• European bourses are firmer after an earnings-dictated start to the session while US futures are essentially flat, with earnings similarly in focus
• The USD has been somewhat choppy initially eclipsing 91.20 sending Cable sub 1.39 briefly though since then the DXY has pulled back with peers mixed
• Russia utilises in excess of 40 warships and 20 support vessels in military drills in the Black Sea
• Libya's NOC said Libyan oil production falls under 1mln BPD and could decline further due to budgetary issues
• Looking ahead, highlights include ECB policy announcement & press conference, US IJC, existing home sales, EZ consumer confidence. Aftermarket earnings from Intel

CORONAVIRUS UPDATE

US COVID-19 cases +61,229 (prev. +60,000), deaths +800 (prev. +456), total vaccine dose administered 215.95mln (prev. 213.38mln), those fully vaccinated 87.59mln (prev. 86.22mln). (Newswires)

Johnson & Johnson (JNJ) published its single-shot COVID-19 vaccine Phase 3 data and stated that it remains confident in the positive benefit-risk profile of the vaccine. JNJ said the vaccine was 85% effective against severe and critical disease, while the trial met its co-primary endpoints of protecting against moderate to severe COVID-19 at 14 and 28 days after vaccination, achieving 67% efficacy at 14 days after vaccination and 66% efficacy at 28 days after vaccination, with prevention against COVID-19-related hospitalization and death across all participants. (Newswires)

UK COVID-19 vaccine passports are to be released as early as next month with UK Department of Transport wanting an official certification scheme in place by May 17th, while the report added that the European Medical Agency recommended fully vaccinated travellers should be able to avoid tests and quarantines. (Telegraph)

European Commission is preparing legal proceedings against AstraZeneca (AZN LN), according to five EU diplomats cited by Politico; one diplomat clarified the point of this is to make it mandatory to provide the COVID-19 vaccine doses in the EU contract. A Majority of EU Countries said they would support suing the company over complaints it massively failed to deliver pledged doses to the bloc. (Politico)

Japanese government will reportedly decide on Friday regarding imposing a state of emergency for 4 prefectures, while there were also comments from Tokyo Governor Koike that she has asked the central government to declare a state of emergency. Subsequently, Economy Minister Nishimura says we require stronger and more targeted steps to curb the COVID-19 pandemic, which would include a request for shop closures, via Kyodo (Newswires)

Indian COVID-19 cases increased by a global single-day record of 314,835 to a total of 15.9mln and deaths rose by a record 2,104 to 184,657. (Newswires)

Germany to remove COVID-19 vaccine prioritisation possibly by end-May, at which point all adults would be eligible for a vaccine. (Bild)

ASIA

Asia-Pac stocks traded mixed as the region struggled to maintain the momentum from the US where the major indices snapped a 2-day losing streak led by advances in small caps which resulted in the Russell 2000 finishing higher by more than 2%, and cyclicals were also favoured with materials, energy, financials and industrials the outperformers in the S&P 500. ASX 200 (+0.8%) was marginally higher with the index kept afloat by strength in gold miners and real estate although gains were capped amid China-related tensions after Australia cancelled the Victoria State MOU and framework agreement with China regarding the Silk Road economic belt that was signed in 2018, while China was said to strongly oppose the cancellation and warned that the action is bound to further deteriorate bilateral relations. Nikkei 225 (+2.4%) outperformed and reclaimed the 29k level with the index largely unfazed by a mixed currency and potential state of emergency declarations for four prefectures which the government will reportedly decide on this Friday. Hang Seng (+0.5%) and Shanghai Comp. (-0.2%) both initially opened higher but then briefly pared all their gains amid ongoing concerns of tighter regulation and continued overhang from US-China tension after the US Senate Foreign Relations Committee backed the Strategic Competition Act of 2021 to send the bill to a full vote at the Senate, while a bipartisan group of lawmakers also proposed legislation calling for USD 100bln in science funding to keep US competitive with China and other nations. Finally, 10yr JGBs were higher and resumed its gradual approach towards a 2-month high amid the eventual upside in T-note futures in the aftermath of a solid 20yr auction stateside, although the gains were only marginal amid the outperformance of Japanese stocks and lack of BoJ purchases in the market today.

