• European bourses are firmer after an earnings fuelled morning while US futures are flat/negative with the NQ underperforming post NFLX -8.0% in pre-market
• Netflix beat on top and bottom lines but subscriber additions were below expectations, also approved a USD 5bln share repurchase scheme
• The USD is firmer with peers mixed/contained though EUR/USD is testing 1.20 to the downside but was unreactive to a favourable German court ruling re. the recovery fund
• US GOP Senators reportedly floated a USD 600bln-800bln counteroffer to President Biden's infrastructure plan
• Looking ahead, highlights include Canadian inflation, BoC rate decision, DoEs, supply from the US

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose to 31.54mln from 31.48mln the day before and deaths rose by 456 to a total 564,813. (Newswires)

The US Gov’t could use its leverage over a key NIH patent use to stabilise vaccine spike proteins to encourage companies to share their knowledge and increase global COVID-19 vaccine access, according to NIH’s Graham; additionally, research indicates that if the US Gov’t were to sue Moderna (MRNA), as they have not licensed the patent, they could owe USD 1bln for just sales to end-2021. (FT)

Japan's government is to declare an emergency in Tokyo, Osaka and Hyogo due to COVID-19 in which a formal decision could be made as soon as this week, while other reports noted that Tokyo is seeking to declare a state of emergency between April 29th - May 9th and will request department stores close during the state or emergency. (Sankei/Mainichi)

France is said to end certain domestic travel restrictions on May 3rd, sources state. (Newswires)

ASIA

Asian equity markets mostly slumped as the negative mood rolled over from the US where the major indices extended on declines led by underperformance in energy and financials amid lower oil prices and yields. In addition, earnings releases did little to spur risk appetite and Netflix shares slumped around 10% after hours despite beating on top and bottom lines, as its subscriber additions were significantly below forecasts and Q2 estimates also underwhelmed. ASX 200 (-0.3%) was negative with the energy sector the worst hit following the recent retreat in oil prices and as participants digested the latest quarterly updates including from BHP which reported a decline in iron ore output and lower than expected shipments. Nikkei 225 (-2.0%) was heavily pressured by a firmer currency and with the government reportedly to declare an emergency in Tokyo, Osaka and Hyogo due to COVID-19 whereby a formal decision could be made as soon as this week. Hang Seng (-1.8%) and Shanghai Comp. (U/C) conformed to the lacklustre mood amid concerns of a regulatory crackdown after MIIT noted that China is to strengthen its inspections of internet companies and although mainland bourses eventually showed resilience, the Hong Kong benchmark languished near its lows after having gapped below the 29k level amid notable losses in the oil majors and with Anta Sports the worst hit among the blue chips after reports its controlling shareholder will offload 88mln shares. Finally, 10yr JGBs were higher following the recent gains in T-notes and as the broad risk aversion spurred a flight to safety, with prices helped by the BoJ’s presence in the market for JPY 955bln of JGBs in mostly 1yr-3yr and 5yr-10yr maturities, while the central bank also offered to buy JPY 75bln in corporate bonds with 3yr-5yr maturities from April 26th.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5046 vs exp. 6.5039 (prev. 6.5103)

Chinese President Xi will attend the April 22nd climate summit at the invitation of US President Biden, with President Xi to attend through video and will also deliver a speech. (Xinhua)

BoJ purchased JPY 70.1bln in ETFs on Wednesday vs. JPY 0bln yesterday. (Newswires)

S&P affirms Japan's A+/A-1 rating; outlook stable; could lift Japan's rating if it comes to believe that fiscal repair will proceed significantly faster than it currently anticipates. (Newswires)

South Korea April 1st-20th Exports rose 45.4% Y/Y, Imports rose 31.3% Y/Y and Trade Balance at provisional deficit of USD 2.03bln. (Newswires)

China is reportedly considering supporting Huarong using PBoC funds, according to source. (Newswires)

US

US GOP Senators reportedly floated a USD 600bln-800bln counteroffer to President Biden's infrastructure plan. Other reports also noted that a group of GOP Senators are looking at an infrastructure proposal valued around USD 600bln, according to Senators Capito and Wicker, who are working on the plan and could release a draft within days although they don’t expect all GOPs to get behind it. (Newswires/Twitter/CNN)

US Senator Sanders is introducing a bill that would make community college tuition free, to pay for this he is reintroducing legislation that puts a tax on trades with stocks at .5%, bonds at .1% and derivatives at .005%. (CBS)

UK/EU

German Constitutional Court has rejected the EU Recovery Package-related injunction; "...based on a summary examination, it does not appear highly likely that the Court will find a violation of Art. 79(3) GG in the principal proceedings... outcome of which is not in favour of the applicants". (Newswires) This ruling should now pave the way for Germany to ratify the package from their perspective; note, all member nations need to do so by end-June, with around 10 other nations still yet to do so, to allow for full ratification and fund distribution.

