China trade could make or break relief rally
After several days of relentless selling, bears finally relented a bit, enabling oversold stock markets to bounce back a bit. Strength into the US close which has sent positive momentum toward the Asia Pacific session is encouraging but a lot of technical damage has been done already this year and there are a number of key hurdles in place now like 20,000 for the Hang Seng and 5,000 for the S&P/ASX 200.
China trade data is due today, figures which could give a better indication of whether the big declines in mainland China markets in the last ten days are justified by fundamentals or now. Markets have price in some pretty poor expectations already so unless the wheels are really falling off of China’s economy which I doubt, data announcements over the next week could help to shore up support for China markets.
In the US, focus continues to turn toward earnings. Today’s US rebound came despite the poor reaction to Alcoa’s earning report which sent its shares and those of fellow base metal miner Freeport McMoRan sharply lower on the day. After the close, railroad CSX beat the street on earnings but guided lower, a disappointing trend that seems to be emerging and could cause the howls of an earnings recession to grow louder.
It’s also a big day for crude oil testing $70.00, which has been holding so far along with CADUSD testing $0.7000. The price picked up only briefly on another bigger than expected API inventory drawdown in the US which suggest that traders remain fixated on the bigger issue of some suppliers using lower prices to fight an economic war, making co-operation to stabilize supply unlikely any time soon. Tomorrow’s DOE inventories may also spark some activity in the market as the latest big round number test continues.
CSX $0.48 vs street $0.46, 2016 EPS to decline from 2015 due to “negative global and industrial market trends”
Ford $1B supplemental cash dividend, 2016 to be flat to up slightly over 2015
Significant announcements released overnight include:
US API crude oil inventories (3.9 mmbbls) vs street 0.3 mmbbls
UK same store sales 0.1% vs street 0.5% & prev (0.4%)
UK industrial production 0.9% vs street 1.7%
UK manufacturing production (1.2%) street (0.8%)
UK NIESR GDP estimate 0.6% unchanged as expected
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:00 pm EST US President Obama State of the Union address
10:00 am AEDT NZ QV house prices previous 15.0%
1:00 pm AEDT China trade balance street $53.1B
1:00 pm AEDT China exports street (8.0%)
1:00 pm AEDT China imports street (11.0%)
TBA China new Yuan loans street 700B
7:00 am GMT Sweden unemployment rate street 4.1%
7:45 am GMT France consumer prices street 0.1%
10:00 am GMT Eurozone industrial production street 1.3%
10:00 am GMT Greece consumer prices street (0.5%)
11:00 am GMT Poland trade balance street PLN 350M
7:45 am EST FOMC Rosengren speaking
10:30 am EST US DOE crude oil inventory street 2.0 mmbbls
10:30 am EST US DOE gasoline inventory street 1.2 mmbbls
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