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 6.4902 vs exp. 6.4896 (prev. 6.5046)

US Senate Foreign Relations Committee backed the "Strategic Competition Act of 2021" by 21-1 to send the bill for a vote in the Senate. (Newswires)

US

US SEC is reportedly examining disclosure rules following the Archegos blowup, while other reports noted that Credit Suisse's (CSGN SW) exposure to Archegos investments had increased to above USD 20bln. (Newswires/WSJ)

UK/EU

UK trade groups stated that the UK government is boosting its efforts to make the implementation of the Northern Ireland protocol work, despite UK PM Johnson's criticism regarding some of the requirements and calls for further measures to mitigate the impact of the post-Brexit deal on Northern Ireland. (FT)

The number of UK companies in financial distress reportedly increased by the fastest pace in 7 years during Q1 as there were nearly 100k more businesses significantly distressed compared with Q4 2020, according to data from insolvency firm Begbies Traynor. (FT)

Italian PM Draghi is to unveil a EUR 221bln recovery plan next week to overhaul Italy’s economy. (FT) In-line with earlier reports that the plan would be presented in the final week of April

GEOPOLITICAL

US official said the second round of talks in Vienna provided a better idea for what the US and Iran need to do to return to compliance on a nuclear deal, while the talks will likely be multiple rounds and we are not near a conclusion with the outcome still uncertain. The official also stated there are still disagreements and in some cases, they are important ones, with differences over which sanctions are needed to be removed and what actions Iran needs to take to resume obligations. Furthermore, the official stated there is no guarantee a future US administration would stick to any agreement and that the US will not rush to meet a deadline on the deal but believes it can remove sanctions quickly if an agreement is made. (Newswires)

Russia utilises in excess of 40 warships and 20 support vessels in military drills in the Black Sea, Ifax reports; over 10,000 soldiers are to take part in drills in Crimea, Ria reports. (Newswires)

Ukraine Foreign Minister Kuleba that international partners need to follow words with deeds to deter Russian use of force and that have no information that Russia has taken a decision to conduct a new military operation in Ukraine, while they have asked EU members to ban Russia from the SWIFT financial system as part of new sanctions and asked US Secretary of State Blinken for help to acquire electronic warfare system to counter Russia. Furthermore, the Foreign Minister said that they have not received a response from Moscow regarding the offer for a Zelenskiy-Putin meeting and he stated that Putin is sending a message that Russia can cross other countries’ red lines but not the other way around. (Newswires)

French Foreign Minister has warned Russia that the EU will hold President Putin and authorities responsible in the event Navalny dies, would lead to the imposition of new sanctions. (Newswires)

China Foreign Ministry says Australia should avoid making the already strained ties even worse, China has lodged stern representations and reserves the right to take further action, re. the belt and road deal cancellations by Australia. (Newswires) In-fitting with commentary yesterday on the matter

There was an explosion and rocket alert near Israel's Dimona nuclear facility which the Israeli Army stated was caused by a Syrian anti-aircraft missile which overflew its target. Furthermore, an Israeli military spokesman said the Dimona reactor was not hit and that it wasn't even close, while there was no casualties nor damage reported from the errant Syrian missile strike and it was also reported that Israel conducted an airstrike near Damascus which Syrian air defenses engaged. (Newswires/Twitter)

Saudi-led coalition said it intercepted an armed drone launched by Houthis at Khamis Mushait. (Newswires)

