Morning Bid: Extreme fear? Seriously? – Reuters

Customers wearing face masks wait in line to enter a supermarket following the coronavirus disease (COVID-19) outbreak in Chaoyang district of Beijing, China April 24, 2022. REUTERS/Carlos Garcia Rawlins/Files

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A look at the day ahead in markets from Julien Ponthus.

One might think that with CNN’s popular gauge of investor sentiment stuck on ‘extreme fear’, it would take some seriously good news to lift up markets these days.

But all it took yesterday was a whiff of COVID-19 optimism from China and decent U.S. retail data to send global equity markets back into a jolly bullish risk-on mode.

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Tech and growth stocks that many investors would no longer touch with a barge pole outperformed with Microsoft (MSFT.O), Apple (AAPL.O) Tesla (TSLA.O) and Amazon (AMZN.O) lifting the S&P 500 and the Nasdaq higher.

The upbeat mood was hard to reconcile with BofA’s self-described “extremely bearish” monthly survey which showed fund managers had not been as underweight on stocks since May 2020. read more

Supposedly weary traders were also more than happy to knock the dollar further away from last week’s two-decade high and dash into riskier currency bets across Oceania, Asia, Europe and even cyberspace with bitcoin claiming back $30k.

Adding to the upward thrust enjoyed by the dollar’s rivals were fast rising bond yields displaying confidence central banks would be able to carry on monetary tightening despite lingering recession fears and Citi’s economic surprise index falling in negative territory.

Even U.S. Federal Reserve Chair Jerome Powell insisting interest rates would go as high as needed to tame inflation didn’t deter the buy-the-dip crowd. read more

As it stands this morning in Europe though, the latest batch of data might have the bulls hesitate before seeking to pursue this tentative bounce any further.

Consider this: in the last few hours Japan announced its economy shrank in the January-March period, China said new-home prices in April fell and Britain just unveiled its highest inflation reading since the 1980s with a whopping 9% in April. read more

Key developments that should provide more direction to markets on Wednesday:

– Australia Q1 wage gains underwhelm, take heat out of rate talk

-Philippine says ready to act on inflation pressures

-Dutch bank ABN Amro’s Q1 profit beats estimates read more

– UniCredit, Commerzbank discussed merger in early-2022, but shelved plan read more

Aviva targets on track as Q1 general insurance sales rise 5% read more

– German Finance Minister Christian Lindner and EU Commission President Ursula von der Leyen attend German Economic Council annual press conference

-The President of the European Central Bank Christine Lagarde and Member of the ECB’s Executive Board Fabio Panetta participates in G7 Finance Ministers’ and Central Bank Governors’ meeting

– Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook before virtual Mid-Size Bank Coalition of America CEO Talk

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Reporting by Julien Ponthus; Editing by Saikat Chatterjee

Our Standards: The Thomson Reuters Trust Principles.

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