 Good morning. Welcome to CMC markets on Friday the 3rd of May and this quick look ahead at the week beginning the 6th of May It's been another decent week for equity markets The German DAX has made a new seven month high above 12,400 and the S&P 500 has managed to make a new record peak above 2940 I think what has struck me more than anything about these particular moves of these two particular indexes is the fact that We haven't really significantly broken above the previous highs particularly in the case of the S&P 500 which saw rather sharp sell-off in the wake of This week's FOMC Rate meeting and press conference from Fed Chair Jay Powell who's rather less than dovish press conference Appeared to catch investors on the hop, but I don't think really we should have been too surprised by that I think markets have been caught up way too much in the political rhetoric of people like Larry Kudlow President Trump's chief economic advisor Who's been calling for a 50 basis point rate cut and President Trump himself who's been calling for a 1%? Fed rate cut now if you actually look at the data neither of those two options is in any way credible Yet markets were pricing in a 62% probability that would see a rate cut By year end and I think press and I think chair Powell's press conference was an effort To reorientate market expectations about the likelihood of a rate cut by year into a much more realistic 50-50 outcome if you actually look at the data the direction of travel for the of the US data There's nothing to suggest that a rate cut Is in any way imminent and I think Chair Powell's press conference was an attempt to try and reorientate the Balance of probabilities now those probabilities could well change later today As we gear up for the US payrolls numbers, but certainly if adp Payrolls are any guide Then the likelihood is we're going to get a fairly decent us payrolls number or certainly Something in the region of around about 180 to 190 thousand New jobs now that could well change Obviously this video will go out post payrolls and we will know more post payrolls than we are Then we'll know now Wages are once again likely to expected to come in around about 3.2 or 3.3 percent And the likelihood of that changing Significantly is not expected to alter the calculus that much What we're also seeing is a strengthening of the dollar and we can see that here in the context of the dollar index Dollar index is up three days in a row. It's well above the 50 100 and 200 day moving averages And the trend is very much clearly your friend in the case of the dollar index So certainly dollar is still very much a case of buy dips The US economy continues to outperform relative to the rest of the world And we have seen a bearish key day reversal on the s&p 500 which might suggest That further improvements in economic data could conversely actually have A negative effect on further aggressive upside in the s&p 500 So we'll have to see how it reacts around about 29 50 29 60 area But I think it's more than likely we'll have a goldilocks scenario whereby the downside is limited to around about 2900 and we could well start to wedge higher But this key day reversal on the US markets Is a warning sign that potentially we could be right for a little bit of a correction Towards the downside, but I don't certainly don't think we'll be we'll be crashing off anytime soon Irrespective of the narrative that gets peddled out every time we come to may which is selling may and go away The trend is still clearly towards the upside. We're still making gradual new highs I expect that to continue while we remain above 2900 on the s&p And while we remain well above 12 000 on the german DAX So it's very much by the dips on equity markets in general We can see also we can also see that in the context of the footsie 100 as well So what are we looking at? For the week ahead because I think it's incumbent upon me to look Towards the week ahead given that equity markets still remain by and large fairly resilient. Well, I'm going to be looking towards UK GDP For the first quarter as well as manufacturing and trade data and that's due out on the 10th of may Due out towards the end of the week We've also got china trade data For april and that could have a significant effect on the australian dollar And it's likely to be a busy week for the australian dollar because we also have The rba Rate decision. So if we look at what i'm looking at for this week, these are the key Markets that i'm looking at for this week the uk 100 footsie 100 s and p 500 of the german DAX We've covered all of them and we're going to look at the australian dollar And the australian dollar has been looking particularly weak in the past Few weeks no pun intended there Simply on the back of slightly weaker than expected economic data And is on the cusp of a very key support level in and around 69 80 69 90 now We've had an awful lot of holidays this week. We've got golden week and china's had a couple of days off But the most recent set of china trade data for march were a little bit of a mixed bag After the weakness of the february numbers There was an improvement in the march export numbers Which improved significantly with the rise of 14.2 percent. That was well above expectations And certainly a vast improvement on the 20 percent decline in february Imports were a little bit more mixed. They were disappointing. They declined 7.6 percent And while they were better than the february numbers, they still remained in the red So i think in terms of internal demand for the chinese economy We have seen a little bit of a slipback on the pmis Which might suggest that the chinese economy maybe isn't as strong as maybe The bounce back in march suggests and that we could well see a little bit of a slipback In april So i think this week's april trade numbers are likely to determine whether the improvement in march was a post lunar new year rebound Or something more pronounced certainly the pmis suggests that Maybe the recovery that we saw in march may not be sustainable and if internal demand Continues to be a concern that's likely to impact on the australian dollar Now it's an rba rate decision And we've seen a surprise deterioration in recent australian economic data and that's prompted speculation That the rba could well be minded to cut rates when they meet to discuss monetary policy On the 7th of may now i think any move on monetary policy next week is highly unlikely Why do i think that because it's an election in may and central bankers by definition are a bit of a cautious bunch They will be very keen not to try and move do anything on monetary policy that could be seen to influence The political vote and that is why i think it'll be very surprising If the rba moves on rates when it meets Next week now that's not to say they won't have a dovish Outlook but certainly in the context of where we are at the moment. There is big support around about 69 80 We do remain vulnerable to a downside push But i think a rate cut at this point in time with an election upcoming Would be a very high risk and very out of character for the central bank We also have a meeting from the rbnz and again Lightly to have a fairly dovish pivot there But i think most of the dovish pivot is likely to be priced into the rba as well as being priced in to the rbnz What else are we looking at for next week services pmis for europe which are due out on the 6th of may the bank holiday monday We have seen a little bit of an improvement in the uk numbers and broadly i think in terms Of services there has been an outperformance relative to manufacturing So i'm expecting that trend to continue in april if recent flash pmis are any guide More broadly i think on terms of the stock picture We're going to be looking towards the uber ipo which is due out on the friday And we also have the latest q1 earnings from lyft and at the moment lyft have been significantly underperforming After the optimism of the post ipo bounce we've pretty much gone one way It's not been a great few weeks for lyft. We've seen heavy falls in its share price Their q1 earnings are due out on the 7th of may and in its pre-ipo prospectus lyft's latest number shows the company turned over 2.6 billion in revenues last year more than double the amount Want to see if that trend continues in the first quarter profits continue to remain elusive Do the q1 numbers suggest that that will improve over the course of the next Um the next few months in terms of the uber ipo that's due out on the friday We will be covering that extensively The big question i think for most people is will it price above its ipo of 44 to 50 dollars a share Now the company is looking to raise nine billion dollars. It values the business around about 84 billion It's below the hundred billion expectations of a month ago. I still think that seems Fairly rich but having seen beyond meat IPO rise 150 on its first day just because it's loss making doesn't necessarily mean it's not going to go up So I think uber is going to be closely watched in terms of how that comes out of the traps Probably likely to trade at a premium in the first couple of days But again, you do have to wonder as to whether or not where how long it will take before reality takes over And the market starts to take a more realistic valuation on some of these ipos that have been coming out But that's it for this week. Thank you very much for listening. It's michael hueson talking to you from cmc markets