March 30 - A look at the day ahead from Danilo Masoni.
Risk-on sentiment is timidly reappearing as hopes grow that the Archegos fiasco will just spoil quarterly results at a few big banks without inflicting any systemic global damage.
And with the policy backdrop supportive of a recovery from the Covid-19 downturn, bond yields have regained momentum and Germany’s DAX equity index looks set for another new historic peak at the open, extending its record-breaking run.
Ten-year U.S. Treasury yields, back above 1.75%, have just set a 14-month high.
U.S. equity futures are subdued however. As President Joe Biden readies a multi-trillion dollar infrastructure bill and higher Treasury yields lift the dollar to four-month highs, investors are booking profits off pricey tech stocks.
The search is on instead for plays better geared to economic recovery.
On the Archegos front, pressure eased a tad off Nomura shares which had on Monday endured a 16% drop, while in Europe, eyes are on Credit Suisse following a fall of nearly 14%. Both have warned of major losses from lending to Archego for derivatives trades.
Investors will wait to see if the events could scupper a planned one billion Swiss franc ($1.08 billion) share buyback this year by Credit Suisse.
Elsewhere in corporate news, a deeply discounted cash call is set to hit tower company Cellnex.
Key developments that should provide more direction to markets on Tuesday:
* Japanese retail sales fell for the third straight month in February as households kept a lid on expenditure
* BOJ Governor offered a cautiously optimistic view of the economy, saying global and Japanese growth are picking up thanks to aggressive stimulus measures
* The Federal Reserve is “a long way from raising interest rates at this point,” Fed Governor Christopher Waller said
* Britain’s Royal Mail to pay a one-off dividend for the year ending March: Imperial Brands maintained its full-year adjusted profit growth forecast
* German flying taxi startup Lilium to float on U.S. markets via a reverse merger with blank-cheque firm Qell Acquisition Corp, valuing the combined company at $3.3 billion
* Fed Deputy chair for supervision, Randall Quarles is to speak.
* Swedish National Bank Stefan Ingves Speaks 1500 GMT
* New York Fed President John Williams 1800 GMT.
* Emerging markets: Chile central bank meets
* German prelim CPI
* US consumer confidence
Reporting by Danilo Masoni; editing by Sujata Rao