Stocks started the day off strong in the early morning hours but faded as the day progressed although major indices managed to finish in the green. An increase in US hourly earnings indicating growing wage inflation that could put pressure on the Fed to raise interest rates provided an initial headwind. Enthusiasm over strong corporate earnings appears to be fading as positive reports after the US close from Intel and Yahoo! haven’t been able to stop the bleeding. This indicates that positive reports have already been priced in to the market and traders appear to be seeing results as an opportunity to take profits with the election looming.
WTI crude oil has been picking up late this afternoon on another big surprise drawdown in US API this time by 3.8 mmbbls. CAD has been climbing in tandem with WTI. The street is currently expecting a 2.1 mmbbl increase in DOE inventories tomorrow so the potential for a positive surprise has increased. This news could have a positive impact on trading in energy shares.
Resource stocks in general along with commodity prices and commodity currencies like AUD, NZD and CAD could be quite active today around key Chinese economic reports including Q3 GDP, industrial production and retail sales which could settle the score following a series of conflicting reports (loans and inflation were positive, falling exports a negative).
Currency trading has been mixed but GBP had a good day rebounding on the back of a higher than expected UK inflation report, making further stimulus from the Bank of England less likely. Similarly, NZD has remained strong overnight boosted by yesterday’s higher New Zealand inflation figures.
CAD may be active around tomorrow’s Bank of Canada decision with the street particularly interested in what the bank has to say about the economy. The Bank has been counting on a summer rebound following a rough spring and had been concerned about a soft July but since then GDP and employment data have suggested an improving economy. The statement may give an ideal of whether a rate cut later this year is still on the table or not.
On top of all the earnings reports flooding out this week, tomorrow could be a big day in the US as traders prepare for the final Presidential election debate with Biotech stocks (sensitive to Clinton) and the Mexican Peso (sensitive to Trump) in particular focus. Fed speeches and he Beige book could keep the interest rate speculation pot boiling as well.
Intel $0.80 vs street $0.73, sales $15.78B above street $15.61B,
Yahoo! $0.20 vs street $0.14, sales $857M vs street $860M, guides next Q sales to $880-$920M below street $940M
Visa 17.9% dividend increase
Significant announcements released overnight include:
US API crude oil inventories (3.79 mmbbls)
US consumer prices 1.5% as expected vs previous 1.1%
US core CPI 2.2% vs street 2.3%
US real average weekly earn 0.8% vs previous 0.4%
UK consumer prices 1.0% vs street 0.9% and previous 0.6%
UK core CPI 1.5% vs street 1.4%
UK retail prices 2.0% as expected vs previous 1.8%
UK producer input prices 7.2% vs street 7.4%
UK producer output prices 1.2% vs street 1.1%
UK house prices 8.4% vs street 7.8%
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 China Q3 GDP street 6.7%
11:00 am AEDT China industrial production street 6.4%
11:00 am AEDT China retail sales street 10.7%
9:30 am BST UK jobless claims street 3.2K vs previous 2.4K
9:30 am BST UK 3M employment change street 76K vs previous 174K
9:30 am BST UK unemployment rate street 4.9%
9:30 am BST UK avg weekly earnings street 2.3%
10:00 am BST Eurozone construction output previous 3.1%
8:30 am EDT US housing starts street 1,175K
8:30 am EDT US building permits street 1,165K
8:45 am EDT FOMC Williams speaking
10:00 am EDT Canada interest rate 0.50% no change expected
10:00 am EDT Bank of Canada monetary policy
11:15 am EDT Bank of Canada Poloz and Wilkins press conference
10:30 am EDT US DOE crude oil inventories street 2.1 mmbbls vs previous 4.8 mmbbls
10:30 am EDT US DOE gasoline inventories street (1.1 mmbbls)
1:30 pm EDT FOMC Kaplan speaking
2:00 pm EDT FOMC Beige Book