The positive response by traders to the French first round election results and speculation the ‎pro-stability and market-friendly Macron will keep up his big second round lead has capital leaving defensive havens for risk markets again today. After a catch-up rally in Asia Pacific markets that saw the Nikkei gain 1.0%, gains have slowed a bit in Europe with the Dax flat while the CAC and FTSE are up 0.3%. US index futures are up 0.2%.

In currency trading, the Loonie is nose diving on concerns over trade sanctions from the US. Overnight press reports indicate President Trump is looking to slap a 20% duty on Canadian softwood lumber. It remains to be seen what other measures may be coming related to the dairy oth other sectors as the US prepares to renegotiate NAFTA. 

North Korea staged a live fire drill as a US missile submarine pulled into a South Korean port so tensions remain high. Traders remain focused on tomorrow's tax reform announcement with reports suggesting a cut in the corporate tax rate to 15% from 35% could be coming. There also have been suggestions the President could back down and drop his demand for immediate border wall fun‎ding to avoid a government shutdown (remains to be seen if that is wishful thinking or not). 

It's another big day for earnings reports with the focus on big Industrials and consumer products companies. So far results have indicated that President Trump has been good for bank earnings. This week we find out if his effect has been as positive for other key sectors of the economy.

Caterpillar’s earnings report has been truly spectacular, signalling a major turnaround for the company. Not only did it beat the street by a mile, big increases to sales and earnings guidance indicate management thinks its prospects look really bright. McDonalds and 3M also reported earnings well above expectations, boosting confidence. This news has sparked a rally in US indices in the last few minutes, showing that traders are still ready to respond to really good news and providing fundamental support for the current upswing.   


Corporate News

Caterpillar    $1.28 vs street $0.63, sales $9.8B vs street $9.2B, raises full year guidance to $3.75 from $3.25, raises sales guidance to $41B from $38B

McDonalds     $1.48 vs street $1.34. sales 

3M     $2.16 vs street $2.07, raises full year guidance to $8.70-$9.05 

 

Economic News

Significant announcements released overnight include:

There have been no major economic announcements overnight. 


Upcoming significant economic announcements include:

10:00 am EDT        US new home sales        street 584K
10:00 am EDT        US consumer confidence    street 123.0 vs previous 125.6
10:00 am EDT         US Richmond Fed        street 16 vs previous 22

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