UK government is planning new cyber security laws to protect smart devices and their users from cyberattacks. (Newswires)

UK CPI YY (Mar) 0.7% vs. Exp. 0.8% (Prev. 0.4%); MM (Mar) 0.3% vs. Exp. 0.3% (Prev. 0.1%)

• Core CPI YY (Mar) 1.1% vs. Exp. 1.1% (Prev. 0.9%); MM (Mar) 0.4% vs. Exp. 0.3%

GEOPOLITICAL

Saudi Arabia reiterated its call for Iran to engage in ongoing negotiations, avoid escalation and not expose the region to more tension, according to a tweet by the state news agency. (Newswires/Twitter)

Russian President Putin says he does hope no country crosses their red lines, constantly developing the military. (Newswires)

EQUITIES

European bourses trade higher across the board (Euro Stoxx 50 +0.8%) following a mixed APAC session as earnings season starts picking up pace. State-side, US equity futures are somewhat mixed, with sideways trade seen in the ES and YM whilst the tech-laden NQ lags slightly and the cyclically-driven RTY outperforms. The underperformance in the NQ could be a function of the rising yields in European hours, but maybe more so on Netflix (-8% pre-market) post-earnings. Barclays, suggests that sentiment surrounding earnings has rarely been so bullish in recent years, but the bank acknowledges that cyclicals are logically expected to lead the bound in earnings, and expect Q1 metrics to lead to more selectivity in finding value stocks offering better risk-reward - "Consensus estimates of 30% Q1 EPS growth in the US and 53% in Europe are not out of reach given easy Y/Y comps and stronger demand, but a lot seems priced in. Lofty P/Es leave little room for upside and stretched technicals raise correction risks. Yet, provided earnings deliver, we think dips should be bought and see equities grinding higher", the bank says. Back to Europe, the Dutch AEX (+1%) narrowly outperforms amid support from ASML (+4.7%) after reporting strong earnings, and updated revenue growth guidance, and the early completion of its share buyback programme, noting that it saw significant demand across all market segments in Q1. That being said, commentary surrounding the chip shortage in the release was sparse. Nonetheless, ASML has provided the IT sector with impetus and thus outperforms. Sectors, in general, are mostly firmer with no standout theme nor risk bias. Meanwhile, the retail sector is propped up by Kering (+1.6%) post-earnings who reported a string of strong metrics - albeit with low-base effects in play - but providing positive omens for the likes of LVMH (+2.0%), Richemont (+0.5%), whilst Hugo Boss (+6.0%) trades firmer with participants pointing to very vague and unconfirmed speculation that the Co. could be a takeover target, whilst another trader mentioned LVMH as a potential party that could be involved. Earnings-related movers this morning include the likes of Heineken (+4.0%), Carrefour (+4.0%) Roche (+1.5%), and Ericsson (-0.3%). Elsewhere, Just Eat Takeaway (-4.5%) and Delivery Hero (-0.9%) trade lower amid reports that UberEats is looking to enter the German market.

Netflix Inc (NFLX) Q1 21 (USD) - EPS 3.75 (exp. 2.97), Revenue 7.16bln (exp. 7.13bln), net subscriber additions missed expectations. Net Subscriber Additions: 3.98mln (exp. 6.25mln), sees Q2 additions at 1.0mln (exp. 4.78mln). Believes Q1 paid membership growth slowed due to large COVID-19 pull forward last year. Sees Q2 EPS 3.16 (exp. 2.68/2.66 GAAP). Sees Q2 rev. 7.30bln (exp. 7.39bln). Board approved USD 5bln share repurchase which it expects to begin this quarter with no fixed expiration date. (PR Newswire) -7.8% in pre-market trade

Norway's Sovereign Wealth Fund Q1 report: equity investment return 6.6%, unlisted real estate 1.4%, fixed income -3.2%. Fund's return was 24bps above the benchmark index. Equity investments had the most positive contribution within Q1, the increase in the equity market was driven by the finance and energy sector. (Wealth Fund)

President Biden has been urged by 12 states to support ending the sale of gas-powered vehicles by 2035, according to a letter. (Newswires)

Please see the Daily European Equity Opening News and the Additional European Equity News headlines for the morning's European earnings

FX

DXY - The Buck has bounced further from worst levels, albeit remaining soft against a few major and EM counterparts, and still largely in corrective trade rather than any real change in fundamentals. However, the technical landscape is getting more constructive as the index climbs from a higher low above 91.000 after closing over the 100 DMA and carves out a higher high at 91.388 ahead of MBA weekly mortgage applications and Usd 24 bn 20 year issuance that could keep US Treasuries on a bear-steepening trajectory, and supportive for the Greenback all else equal.

CHF/EUR/JPY - All conceding ground to the Dollar, with the Franc back below 0.9150, Euro holding just above 1.2000 and Yen retreating though 108.00 again following a relatively strong safe-haven rally overnight when APAC bourses suffered heavy losses in sympathy with US stocks over the preceding session. Indeed, Usd/Jpy hit lows circa 107.88 at one stage, but perhaps crucially from a chart standpoint held just above key Fib support at 107.77 (38.2% retracement), in keeping with the DXY’s rebound on Tuesday from a cloud base protecting a Fib level.

