Stocks Level Off Following Galacia Election
European Indices have been trading close to flat today. In Spain, Prime Minister Rajoy’s party not only won but increased its majority in the Galacia regional parliament in what had been seen as a key test of support for austerity and other measures for dealing with the country’s banking and sovereign debt crisis. Concerns that the crisis could escalate continue to ease, with Greece’s treasury yield drifting back toward the 16.0% level.
British Petroleum (BP LN) has agreed to sell its 50% interest in its Russian joint venture with TNK to OAO Rosneft for $12.3 billion in cash, a 19.75% interest in Rosneft (estimated value of $14.5 billion) and two seats on its board. BP has slipped back 1.8% today on this news.
US indices have stabilized near the lower end of their trading ranges, gaining support near the lows set a few sessions ago. There has been no major economic news, so traders have been focused mainly on the flood of key earnings reports due out this week. Tonight brings the third and final Presidential candidate’s debate with the parties running neck and neck in the polls. The latest Fed monetary policy decision comes on Wednesday.
Coal producers are in vogue today after Peabody Energy posted very strong earnings ($0.51 vs street $0.34). Peabody is up 13.1% while Consol Energy has gained 4.67% in sympathy. On the other hand, SunTrust Banks is down 4.4% after reporting earnings.
Currency markets continue to see capital flow out of defensive areas, with JPY particularly weak on anticipation that the country could ease monetary policy further later this month to try to prop up its economy. EUR and GBP have been gaining strength.
Resource currencies have been mixed with NZD up, SEK and NOK basically flat, and AUD and CAD declining. CAD continues to underperform its peers on concerns that the Canadian economy may be slowing and could force the Bank of Canada to back away from its more hawkish tone. In addition, traders may be recognizing that growing opposition to big foreign takeovers of Canadian companies could cut into future demand for the loonie.
In commodities today, grains continue to rebound, led by soybeans up 0.6% and wheat up 0.8%. Copper continues to struggle after last week’s breakdown as the soft Chinese economy drags on expectations for future resource demand.
The energy group is relatively quiet today. Seasonal trends in natural gas and gasoline remain intact