Stock markets around the world have been trading higher overnight and into this morning. US index futures are up 0.4% while the Dax is up 1.8% plus the FTSE and Hang Seng are up 0.8%. The first positive producer price report from China in over four years have been getting the credit for the rally with rising inflation in China seen as a sign of an improving economy, offsetting some of the negativity surrounding yesterday’s trade reports.
Crude oil has been trading higher this morning with WTI up 1.0% and Brent up 0.7%. Although headline crude oil inventories rose more than expected yesterday, traders have responded favourably to distillate and gasoline inventories falling more than expected and a report showing US crude oil production down 0.7 mmbbls from a year ago.
CAD has started to catch up to rising oil prices overnight rising against USD along with other resource currencies like AUD and NZD. It’s a mixed day for the greenback as it underperforms resource currencies but continues to climb against EUR, GBP and JPY. Interestingly, CAD is particularly strong against up against EUR amid reports that Belgium has voted to block the EU-Canada free trade deal. Traders may look to Canadian existing home sales data for more insights into the uneven Canadian real estate market where some cities have been overheating while others have been really struggling.
Yesterday’s big increase in average house prices makes it more difficult for the Bank of Canada to cut rates even if they wanted too, providing support to the loonie.
Today’s focus for trading turns to the US with a number of big bank earnings due. JPMorgan, Citigroup, Wells Fargo and PNC Bank have all beaten the street indicating a positive environment for US banks. At 8:30 am, US retail sales is due which could give an indication of the health of the consumer economy moving into election season. Comments from Fed Chair Yellen, Boston Fed President Rosengren and US producer prices may also attract attention particularly with Chair Yellen also in the political spotlight these days.
Late breaking news, US retail sales rebounded as expected, USD has jumped on the news while US indices have dropped back as this keeps the Fed on track toward an interest rate hike this year.
JPMorgan Chase $1.58 vs street $1.39
Citigroup $1.24 vs street $1.15
Wells Fargo $1.03 vs street $1.01
PNC Bank $1.84 vs street $1.78
US retail sales 0.6% as expected vs previous (0.3%)
US retail ex auto 0.5% as expected vs previous (0.1%)
US producer prices 0.7% vs street 0.6% vs previous 0.0%
US core PPI 1.2% as expected
China consumer prices 1.9% vs street 1.6% vs previous 1.3%
China producer prices 0.1% vs street (0.3%)
UK construction output 0.2% vs street 1.2%
Upcoming significant economic announcements include:
8:30 am EDT FOMC Rosengren speaking
8:30 am EDT FOMC Yellen speaking
10:00 am EDT US consumer sentiment street 91.8
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.