Trading was light in Asia-Pacific markets, as the Lunar New Year holiday gets underway. The Nikkei gained 0.3%, while China markets were fully or practically closed. Trading in Europe and North America has been subdued so far as well, with the FTSE up slightly, the DAX down 0.4% and US index futures flat. Currency trading has also been relatively quiet, with the USD posting rebound gains against other majors and gold.
This could be seen as the calm before the storm, however, as there is still the potential for significant markets action in North America today, so don't get lulled into complacency. US GDP and durable goods orders may give an idea of the state of the US economy and how much pressure the Fed is under to raise interest rates again this year ahead of next week’s FOMC meeting.
There is also likely to be a lot of attention on individual stocks today, particularly in the technology sector. Last night, Microsoft and Intel beat the street on earnings and/or guidance while Google fell short. In line reports from Starbucks and PayPal have also been treated as disappointments indicating that the big markets rallies of late have priced in very high expectations.
Trade talks may also attract attention today. US president Donald Trump and UK prime minister Theresa May are set for a meeting today to talk potential post-Brexit trade relations. It also looks like the US is preparing to pursue a course of one on one trade deals with other countries to replace the terminated Trans Pacific Partnership, with reports suggesting Japan could be the first candidate with the potential for initial discussions with Japanese prime minister Shinzo Abe as early as their planned meeting next month.
Commodity markets are in retreat today with WTI crude down 0.75%, Brent crude down 1.1% and natural gas down 2.9%. Rising gasoline inventories have been getting the blame for today’s takedown which seems dubious considering that gasoline itself is only down 0.5%, go figure. We could see some attention around this afternoon’s US Baker Hughes drill rig count with the impact of higher oil prices and increasing US exploration potentially boosting US supply likely to overhang energy prices moving forward.