EQUITIES

Equities in Europe trade with comfortable gains across the board (Euro Stoxx 50 +0.9%) as sentiment picked up from a mixed APAC handover and as earnings season kicks into gear with traders now eyeing the ECB’s decision and presser later (full preview available in the Newsquawk Research Suite). State-side, US equity futures trade sideways awaiting catalysts whilst the RTY experiences mild underperformance. Back to Europe, the general direction across bourses remains positive but individual performances vary – largely due to a slew of large-cap earnings in the EU pre-market. The AEX (+1.3%) and SMI (+1.1%) stand as the top performers with the former feeling second winds from ASML (+2.9%) earnings. Meanwhile, the latter is buoyed by Nestle's (+3.6%) performance post-earnings, in turn offsetting pressure from Credit Suisse (-5.6%) whose shares plumb the depths amid substantial US hedge fund-related costs coupled with probes by the Swiss and US watchdogs regarding the Archegos situation. Credit Suisse noted that they have exited 97% of the related position, with a CHF 600mln impact seen in Q2. Thus, Europe sees its financial sectors as the current laggard, whilst the upside sees Food & Beverages, closely followed by Tech. The broader sectors however do not portray an overarching theme. In terms of individual movers, AstraZeneca (+1.1%) has shrugged off reports that the EU is said to be getting ready to launch legal proceedings against AstraZeneca over complaints it failed to deliver on its pledges. On the flip side, Aggreko (-2.4%) is pressured as Liontrust Asset Management (12% stake) is reportedly intending to oppose the GBP 2.3bln takeover deal by a consortium involving TDR and I Squared, according to sources. Meanwhile, earnings-related movers include the likes of Volvo (+3.5%), SAP (+1.5%), Hermes (+3%), Renault (-2%) and Orange (-2%).

AT&T Inc (T) Q1 2021 (USD): Adj EPS 0.86 (exp. 0.78/0.54 GAAP), Revenue 43.9bln (exp. 42.69bln)

Southwest Airlines Co (LUV) Q1 21 (USD): EPS -1.72 (exp. -1.87), Revenue 2.05bln (exp. 2.03bln); Q1 cash burn between 2-4mln per day; estimates Q2 capacity to increase about 90%

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

FX

CHF/NZD/AUD - Not quite all change in the major pecking order, but the tables have turned for the Franc and Kiwi, as Usd/Chf retreats through 0.9150 from yesterday’s high just shy of 0.9200 and Nzd/Usd lets go of the 0.7200 handle again. Encouraging Swiss trade data revealing a significantly wider surplus swelled by key watch exports may be helping the Franc leverage more from the latest bout of Greenback weakness, while the Kiwi looks somewhat taken aback by a marked change in direction in Aud/Nzd cross flows from sub-1.0750 lows to the upper 1.0700 area in wake of a rise in NAB business sentiment that is helping the Aussie deflect further angst with China over the cancellation of the Silk Road MOU and framework agreement. Indeed, Aud/Usd is holding near 0.7750 as attention turns to preliminary PMIs.

DXY - The Dollar index has succumbed to more selling pressure after running out of steam into 91.500 on Wednesday and then relenting to the Loonie’s post-BoC resurgence, but underlying bids ahead of recent lows are helping to keep the DXY contained between 90.999-91.204 bounds in the run up to this week’s first real batch of US data in the form of jobless claims and existing home sales.

EUR/JPY/CAD/GBP - Having survived several rigorous tests of the 1.2000 level, the Euro found 1.2050 vs the Buck almost as impregnable and is now hovering around 1.2025 awaiting the ECB, albeit without much aspiration for anything meaningful in terms of policy insight to trade off. However, the post-meeting press conference and Q&A always hold potential for something unexpected - full preview of the event available in the Research Suite and to be posted on the Headline Feed before 12.45BST. Elsewhere, the Yen seems to be in a quandary in advance of Japanese CPI given hefty option expiry interest at the 108.00 strike (1.6 bn) and bigger expiries between 108.30-40 (2.6 bn), but key technical resistance at 107.77 (38.2% Fib retracement of the move from 110.97 to 102.59) still proving too tough to scale. Meanwhile, the Loonie has lost a bit of its aforementioned BoC inspired gusto and is straddling 1.2500 in the absence of further impetus that is highly unlikely to come via Canadian new home prices today, and Sterling is fading as well following a test of 1.3950 vs the Greenback, though should derive more independent impetus from UK retail sales and flash PMIs on Friday if not public finances, while the below-forecast CBI metric failed to induce any action.

