Stock markets around the world have been giving back yesterday’s gains overnight and into this morning. The Nikkei fell 0.9% while the Hang Seng was closed for the Dragon Boat festival. In Europe today, the Dax is down 1.2% outpacing the FTSE’s 0.9% decline to the downside. Losses in the US have been minor so far with Dow and S&P futures falling about 0.3%.
As with stocks the North American WTI price of oil is down less that the European Brent price of oil falling 0.8% and 1.3% respectively. So far this looks like a normal trading correction after both reached new 2016 highs yesterday on the back of a 3.2 mmbbl drawdown in US inventories. Both contracts continue to attract support above $50.00/bbl.
USD is on the rebound today against most other currencies, the one exception being NZD which has soared after the RBNZ decided not to cut interest rates yesterday as had previously been expected. The Bank of Korea on the other hand, delivered a surprise 0.25% rate cut. GBP is down less than EUR while CAD is down less than NOK.
This suggests that traders are more concerned about the European economy after ECB President Draghi pleaded for more reforms indicating that monetary and fiscal policy need to be working together. Meanwhile, a big jump in German labour costs suggested that inflation pressures may be starting to build. Once again, Germany reported a higher than expected trade surplus as it continue to dominate its competitors/partners. Sweden household spending, meanwhile, continued an emerging global trend of growing consumer consumption also seen in recent US, UK, Japanese and Eurozone data.
It’s a relatively quiet day for economic news in North America. CAD could be active around a Bank of Canada report and comments from Governor Poloz. Natural gas storage could spark some trading action in energy markets. US jobless claims could give an update on the health of the US job market which remains in question after last week’s nonfarm payrolls report.
There have been no major corporate announcements in North America so far today.
Significant announcements released overnight include:
RBNZ official cash rate 2.25% no change expected
Bank of Korea surprise 0.25% interest rate cut to 1.25%
Germany trade balance €25.6B vs street €22.8B
Germany labour costs 3.1% vs previous 2.1%
Sweden household consumptn 2.4% vs previous 1.9%
UK trade balance (£3.2B) vs street (£3.7B)
Greece unemployment rate 24.1% vs previous 24.2%
Greece industrial production 2.8% vs previous (4.0%)
Greece consumer prices (0.9%) vs previous (1.3%)
Japan machine orders (8.2%) vs street (1.8%)
Japan machine tool orders (25.0%) vs previous (26.3%)
China consumer prices 2.0% vs street 2.2%
China producer prices (2.8%) vs street (3.2%)
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 US jobless claims street 270K
8:30 am EDT Canada new house prices street 2.1%
10:30 am EDT US natural gas street 76 BCF
10:30 am EDT Bank of Canada Review and Poloz speaking
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