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Resource stocks drop as oil, gold and copper retreat

Metals prices have also been under pressure today. Gold lost nearly $25.00 per ounce on the day. Some reports blamed this on speculation that the Fed could keep to two rate hikes this year but I find that unlikely as there was no real change in the bond market and the USD index only rose a small amount. More likely it was due to a correction deepening and falling inflation pressures with oil and copper in retreat. Copper took a 2% hit on the day after China trade figures disappointed, particularly a big drop in imports indicating low resource demand.

Declines in metal and energy prices pushed Canadian stocks down 0.7% underperforming their US counterparts. This suggests Australia’s 0.5% gain to start the week could be vulnerable. Base metal stocks were hit particularly hard today with Freeport, First Quantum and Teck Resources all falling over 10% while BHP lost 6% in the US session. Gold miners also took one on the chin with Barrick and Newmont falling 5-6%. Eldorado was the only  gold (small) gainer after the technical study for its Skouries mine in Greece was approved allowing construction to resume. Energy stocks also fell today along with oil prices.  

Commodity currencies also have been falling, particularly AUD and NZD which have outpaced oil sensitive CAD and NOK to the downside today. Precious metal sensitive ZAR has taken a big 2% haircut today. AUD and NZD could be active again today around the China inflation reports. JPY continues to weaken after Japan’s finance minister threatened to intervene in forex trading yesterday, taking some of the pressure off of Japanese stocks.

Corporate News

There have been no major announcements so far after the US close today.

Economic News

Significant announcements released overnight include:

Canada housing starts        191K vs street 193K

UK Halifax house prices        9.2% vs street 9.6% and previous 10.1%

Germany factory orders        1.7% vs street 0.1%

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)  

5:00 pm EDT        FOMC Williams speaking

11:30 am AEST        China consumer prices        street 2.3%
11:30 am AEST        China producer prices        street (3.7%)

12:00 am BST        UK same store sales        street 0.5%
9:30 am BST        UK trade balance         street (£4.2B)

7:00 am BST        Germany industrial production    street 1.1%
7:00 am BST        Germany trade balance         street €20.6B
7:45 am BST        France industrial production    street 0.5%

9:00 am BST        Norway consumer prices    street 3.3%
9:00 am BST        Norway producer prices        street 3.3%
9:00 am BST        Norway industrial production    previous (1.8%)

9:00 am BST        Italy industrial production    street 1.3%
10:00 am BST        Greece industrial production    previous (3.0%)
10:00 am BST        Greece consumer prices    street (1.3%)

3:15 am EDT        FOMC Dudley speaking


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