Last night Donald Trump handily won the Indiana primary, pretty much wrapping up the Republican nomination after Ted Cruz dropped out of the race, while Hillary Clinton lost another state to Bernie Sanders. It would be easy to suggest that last night’s Indiana primary results and US political uncertainty are weighing on markets but there’s much more going on.
The biggest trading development overnight has been the continued rebound in USD building on yesterday’s big turnaround. The greenback had been under pressure lately but roared back to life after two Fed speakers suggested yesterday after two Fed speakers indicated yesterday that the June meeting remains open for a potential rate hike and suggested the street has underpriced the potential for a hawkish move. Expectations have been tempered a bit this morning by comments from Atlanta Fed President Lockhart that the Brexit referendum could have an influence on Fed thinking as well with US slipping and the Dow rising slightly over the last hour or so.
The impact of the Brexit vote appears to be having a big impact on UK data and trading. It appears that uncertainty over the results has started to drag on the UK economy as construction PMI came in below expectations after manufacturing PMI yesterday dropped under 50 into contraction territory. Sterling is down against USD today but declining in line with other major currencies after taking a big tumble yesterday.
Crude oil has stabilized but gold continues to drop back this morning. CAD and NOK declines have moderates while RUB is rebounding. In addition to commodity action, earnings announcements may also impact trading in Canadian stocks with Agrium cutting guidance overnight while Loblaw raised its dividend.
Today, traders may get a better read on the US economy with a number of significant announcements on the way. ADP payrolls are the main event, but factory orders, service PMI, trade figures and DOE energy inventories may also attract attention and could move the markets.
Time Warner $1.49 vs street $1.29
Agrium $0.05 vs street ($0.05), cuts 2016 guidance to $5.25-$6.25 from $5.50-$7.00
Loblaw $0.82 as expected, 4% dividend increase
Significant announcements released overnight include:
US Indiana primary results
Republicans Trump 53%, Cruz 37%, Kasich 8%
Democrats Sanders 52.5%, Clinton 47.5%
US API crude oil inventories 1.3 mmbbls vs street flat
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%
NZ employment change 2.0% vs street 1.3%
NZ unemployment rate 5.7% vs street 5.5%
NZ average hourly earnings 0.3% vs street 0.5%
NZ QV house prices 12.0% vs previous 11.4%
NZ ANZ commodity prices (0.8%) vs previous (1.3%)
Service PMI reports:
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
Australia 49.7 vs previous 49.5
India 53.7 vs previous 54.3
Upcoming significant announcements include:
8:15 am EDT US ADP payrolls street 195K
8:30 am EDT US trade balance street ($41.1B)
8:30 am EDT Canada trade balance   street ($1.4B)
9:45 am EDT US Markit service PMI street 52.1
10:00 am EDT US ISM non-manufacturing PMI street 54.7
10:00 am EDT US factory orders street 0.6%
10:00 am EDT US final durable goods orders street 0.8%
10:00 am EDT US final durables ex transport street (0.1%)
10:30 am EDT US DOE crude oil inventories street 0.75 mmbbls
10:30 am EDT US DOE gasoline inventories street (0.25 mmbbls)
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