Calm moves and lower volumes characterised overnight trading. Shares, currencies, bonds and commodities broadly retraced recent moves ahead of key central bank meetings. European shares reversed previous losses and US shares rose on continuing stronger earnings reports. Oil bucked the trend, moving higher despite a report showing US production reaching for all-time highs.
The boards of both the Bank of Japan and the European Central Bank meet today. Neither is expected to shift interest rates but the importance of the accompanying statements is underlined by recent currency moves. A weakening USD may curtail recent attempts to prepare markets for stimulus withdrawal, and any weakening of JPY and EUR could echo through asset markets.
American Express and IBM reported earnings above consensus estimates. Overall strength in earnings is underpinning record levels in the Dow, S&P 500 and Nasdaq indices. This strength combined with yesterday’s confirmation of strong capital positions at Australian banks sees futures markets indicating better than a half percent opening gain. Energy shares may feature as oil traders focus on a weekly draw of more than 4 million barrels in the US, and despite US production above 9.4 million barrels a day. The all-time high for US production is 9.595 barrels per day.
Australian jobs data may change the tone mid-session. Last month’s strong read employment has many analysts looking for mean reversion in today’s release of this notoriously volatile series. Investors may react strongly to any data that defies consensus estimates of 15,000 new jobs and unemployment edging higher to 5.6%.