SCANDI/EM - The Nok has recouped a chunk of its midweek losses to retest offers into 10.0000, and perhaps with the aid of an improvement in Norwegian Q1 industrial sentiment, but the Try has depreciated further through 8.3500 at one stage vs the Usd with no assistance from a fall in Turkish consumer confidence or reports that US President Biden plans to officially acknowledge the Armenian genocide and likely exacerbate already fractious relations between NATO nations. Moreover, the Lira still has CBRT minutes to come. Conversely, the Cnh/Cny and Rub continue to contend quite well with heightened China/US-Australia and Russia/US/EU etc strains circa 6.4900 and 76.2100.

• Australian NAB Quarterly Business Confidence (Q1) 17 (Prev. 14)

Notable FX Expiries, NY Cut:

• USD/JPY: 108.00 (1.6BLN), 108.30-40 (2.6BLN)

Turkey has commenced a probe into the Thodex cryptocurrency exchange, according to local press. (Twitter)

FIXED

Although Bunds saw enough follow-through buying to post a new w-t-d pinnacle in early Eurex trade after closing a gap from late yesterday, 121.27 has not been bettered and left another aperture just above unfilled before a gradual retreat amidst a decent bounce in stocks and some defensive pre-ECB positioning. Indeed, the core Eurozone bond and its counterparts are now all hovering just off new intraday lows below par, with the 10 year German benchmark at 170.79 (-9 ticks vs +39 ticks), Gilts down to 128.73 (+6 ticks vs +26 ticks) and T-note 132-15+ compared to 132-245+ when post-20 year auction relief was more apparent. Note also, newswires report heavy buying of OTM put spreads in the Jun21 10 year expiry plus outright puts in 5s that may have compounded the UST retreat ahead of IJC and existing home sales.

COMMODITIES

WTI and Brent front month future are again choppy but within a tighter range than seen in recent days, with the former on either side of 61/bbl (60.61-61.27/bbl range) and the latter oscillating around USD 65/bbl (64.58-65.26/bbl). The complex continues to balance the scales with the demand side of the equation weighing rising cases vs vaccinations - with energy consultancy firm FGE forecasting the Indian COVID outbreak to hit 500k BPD in oil demand in May. Meanwhile, the supply side tackles OPEC+, Libyan and Iranian supply developments – with Petro-Logistics suggesting Iranian exports remain elevated at 500k BPD thus far in April and may not hit 2020 lows as JCPOA talks continue – with the US said to be mulling lifting some oil-related sanctions. Tensions with Russia are also eyed as drills are underway, with over 40 warships and 20 support vessels in military drills in the Black Sea, and north of 10,000 partaking in drills in Crimea. Turning to OPEC+, there remains a lack of official communication from the secretariat on whether an OPEC+ meeting will follow next week’s JMMC. If an OPEC+ meeting is to go ahead, then the door remains open for a potential tweak to the output quotas set through July in wake of the COVID developments and some limited vaccine rollouts in light of rare blood clot reports. Russia has remarked that next week’s meeting will likely focus more on current market dynamics, intimating just a JMMC meeting, whilst some also suggested that it will be difficult to carry out two meetings during the Islamic period of Ramadan. Elsewhere, spot gold and silver have been moving with firming Dollar, with the former waning off its 1,797/oz intraday peak to reside at session lows, whilst spot silver failed to sustain an upside breach of USD 26.50/oz overnight. Over to base metals, LME copper is relatively flat but still in close proximity to USD 9,500/t, whilst Shanghai copper overnight dipped with trader citing consolidation following the recent rise. Chinese steel futures hit record highs with some pointing to expectations of robust demand.

US President Biden administration's environmental council head said the White House is considering an aggressive push on renewable energy. (Newswires)

Libya's NOC said Libyan oil production falls under 1mln BPD and could decline further due to budgetary issues. (Newswires)

Iranian April exports remain elevated at around 500k BPD so far, according to Petro-Logistics, whilst exports may not return to 2020 lows as JCPOA talks continue. (Newswires)