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Stocks and oil rise with focus on earnings from chemicals and refiners

Even with three central bank decisions looming later this week from the Fed, Bank of Japan and RBNZ, much of today’s focus among traders is on earnings reports. In particular, earnings from integrated oils may attract attention after the UK’s BP plc and Canada’s Husky Energy posted surprise profits driven be positive results from their refining divisions. Companies with refining assets may also attract attention with Saudi Arabia indicating overnight that as part of an economic and government restructuring, including reforms to reduce the country’s dependence on oil, and ahead of a potential IPO of up to 5%, it has valued Saudi Aramco at $2-3T (yes Trillion).

In addition, chemical major DuPont beat the street last night and raised its full year guidance. The most interesting part of DuPont’s report was that they indicated that negative impact of the higher US dollar has started to fade with the dollar coming back down during the quarter. I had thought that would take longer to show up in corporate results (more next quarter). It also suggests that the currency impact could play a significant role in whether the Fed decides to signal toward a potential June increase in tomorrow’s statement.

Base metal miner Teck Resources posting a surprise profit and Barrick Gold exceeding expectations may also have a positive influence on sentiment toward resource sectors. Earnings from other sectors have been mixed with Canadian National, Eli Lilly and Whirlpool coming in short of expectations while 3M, Proctor & Gamble, Coach and Baxter beat the street.   

In currency action today, the spotlight remains firmly on GBP which continues to rally, breaking out against USD and EUR as Brexit risks fade with another overnight poll showing the Remain camp in the lead. CAD is consolidating recent gains along with the oil price.

Today’s US durable goods report may attract some attention although it’s unlikely to change any minds at the Fed for this week’s meeting. Apple could be active through the day ahead of tonight’s earnings report while oil could attract attention again around this afternoon’s API inventories. Tonight also brings another round of US primary results from 5 states mainly in the northeast led by Pennsylvania and Maryland.  

Corporate News

BP plc        adjusted profit $532M vs street ($245M) refining business earned $1.8B

DuPont    $1.26 vs street $1.04, cuts forex impact on earnings to $0.20 per share from $0.30, raised 2016 EPS guidance to $3.05-$3.20 from $2.95-$3.10.

3M            $2.05 vs street $1.92

Procter and Gamble    $0.86 vs street $0.82

Eli Lilly            $0.83 vs street $0.85

Baxter    Pharma        $0.36 vs guidance $0.30

Whirlpool        $2.63 vs street $2.68

Coach            $0.44 vs street $0.41

Hershey        $1.10 vs street $1.07

Canadian National    $1.00 vs street $0.93, guides 2015 EPS to $4.44 below street $4.66

Barrick Gold        $0.11 vs street $0.10

Teck Resources    $0.03 vs street ($0.03)

Husky Energy         CFPS $0.43 vs street ($0.33)

Thompson Reuters    $0.48 vs street $0.45

Economic News

Significant announcements released overnight include:

Sweden producer prices            (3.7%) vs previous (4.2%)

Singapore industrial production        (0.5%) vs street (2.0%)

Upcoming significant announcements include:

8:30 am EDT        US durable goods orders        street 1.9% vs previous (3.0%)
8:30 am EDT        US durables ex transport        street 0.5% vs previous (1.3%)

9:45 am EDT        US flash service PMI            street 52.0
10:00 am EDT        US consumer confidence        street 95.8
10:00 am EDT        US Richmond Fed             street 12 vs previous 22

After 4:00 pm EDT    Apple earnings
About 4:30 pm EDT    US API oil inventories


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