US indices were quiet today with most of the action focused on individual stocks and sectors following a flurry of morning earnings reports.
In particular, mining and energy stocks were on the move higher, boosted by another rally for oil, strong earnings out of BP and a positive surprise from Teck Cominco. On the other hand, railway Canadian National slumped after cutting guidance. Overall, resource weighted Canadian stocks outperformed their US counterparts on the day.
Earnings news and market action have continued after US exchanges closed for the day. Another surprise drop for API crude oil inventories has sent WTI crude oil higher again in late trading. Apple hit the street with three strikes missing badly on earnings, sales and guidance sending the NASDAQ sharply lower. Twitter’s report was mixed missing on sales and guidance but beating the street on earnings and active users.
US economic news was mixed today with durable goods orders and consumer confidence disappointing while the Richmond Fed index fell less than feared. This news didn't impact expectations around tomorrow's FOMC decision and broad market traders spent the day waiting on the Fed.
It's pretty much a done deal that the Fed won't change rates this month, having cut its plans from 4 rate hikes this year to two. Although the markets have recovered from the pounding they took earlier this year, China’s economy has stabilized, and some FOMC members favour a hike, the majority of Fed members don't appear set to rock the boat too much yet.
It is possible though that the Fed may signal the potential for a June hike. Although bond prices suggest expectations of a dovish Fed, the two more dovish regional voters this year (Bullard and Rosengren) have suggested the street may be too pessimistic about the economy and underestimating the number of potential rate hikes this year. With crude oil still climbing deflation fears have faded and inflation could pick up.
A June hike would keep the Fed clear of the election campaign and on course for 2 increases this year. Ways the Fed could signal it's considering a June move could include more hawkish dissenters, a more upbeat economic assessment, or talk of rising price pressures. A dovish tone could boost stocks and send USD lower while a hawkish tone could knock stocks back briefly and boost USD a bit (but not too much as the currency still appears to be pricing in 2 hikes this year unlike bonds).
Today's economic calendar is light before picking up later in the week. AUD and NZD could be active around Australia GDP and NZ trade reports, while Australian stocks could benefit from improved sentiment toward miners.
Tomorrow the RBNZ is due to report its latest OCR decision 3 hours after the Fed. While no cut is expected don't be surprised if Governor Wheeler tries to talk down the dollar in a bid to put a lid on recent gains and keep it under 70 cents.
Apple $1.90 vs street $2.00, sales $50.5B vs street $52.0B, guides next Q sales to $41-$43B below street $47.4B, 10% dividend increase
Twitter $0.15 vs street $0.10, sales $594M below street $607M, 310M active users above street 308M, guides next Q sales $590M-$610M below street $677M
Chipotle ($0.88) vs street ($0.98) same store sales (29.7%) sales 834M below street $867M
eBay $0.47 vs street $0.45, guides next Q to $0.40-$0.42 below street $0.44
Significant announcements released overnight include:
US API crude oil inventories (1.1 mmbbls) vs street 0.5 mmbbls
US durable goods orders 0.8% vs street 1.9% vs previous (3.0%) US durables ex transport (0.2%) vs street 0.5% vs previous (1.3%)
US flash service PMI 52.1 vs street 52.0 US consumer confidence 94.2 vs street 95.8 US Richmond Fed 14 vs street 12 vs previous 22
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)
8:45 am AEDT NZ trade balance street $401M 11:30 am AEDT Australia consumer prices street 2.0% vs previous 2.1%
TBA US primary election results for Pennsylvania, Maryland, Delaware, Rhode Island and Connecticut
8:00 am BST Spain retail sales street 3.4% 8:30 am BST Sweden trade balance street SEK 1.7B
9:30 am BST UK Q1 GDP street 2.0% vs previous 2.1%
8:30 am EDT US advance goods trade bal street ($62.8B) 10:00 am EDT US pending home sales street 0.8%
10:30 am EDT US DOE crude oil inventories street 1.75 mmbbls 10:30 am EDT US DOE gasoline inventories street (1.0 mmbbls)
2:00 pm EDT US FOMC interest rate 0.25%-0.50% no change expected
9:00 am NZDT Thu NZ RBNZ cash rate 2.25% no change expected 5:00 pm EDT Wed