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Stocks bounce back as crude oil rebounds and metals stabilize

Sentiment toward China’s economy has stabilized a bit with the Hang Seng gaining 0.4% while copper levelled off. Crude oil is also bouncing back today with WTI up 0.9% and Brent up 1.5%. Supply disruptions in Libya have given Brent another boost today relative to WTI. Yesterday’s news from Alberta was that 90% of the buildings in Fort McMurray were saved from the wildfires along with the oil sands facilities, indicating that once the crisis phase passes, oil sands production could resume within a reasonable amount of time.

Stocks in the resource weighted Australian market rose 0.4% overnight on the commodity bounce which bodes well for trading in Canada today particularly after yesterday’s action took some base metal miners down over 10% and many major gold miners down over 5%.

In currency markets, JPY continues to sell off from the country’s threat to intervene in forex markets earlier this week which ignited a 2.1% gain for the Nikkei. Resource currencies have been mixed with AUD up a bit, CAD and NOK flat and NZD still retreating. GBP has started to retreat over the last hour following reports that NIESR has cut its UK GDP forecast to 2.0% for this year.   

European indices appear to be up today on two main factors. First, the outline of a three stage debt relief plan for Greece that could include debt management, longer grace and payment periods and perhaps more relief down the road may be providing some relief from long-running uncertainty over Greece’s place in the Eurozone. Comments suggesting that helicopter money is not needed for Europe may also be helping to give traders some confidence although data suggests otherwise. A strong trade balance and positive industrial production for Germany while industrial production fell for France, Italy, Greece and Norway confirmed that the Eurozone project still appears to be running at two speeds, with some economies benefitting at the expense of others.  

Corporate News

Imperial Oil    completed controlled shutdown of its Kearl oil sands facility, site unaffected by fires, but return to production unknown at this point

George Weston        $1.31 vs street $1.29

Economic News

Significant announcements released overnight include:

US NFIB small bus optimism    93.6 vs steet 93.0

China foreign investment    6.0% vs street 5.0% and previous 7.8%
China consumer prices        2.3% as expected
China producer prices        (3.4%) vs street (3.7%)

UK NIESR 2016 GDP Forecast     cut to 2.0% from 2.3%

UK same store sales        (0.9%) vs street 0.5%
UK trade balance         (£3.8B) vs street (£4.2B)

Germany industrial production    0.3% vs street 1.1%
Germany trade balance         €26.0B vs street €20.6B
France industrial production    (0.8%) vs street 0.5%

Norway consumer prices    3.3% as expected
Norway producer prices        (14.3%) vs previous (14.9%)
Norway industrial production    (4.0%) vs previous (1.8%)

Italy industrial production    0.5% vs street 1.3%
Greece industrial production    (4.0%) vs previous (3.0%)
Greece consumer prices    (1.3%) as expected

Announcements due later today include:

There are no major announcements scheduled for North America today.


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