It’s been a tough day in commodity markets. Oil turned sharply lower as North American traders returned from the weekend. Suncor Energy announced that it has been able to keep forest fires away from its oil sands operations in Northern Alberta and that the 10,000 people who had sought refuge there were successfully evacuated over the weekend. Reports have been circulating through the day that with little damage done to oil sands facilities, various operations could get back up and running within a week to ten days once the main crisis passes, although it’s going to take longer for workers to rebuild their lost homes.
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.
There have been no major announcements so far after the US close today.
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