Stock markets in Europe and North America spent the day in consolidation mode, digesting the big gains they made to start the month. Resource markets, however, continued to post strong gains, indicating growing confidence in the world economy and confirmed renewed interest in risk markets.
Crude oil shrugged off a huge 10 million barrel plus increase in US DOE inventories way above the 3.5 mmbbl increase the street had expected and confirmed the big API inventory jump. This news should have sent crude oil sharply lower (and would have a few short weeks ago). Instead after a short downdraft, WTI turned higher and broke out of a base. This indicates that the street has fully factored US oversupply into the price and is looking past it. Today traders appeared to focus more on reports that Russian oil companies have agreed to the government’s plan to freeze production. Reports out of Venezuela that up to 15 companies may participate in the upcoming production freeze discussion also appears to have sparked renewed interest in oil.
Meanwhile, base metal stocks have also been in vogue today. With copper climbing out of a base as traders increasingly recognize the worst may be passing for China and stimulus could help a rebound, base metal miners have been soaring with Alcoa up 6%, BHP in the US up 7.5%, Freeport up 12.5%, and Teck up 17.5%, Australian miners could attract attention again today. Increased in metals also appears to be powering AUD to the top of its league today with yesterday’s strong Australia GDP report also helping the cause. NZD is also picking up but at a smaller pace but this could change depending on how today’s New Zealand commodity price report shakes out. AUD, meanwhile could be active again on trade figures.
JPY has been bouncing back a bit which could hinder Japanese stocks as risk-on risk off capital flows continue the see saw action between Japanese currency and stock markets.
GBP has turned back upward breaking out over $1.4000 against USD indicating that the wave of Brexit fears have run their course for now. A poll released today found the Stay and Exit sides tied at 41%.
US economic news remains positive with ADP payrolls rising more than expected, continuing the streak of winning economic numbers and setting the stage for Friday’s nonfarm payrolls. Between now and then, service PMI reports may have an influence on trading in some markets Thursday along with US factory orders.
There have been no major announcements after the US close today.
Significant announcements released overnight include:
US ADP Payrolls 214K vs street 188K
ISM New York 53.6 vs previous 54.6
US DOE crude oil inventories 10.4 mmbbls vs street 3.3 mmbbls
US DOE gasoline inventories (1.5 mmbbls) as expected
Super Tuesday results from 13 state caucuses and primaries
Trump 285 delegates after winning 7 states incl Virginia, Georgia and Massachusetts
Cruz 161 delegates after winning 3 states incl Texas and Oklahoma
Rubio 87 delegates after winning Minnesota
Clinton 544 delegates after winning 7 states incl Texas, Georgia, Virginia
Sanders 349 delegates after winning 4 states incl Colorado, Oklahoma, Vermont
UK construction PMI 54.2 vs street 55.5
UK BRC shop prices (2.0%) vs previous (1.8%)
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
11:00 am AEDT NZ ANZ commodity prices previous (2.3%)
11:30 am AEDT Australia trade balance street ($3.2B)
7:00 am GMT UK Nationwide house prices street 4.9%
8:30 am GMT UK Halifax house prices street 10.4%
10:00 am GMT Eurozone retail sales street 1.3%
8:30 am EST US jobless claims street 270K
10:00 am EST US factory orders street 2.1% vs previous (2.9%)
Service PMI reports:
9:30 am AEDT Australia previous 48.4
12:45 pm AEDT China Caixin previous 52.4
1:00 pm AEDT Japan Nikkei
2:00 pm AEDT Singapore Nikkei previous 52.5
4:00 pm AEDT India Nikkei previous 54.3
7:30 am GMT Sweden street 58.1
8:15 am GMT Spain street 54.0
8:45 am GMT Italy street 52.8
8:50 am GMT France street 49.8
8:55 am GMT Germany street 55.1
9:30 am GMT UK street 55.1
9:45 am EST UK Markit street 50.0
10:00 am EST US ISM street 53.1
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