong, with chairman Mark Tucker and chief executive Noel Quinn. At least 100 HSBC investors will renew their demand for an Asia business spin-off and an increase in dividend payouts to pre-Covid levels.

For the bank, these two requests are not in the interest of the group and it will therefore recommend voting against them ahead of HSBC's main annual general meeting, in Birmingham on May 5.

Tesla has produced a record set of numbers for first quarter deliveries but missed very hawkish forecasts. Tesla delivered 422,875 vehicles, a record high for the automaker, but smaller than analyst expectations of 430,008 vehicles, according to Refinitiv data.

This means that Tesla deliveries were 36% higher than a year ago, but below the 52% growth rate that was projected by chief executive Elon Musk early this year.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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