Stock markets overseas are off to a a strong start to the week picking up where they left off and catching up with Friday’s advances in the US. Mainland Chinese markets are leading the charge where Shenzen rallied 3.5%. Asia Pacific indices like the Hang Seng and Nikkei rose 1-2% while European indices like the FTSE and CAC are up 0.5%. The Dax is gaining 1.5% and briefly peeked back above 10,000 earlier on the back of a strong Eurozone industrial production report which raises hopes that recent ECB stimulus can help to give an already strengthening continental economy a really big boost.
US index futures, meanwhile, are trading flat to down slightly this morning essentially pausing near Friday’s highs. This suggests stocks have paused to digest recent gains, and also indicates a reluctance among traders to press too far ahead before Wednesday’s Fed decision on interest rates and economic projections.
Crude oil has dropped back this morning with both WTI and Brent falling about 1.3%. Comments from Iran over the weekend that it still intends to ramp its production level back up to the 4 mmbbl/d it was at before sanctions were imposed from about 3 mmbbl/d currently. Even though this should not have come as a surprise to anyone who has been paying attention and is not unreasonable, it appears the rumoured meeting among oil producers to try and stabilize production may be pushed off to April. Oil markets had been getting technically overbought so Iran appears to have been the excuse for a needed correction. Still with Brent hanging around $40.00 and WTI trading well above $35.00 the underlying recovery trend and Friday’s comments from the IEA about oil having turned the corner remain intact.
Currency trading today finds USD on the rebound, clawing back some of last week’s losses. The greenback is rising moderately against all the other majors with gains of 0.1%-0.4%. GBP is a bit stronger than EUR while CAD is not down as much as RUB or NOK but overall, it appears to be a consolidation day for currencies. Gold has stabilized near $1,250 after falling Friday.
The focus of traders for the next several days is likely to fall firmly on central banks with decisions due this week from the Bank of Japan tonight, the Fed on Wednesday and the Bank of England on Thursday. These decisions should give a better idea if recent dovish moves from the ECB and RBNZ were the start of a new wave of stimulus or the last gasp of the last wave and may have a significant impact on trader confidence and market action.
Starwood Hotels has received a $76.00 unsolicited takeover offer from a group of companies which is higher than the $63.75 current value of the friendly deal it made with Marriott.
Significant announcements released overnight include:
Eurozone industrial production 2.8% vs street 1.6%
Japan machine orders 8.4% vs street (3.8%)
NZ service PMI 56.9 vs street 55.4
Upcoming significant announcements include:
8:30 am EST Canada Teanet/National Bank house prices previous 5.9%
8:00 pm EST Bank of Japan interest rate and QE no changes expected
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