Global markets this morning:
Stock markets have been steady to start the week as selling pressure subsides. Last Friday’s selloff did not continue into the Asia Pacific session overnight.
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.
US indices have been holding 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.
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 and wheat. Copper continues to struggle after last week’s breakdown. The energy group is relatively quiet today, keeping current trends intact.
There are no major economic announcements today.
Agrium completed its $900 million share buyback, taking up 8.7 million shares or 6% of the total at a price of $103.00 per share. The company also announced it intends to double its dividend to $2.00 per year which it now intends to pay in quarterly instalments like most other major companies.
Canadian stocks could see takeover speculation and premiums evaporate with a number of deals having come under serious government scrutiny of late.
Over the weekend, the Government of Canada blocked the $5.2 billion acquisition of Progress Energy (PGX) by Malaysia’s Petronas, on the basis that the deal is considered not to be in the best interest of Canadians.
This decision could also dampen enthusiasm over the bid for Nexen (NXY) by China’s CNOOC, which is also under review, and raise concerns that Nexen deal could face a longer approval process or fall apart too.
Even outside the oilpatch, Canada has become increasingly hostile to big mergers of late. Last week, the CRTC rejected Bell Canada’s bid for Astral Media on concentration concerns. Late Friday Bell appealed to the Federal Cabinet for policy direction. Last month, Lowes (LOW) abandoned its hostile takeover bid for Rona due to corporate and political opposition in the wake of the Quebec election and change in power.
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.
It’s another busy day for earnings, highlights include:
Caterpillar CAT $2.54 vs street $2.47, 2012 EPS guidance $9.00-$9.25 cut from $9.60. 2013 revenue guidance (5%) to 5%, below street
Hasbro HAS $1.24 vs street $1.20
SunTrust Banks STI $1.98 vs street $1.86
Peabody Energy BTU $0.51 vs street $0.34
North American indices
The Dow Industrials (US30 CFD) are holding the low end of their trading channel near 13,300 so far and RSI has moved back above 30 from oversold territory, suggesting a near-term bounce may be possible toward 13,400 or 13,500. If 13,300 fails, however, next support doesn’t appear until closer to 13,190 or even 13,000.
The S&P 500 (SPX500 CFD) has stabilized above 1,420 with resistance near 1,435 and 1,450. On a breakdown, however, 1,400 could easily be retested.
The S&P/TSX 60 (Toronto60 CFD) continues to trade in the upper half of a 692-718 channel.
Copper remains in a downswing with the broken $3.65/lb becoming new resistance and next key support closer to $3.55, a previous breakout point.
US crude is hanging around the $90.00/bbl level with support near $89.50 and $88.70 and resistance in the $92.00-$93.00 area.
UK crude has held $110.00/bbl support, setting a higher low with initial resistance near $112.50.
Gasoline remains in a downtrend testing the $2.70-$2.80/gallon range with next support after that closer to $2.55.
Natural Gas remains well supported above $3.50/mmbtu, keeping its uptrend intact with next trend resistance near $3.60 then $3.80.
Corn remains supported above $7.60 as it continues to form a reverse head and shoulders base between $7.35 and $7.80/bushel.
Soybeans continues to trade in the $15.35-$15.75/bushel range after breaking out of a downtrend last week with next upside resistance closer to $15.95.
Wheat continues to consolidate last week’s rebound in the $8.55-$8.75/bushel range within a wider $8.25 to $9.10 channel.
FX this morning
Gold has bounced up from $1,715/oz toward $1,725, but remains in a downtrend with a retest of $1.695 Fibonacci support still possible and resistance ear $1.735.
Silver is trading in the $31.80 to $32.30/oz range but remains in a downtrend overall with next downside support near $31.00.
USDCAD has decisively broken out today, rallying up through $0.9900 and $0.9960 with next resistance near par then $1.0080.
EURUSD keeps trending higher today toward a retest of $1.3075 after bouncing up from $1.3000 with key resistance looming closer to $1.3175.
GBPUSD successfully tested $1.6000, setting a higher low, and has started to rebound toward $1.6040 with more resistance possible near $1.6100 then $1.6175.
USDJPY is breaking out again today, clearing 79.70 with next resistance on trend near 80.60, 81.75 and 83.40.
AUDUSD is consolidating between Fibonacci levels in the $1.0285 to $1.0350 area.