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.


Corporate News

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


Economic News

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)