Stock markets around the world have gone quiet overnight with traders having priced in their expectations of tomorrow's UK Brexit referendum. With polls showing momentum swinging back from a Leave lead last week to a very close race, this one could still go either way.
Better seem to be leaning toward a Remain win with BetFair indicating a 75% chance of a decision to stay (even if a close vote) up from a low near 60% last week. GBPUSD action suggests similar sentiment for traders. Using Cable's $1.4000 to $1.4800 range as a guide. Shooting up from the low end to the high end indicated a swing from expectations of a 100% chance of Brexit to a 100% chance of Bremain both of which appeared extreme. The swing back toward $1.4600 indicates traders remembering the vote could still be a close call. The $1.4400 midpoint would indicate expectations of a coin toss.
With that in mind, Asia markets were mixed overnight with the Nikkei down 0.6 % and the Hang Seng up 0.6%. In Europe the Dax is up 0.5% holding 10,000 while the FTSE is up 0.2%. US index futures for the Dow and SPX are flat while gold is down 0.3%.
One market having a big day is crude oil with WTI and Brent trading up about 1.0 percent. API inventiries fell a surprisingly large 5.2 mbbls overnight indicating the US market continues to come back into balance. WTI is back up above $50.00 on the news. Oil may remain active through today's DOE inventory reports with traders looking for confirmation of rejection of the API report.
Oil action may also influence trading in energy stocks today along with oil sensitive currencies like NOK and CAD. The loonie may also be influenced by today's Canada retail sales report.
Tesla Motors has been slammed overnight after announcing that it has offered to purchase SolarCity for $2.8 billion. SolarCity's shares shot up 20% on the news while Tesla fell 10%. In addition to the usual concerns about overpaying and integration risk, traders appear to be concerned about this potentially providing a distraction while the company is preparing to roll out the Model 3 and building it's gigafactory. With Tesla CEO Elon Musk also a large shareholder of SolarCity, there may also be questions of whether management is running out of ideas.
Tesla Motors announced a $2.9B offer to purchase SolarCity a 21% to 30% premium over yesterday’s close in an all-share transaction
FedEx $3.30 vs street $3.38
Adobe Systems $0.71 vs street $0.68
Significant announcements released overnight include:
US API crude oil inventories (5.2 mmbbls) vs street (1.5 mmbbls)
Recent Brexit polls include:
ORB Remain 54% Leave 46%
Sweden consumer confidence 98.7 vs street 96.5
Sweden unemployment rate 7.6% vs street 7.3%
Norway unemployment rate 4.6% vs street 4.7%
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)
8:30 am EDT Canada retail sales street 0.8%
8:30 am EDT Canada retail ex auto street 0.7%
9:00 am EDT US FHFA house prices street 0.6%
10:00 am EDT US existing home sales street 5.55m
10:30 am EDT US DOE crude oil invengtories street (1.5 mmbbls)
10:30 am EDT US DOE gasoline inventories street (1.0 mmbbls)
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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.