NZD/CAD/GBP/AUD - The Kiwi is still ‘outperforming’ or at least putting up more resistance than most in the face of the Buck revival, and slightly firmer than expected NZ inflation data could be helping to keep Nzd/Usd afloat between 0.7162-87 parameters, on top of stronger Aud/Nzd tailwinds as the cross loses further momentum below 1.0800 to probe under 1.0750. Conversely, stronger than forecast Aussie retail sales have not offered Aud/Usd much encouragement in the low 0.7700s, and the pair appears to have decoupled somewhat from Usd/Cnh-Cny that remain anchored around 6.5000. Elsewhere, the Loonie is now pivoting 1.2600 following its oil-related reversal and awaiting Canadian CPI before the BoC for fresh direction that may be bullish if the Bank does tweak guidance to flag measured QE tapering. Meanwhile, the Pound derived little if any independent impetus via UK inflation data that was somewhat mixed, as Cable manages to stem declines from 1.4000+ to roughly 100 pips and meanders either side of 0.8625 vs the Euro.

EM - Not much reaction to softer than anticipated SA core CPI given that the headline readings matched consensus and the Rand seems content to rotate on a 14.3000 axis eyeing Gold that in turn is fixated on US yields and the Greenback within striking distance of Usd 1800/oz, but capped by recent peaks. In contrast, the Lira is lurching towards 8.2000 and ironically, though not without president amidst a tirade from Turkish President Erdogan about the nation’s battle against interest, inflation and exchange rates.

• Australian Retail Sales (Mar P) M/M 1.4% vs. Exp. 1.0% (Prev. -0.8%)
• New Zealand CPI (Q1) Q/Q 0.8% vs. Exp. 0.7% (Prev. 0.5%)
• New Zealand CPI (Q1) Y/Y 1.5% vs. Exp. 1.4% (Prev. 1.4%)
• New Zealand RBNZ Sectoral Factor Model Inflation (Q1) 1.9% (Prev. 1.8%)

Notable FX Expiry, NY Cut:

• AUD/USD: 0.7740-45 (1.1BLN), 0.7770 (410M)
• EUR/USD: 1.1980-90 (700M), 1.2015 (400M), 1.2050 (500M)

Czech Central Bank Governor Rusnok says he does not expect a rate increase at the May 6th policy meeting, however policy could begin to normalise in H2 2021 despite the softer economic outlook. (Newswires)

FIXED

In contrast to Tuesday, Germany’s 10 year auction was more successful than the 2035 UK sale in terms of relative results if not by direct comparison. Indeed, demand for the former almost hit twice the amount on offer, albeit at a considerably higher an symbolic -25 bp yield and with ‘only’ a circa 14.6% retention vs around 18% previously whereas the DMO mustered just shy of 2.5 bids over the Gbp 2.5 bn on tap as the average yield slipped circa 7.5 bp. Hence, Bunds are still holding up better than Gilts within 170.61-90 and 128.53-88 respective bands from yesterday’s 170.74 Eurex and 128.76 Liffe closes, while US Treasuries retain a marginally softer outright tone and steeper profile before Usd 24 bn 20 year T-notes go under the hammer.

Japan Post (7181 JT) - Co. plans to maintain holdings of foreign bonds flat in FY21; Co. is cautious about purchasing foreign bonds without currency hedges; plans to cut holding of JPY-denominated fixed income assets in FY21/22. (Newswires)

COMMODITIES

WTI and Brent front month futures see another choppy European morning but are ultimately softer, with the former sub-USD 62/bbl (61.64-62.56 intraday range) at the time of writing, whilst the latter extends losses under USD 66/bbl (65.53-66.52 range). The choppiness in the crude complex in recent weeks goes to show the near-term uncertainty surrounding the supply/demand imbalance in the context of rising COVID infections during the recovery phase, and as geopolitical tensions remain heated on multiple fronts. Yesterday, we also saw reports that the US House is advancing the NOPEC bill, which essentially aims to restrict OPEC’s influence on prices via deep production-cuts, although this is unlikely to materialise ahead of the JMMC meeting next week. Note, the US has been at loggerheads with OPEC over the higher crude prices feeding to American consumers ahead of an expected rebound in demand heading into the summer months. Further adding to the bearish narrative, yesterday’s Private Inventory report printed a surprise build, albeit modest, with traders now eyeing the weekly DoE figures as the next scheduled catalyst – with the headline expected to show a draw of almost 3mln bbls. Elsewhere, spot gold and silver have largely been moving in tandem with the Dollar throughout early European hours amid a lack of fresh catalysts, with the former hitting highs just shy of USD 1,800/oz (1,776-1,788 range), ahead of its 100 DMA at USD 1,803/oz. Spot silver oscillates on either side of USD 26/oz. Turning to base metals, copper prices in Shanghai fell almost 1% amid COVID woes surrounding India and Japan as the countries enter targeted lockdowns. Meanwhile, Chinese steel futures rose due to concerns over stricter capacity and output controls from regulators in the coming months.

US Private Inventory Data (w/e April 16th): Crude +0.4mln (exp. -3.0mln), Cushing -1.3mln, Gasoline -1.6mln (exp. +0.5mln), Distillate +0.7mln (exp. -1.0mln). (Newswires)