Danske Bank: EU-valg vil ikke rykke på finansmarkederne. “We expect little to no market reaction to the European Parliament elections in June, despite its status as a significant political event. Historical data suggests that these elections typically have a minimal effect on markets, and we anticipate a similar scenario this time. Current polling data indicate a surge in right-wing populist parties, but not to a degree that would threaten the prevailing majority held by the conciliatory, pro-EU factions (S&D, EPP, Renew, and Greens). Recent polls predict the four pro-EU factions will secure 450 of 720 seats in the European Parliament, surpassing the 361 seats needed for a simple majority despite losing 50 seats since 2019. The right-wing ECR and ID groups are expected to increase their seat count by 57. However, contrasting views on issues like NATO and Russia, and internal disagreements in ID, reduce the chance of a broader right-wing coalition. Instead, they are likely to use their increased influence to form sporadic blocking minorities with other anti-EU parties on issues such as EU integration, green transition, and migration.”
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ABNamro: Beijing is taking bolder action to stabilise property sector. “The Chinese government is working on more forceful actions to stabilise the stumbling property sector. Today, the PBoC announced to remove the nationwide floors for mortgage interest rates, while lowering the minimum downpayment ratios to 15% (from 20%) for first-time home buyers and to 25% (from 30%) for second homes. What is more, Beijing also urged local governments to buy homes from property developers at ‘reasonable prices’, allegedly supported by targeted financing of state banks, and turn these into affordable housing – in an attempt to bolster home sales and mitigate the financing distress for property developers. While it is still early days and the impact will depend on effective implementation, the recent measures and communication signal policy makers’ increasing sense of urgency to tackle the biggest domestic drag to the Chinese economy.”
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Morgan Stanley: The U.S. Federal Reserve will likely start interest rate cuts in September. “Higher-than-expected inflation in first quarter of 2024 reinforced the Fed’s caution and pushed back the rate cuts we previously anticipated in July. Slowing inflation in the second half of the year should give the Fed confidence to move. Investors, consumers and business leaders have been closely tracking the U.S. Federal Reserve’s interpretation of economic data, waiting for the moment when the economy has slowed enough to allow the Fed to cut interest rates for the first time since it began raising them in March 2022. So far, they have waited without result: Recent data has shown that economic growth has remained strong. Namely, inflation continues to be stubborn, with a surprising upswing in the price of goods and services in the first few months of the year.”
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ING: Central banks keep buying gold. “Gold demand from central banks posted its strongest start to any year on record in the first quarter. Central banks added 290 tonnes of gold to their official holdings in the first quarter of the year, with China being the biggest buyer. The People’s Bank of China added 27 tonnes to its gold reserves during the quarter. In April, China’s central bank expanded its gold reserves for an 18th straight month adding 1.87 tonnes and taking the total holdings to 2264.3 tonnes. However, the pace of buying slowed last month amid record high gold prices. Last year central banks bought 1,037 tonnes of gold, just shy of the all-time high of 2022. Gold tends to become more attractive in times of instability, when investors pile into safe-haven assets as a hedge against the economic climate, geopolitical tensions or inflation. Still, the record-breaking rally since mid-February might dent demand for now.”
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Morten W. Langer
