Falling metal and energy prices keep resource stocks under pressure

Stock markets around the world have been trading moderately lower while USD has been advancing for a second straight day. US data was mixed with a big miss in ADP payrolls offset by better than expected US trade, factory orders and service PMI reports. Traders now await Friday’s nonfarm payrolls report for confirmation or rejection of a slowdown in job creation. On the interim, expectations of a June rate hike appear to be unchanged.

One of the bigger moves today has been in CAD which plunged to a 1.1% loss on the day on news of a much bigger than expected trade deficit for Canada, which exacerbated downward pressure from falling energy prices and accelerated a trading correction. The loonie may remain active through Friday’s Canada employment report.

Crude oil’s correction also continued to deepen as an increase in US DOE stockpiles confirmed Tuesday’s API report. Natural gas rose ahead of Thursday’s storage report. Gold continues to struggle after failing to break through $1,300 in recent days.

Copper has fallen another 1.7% today putting pressure on base metal mining shares. BHP fell 6.6% in US trading while First Quantum dropped 7.7% in Canada. Gold and energy stocks have also been struggling on both sides of the border which could weigh on Australian miners to start their trading day.   

Today is kind of a mop up day for data following recent holidays setting the stage for Friday’s big job reports. Asia Pacific trading may be influenced by Australia retail sales and more PMI reports from China and Singapore.  Tomorrow brings UK service PMI along with another flurry of earnings reports from mid-tier companies.


Corporate News

Tesla Motors        ($0.57) vs street ($0.60) guides Q2 production to 20K vehicles up 30% sequentially and plans to deliver 80-90K vehicles in 2016

MetLife        $1.20 vs street $1.38


Economic News

Significant announcements released overnight include:

US ADP payrolls            156K vs street 195K

US trade balance            ($40.4B) vs street ($41.1B)
Canada trade balance            ($3.4B) vs street ($1.4B)

US factory orders            1.1% vs street 0.6%
US final durable goods orders        0.8% as expected

US DOE crude oil inventories        2.7 mmbbls vs street 0.75 mmbbls
US DOE gasoline inventories        0.5 mmbbls vs street (0.25 mmbbls)

UK BRC shop prices            (1.7%) as expected
Spain employment change        (83K) vs street (81K) and previous (57K)
Eurozone retail sales            2.1% vs street 2.6%

Service PMI reports:

US Markit        52.8 vs street 52.1
US ISM            55.7 vs street 54.7

UK construction        52.0 vs street 54.0

Sweden        52.6 vs street 56.0
Spain            55.1 vs street 55.0
Italy            52.1 vs street 51.9
France            50.6 vs street 50.8
Germany        54.5 vs street 54.6

Greece manufacturing    previous 49.0


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)  

11:00 am AEST        Australia new home sales        previous (5.3%)
11:30 am AEST        Australia trade balance            street ($2.9B)
11:30 am AEST        Australia retail sales            street 0.3%

11:45 am AEST        China Caixin service PMI        previous 52.2
1:00 pm AEST        Singapore Nikkei PMI            previous 52.0

8:30 am BST        UK Halifax house prices            street 9.6% vs previous 10.1%
9:30 am BST        UK service PMI                street 53.5

8:30 am EDT        Canada building permits            street 4.8%
8:30 am EDT        US jobless claims            street 260K
11:50 am EDT        FOMC Bullard speaking