April 25, 2023

Daily Report 25/04/2023

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There were no significant domestic developments during Monday while risk appetite was relatively steady as the FTSE 100 index fluctuated around unchanged on the day. Markets continued to expect that the Bank of England would increase interest rates at the May policy meeting which underpinned the currency. Markets will continue to monitor any comments from Bank of England officials with Deputy Governor Broadbent due to speak on Tuesday.

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The German IFO business confidence index strengthened to 93.6 for April from a revised 93.2 the previous month, but slightly below consensus forecasts. The current conditions component edged lower to 95.0 from 95.4 which was more than offset by a recovery in the expectations index to 92.2 from 91.0 the previous month. The IFO remained cautious over the outlook with the economy still lacking momentum despite an increase in export expectations. There was no major impetus from the data, although the Euro managed to push higher. In its latest monthly report, the Bundesbank stated that there had been a rebound in industrial production and that the economy is likely to have expanded in the first quarter of 2023 compared with previous expectations that there would be a small monthly contraction. It added that there had been a further boost to activity due to a surge in industrial orders. The bank added that unemployment is likely to fall slightly over the next few months, but consumption will still be hampered by high inflation. The bank expects that services-sector inflation will decline slowly.

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There were no major US data releases on Monday with the Chicago Fed national activity index remaining at –0.19 for March. The Dallas Fed manufacturing index deteriorated further to a 9-month low of -23.4 for April from -15.7 the previous month, although the underlying components were more positive with a slight net increase in inflation pressures for the month.

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