US and European stock markets are coming off another banner day that saw the Dax break out to a new all-time high and crude oil’s technical rebound accelerate. In Europe, indications that some of the apocalyptic fears surrounding may have been overblown with some of the rhetoric softening a bit, removed a big roadblock and enabled markets to move on anticipation of the ECB stimulus program starting next month and the benefits of lower energy prices. Crude oil continued its rebound with bargain hunters dominating as shorts continue to get squeezed out through margin calls and stop losses being triggered. WTI broke through $50.00 while Brent cleared $55.00. A common 23% retracement of the previous selloff over time does not appear unreasonable which comes in around $58.50 for WTI and around $62.00 for Brent. The rebound in oil had a positive effect on energy shares with the sector leading markets higher in both the US and Canada today. The S&P/ASX remained bubbly overnight, building on yesterday’s RBA inspired breakout and a rebound for resource companies. Easing fears also contributed to the other major trend in the markets today, a big rotation out of defensive plays back into more aggressive stances (risk on trades). USD came under particular pressure dropping about 1% which helped to boost prices of commodities, EUR, and resource currencies, particularly CAD, NOK and NZD. AUD clawed back some of its losses but trailed its peers as it continues to react to yesterday’s somewhat of a surprise RBA interest rate cut. NZD has been a bit choppy following mixed New Zealand employment numbers. The US dollar selloff may also have been sparked by worse than expected US factory orders while may have caused some traders to back away from speculation of an early US interest rate increase. Because of this, tomorrow morning’s ADP payrolls may capture significant attention from traders wondering if US economic momentum is slowing. From now until then, service PMI numbers from around the world may give traders lots of other news to digest. Corporate News Chipotle Mexican Grill $3.84 vs street $3.79, sales $1.07B below street $1.08B, same store sales up 16.1% Macy’s to buy luxury retailer Bluemercury for $210M, Q4 same store sales 2.5% vs guidance 2.5-3.0%, above street 2.3%. raised Jan 2015 yar guidance to $4.35-$4.37 from $4.25-$4.35 Walt Disney $1.27 vs street $1.07 Gilead Sciences $2.43 vs street $2.23, launches quarterly dividend of $0.43 per share Economic News Significant announcements released overnight include: NZ employment change 1.2% vs street 0.8% NZ labour cost index 1.8% as expected NZ unemployment rate 5.7% vs street 5.3% Singapore PMI 49.9 vs street 49.8 Singapore electronics sector 50.5 vs street 50.4 US factory orders (3.4%) vs street (2.2%) Canada industrial prices (1.6%) vs street (0.5%) Canada raw material prices (7.6%) vs previous (5.8%) Spain unemployment 78K vs street 88K UK construction PMI 59.1 vs street 57.0 Eurozone producer prices (2.7%) vs street (2.5%) Upcoming significant announcements include: 10:00 am GMT Eurozone retail sales street 2.0% 8:15 am EDT US ADP payrolls street 220K vs previous 241K 10:30 am EDT US crude oil inventories street 3.0 mmbbls Service/Non-manufacturing PMI reports: 9:30 am AEDT Australia previous 47.5 12:35 pm AEDT Japan previous 51.7 12:45 pm AEDT China HSBC previous 53.4 4:00 pm AEDT India previous 51.1 7:30 am GMT Sweden street 56.0 8:15 am GMT Spain street 54.4 8:45 am GMT Italy street 50.0 8:50 am GMT France street 49.5 8:55 am GMT Germany street 52.7 9:00 am GMT Eurozone street 52.3 9:30 am GMT UK street 56.3 7:00 am EST Brazil previous 49.1 9:45 am EST US Markit street 54.1 10:00 am EST US ISM street 56.4 10:00 am EST Canada Ivey PMI street 53.4
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