In North America, the technology heavy NASDAQ led the charge rallying to a 1.0% gain. Surprisingly despite gains in energy and health care (boosted by another big rebound for Valeant), the S&P/TSX lagged behind US indices. The rally in crude oil did help CAD to overcome a soft Ivey PMI reading to post a 0.25% advance in a trading rebound.
The other big story in stocks today was that the street took government opposition to big mergers in stride. Pfizer which called off its deal with Allergan rose by 4.8%. Meanwhile the US Department of Justice moving to block the Baker Hughes (up 7.4%) planned merger with Halliburton (up 5.5%) was viewed as favourable to both sides. This suggests traders have become more wary of the risks of mega deals, particularly ones that are more financially driven rather than operationally driven.
Minutes from the last FOMC meeting came out this afternoon and to no surprise, considering all the comments from Fed members since the meeting, it didn’t have much of an impact. Mixed sentiment about the economic and financial market outlook encouraged the central bank to slow its pace of interest rate hikes with members setting around a projection of 2 hikes likely for this year.
Interestingly, the minutes contained comments about the April meeting with some members thinking an April hike would send an unwanted signal of urgency around rate hikes with others thinking and April hike could be warranted if economic data remains positive. Overall, this suggests that while there may be a spirited discussion, an April hike remains unlikely but increases the potential for an increase in June and then December before and after the US Presidential election campaign.
Monetary policy looks to be the main focus of trading over the next 24 hours with the main economic report being IMF forecasts. ECB minutes, a number of speakers from the FOMC, ECB, Riksbank and Norges Bank could keep the pot boiling in forex markets. There are two conferences being held, one in Europe featuring ECB members and one in the US featuring Fed Chair Yellen and the three previous FOMC Chairs.
There have been no major announcements after the US close today.
Significant announcements released overnight include:
US DOE crude oil inventories (4.9 mmbbls) vs street 2.85 mmbbls
US DOE gasoline inventories 1.4 mmbbls vs street (1.1 mmbbls)
Canada Ivey PMI 50.1 vs street 54.8 vs previous 53.4
UK BRC shop prices (1.7%) vs previous (2.0%)
Germany industrial production 1.3% vs street 0.4%
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)
6:30 pm EDT FOMC Bullard speaking
8:00 pm EDT FOMC Kaplan speaking
9:30 am AEDT Australia construction PMI previous 46.1
7:30 am BST ECB conference
10:30 am BST Riksbank Skingsley speaking
12:30 pm BST ECB meeting minutes
2:00 pm BST Norges Bank Olsen speaking
3:00 pm BST ECB Draghi speaking
8:30 am BST UK Halifax house prices street 9.5%
9:00 am BST Norway industrial production previous (0.2%)
10:00 am BST Greece unemployment rate street 24.0%
8:30 am EDT US jobless claims street 270K
9:30 am EDT IMF World Economic Outlook
10:30 am EDT US natural gas street 7 BCF
5:30 pm EDT FOMC Yellen, Bernanke, Greenspan and Volcker speaking