December begins with crude oil still in rally mode building on Wednesday’s explosive gains as traders respond favourably OPEC’s agreement to cut production. A meeting with non-OPEC producers is planned for next week to nail down that side as well. Progress toward managing supply after a two year war over market share that depressed prices is being seen as a positive for the oil market regardless of the actual details. WTI is trading up 0.8% near the $50.00 level just below the top of the trading range that has been in place for the last six months. The big question for oil prices now is what level would be enough to bring shut-in US shale production back on stream. This year traders have been capping the price just above $50.00, but some agencies have suggested lately that the tipping point could be closer to $60.00.
Stock markets around the world are trading mixed through the release of manufacturing PMI reports, the first reading on how economies have performed this month. The FTSE is down 1.0% on a soft reading out of the UK while the Dax is down 0.8%. Reports out of China and Japan were a bit better than expected helping the Nikkei to gain 1.1% and the Hang Seng to rise 0.4%. US index futures are trading down slightly as traders await US PMI figures later this morning and US nonfarm payrolls tomorrow. Traders will be looking for confirmation of yesterday’s positive ADP payrolls and Chicago PMI reports and more signs of a post-election surge.
In currency trading today USD has slipped back slightly and is still showing signs of topping. Traders may look to upcoming data less for signs of whether the Fed will raise in December which looks like a lock and more about how many rate hikes could follow in 2017. Incoming Treasury secretary had nice things to say about Janet Yellen further indicating she is likely to finish out her term which ends in January 2018. GBP and EUR have capitalized on USD’s rally. CAD is also strengthening although so far gains appear light relative to the positive oil price and Canadian GDP tailwinds that have emerged this week. Canadian banks could be active again today with CIBC turning in strong earnings and a dividend increase while TD Bank met expectations.
CIBC $2.60 vs street $2.48, 2.5% dividend increase
TD Bank $1.22 as expected
Japan Q3 capital spending (1.3%) vs street (0.4%) vs previous 3.1%
Australia commodity index 32.1% vs previous 16.0%
NZ QV house prices 12.4% vs previous 12.7%
UK Nationwide house prices 4.4% vs street 4.7%
Eurozone unemployment rate 9.8% vs street 10.0%
Italy GDP 1.0% vs street 0.9%
Manufacturing PMI Reports:
China official 51.7 vs street 51.0
China non-manufacturing 54.7 vs previous 54.0
China Caixin 50.9 vs street 51.0
Japan 51.3 vs previous 51.1
Australia 54.2 vs previous 50.9
India 52.3 vs previous 54.4
UK 53.4 vs street 54.4
Germany 54.3 vs street 54.4
France 51.7 vs street 51.5
Spain 54.5 vs street 53.7
Italy 52.2 vs street 51.3
Sweden 57.3 vs street 58.5
Norway 47.6 vs street 52.5
Poland 51.9 vs street 51.0
Greece 48.3 vs street 49.2
Russia 53.6 vs street 51.5
Upcoming significant economic announcements include:
8:30 am EST US jobless claims street 253K
10:30 am EST US natural gas street (51 BCF)
9:00 am EST FOMC Kaplan speaking
Manufacturing PMI Reports:
9:30 am EST Canada previous 51.1
9:45 am EST US Markit street 53.9
10:00 am EST US ISM PMI street 52.5
10:00 am EST US ISM prices paid street 54.5
10:00 am EST US ISM new orders previous 52.1
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.