It’s been a very choppy day for trading with significant intraday swings
in both directions for major markets as traders tried to make heads or tails of this week’s political developments. US stocks shrugged off energy sector weakness and picked up Tuesday with momentum turning more positive into the afternoon.
Indications from polls and market sentiment that Hillary Clinton won the first Presidential debate has calmed some nerves and sparked a relief rally. Ms. Clinton is widely seen as representing a continuation versus Mr. Trump’s calls for radical changes in government policy and direction.
The debate had the biggest impact on the Mexican Peso MXN which had become really depressed lately as Mr. Trump has risen in the polls due to his antagonistic campaign toward the country complaining about NAFTA and threatening to build a wall along the Rio Grande. A setback for Trump then enabled MXN to stage a big 1.8% pop.
It remains to be seen if this debate was enough to slow or stop Mr. Trump’s momentum in the polls so it would be unwise for traders to get complacent or get caught up in wishful thinking and think it’s all over already. Six weeks is an eternity in an election campaign and a lot can change. The close race could spark significant trading swings and opportunities in both directions in the coming weeks.
MXN was able to hold its debate related gains despite a big 3% drop in crude oil prices which dragged CAD and energy stocks downward. It increasingly looks like there’s not going to be a deal to stabilize the market at this week’s Algeria conference. That being said, Saudi Arabia suggested that various scenarios for a freeze deal are still being discussed with an agreement possible at the next OPEC meeting. Options on the table include giving Iran, Libya and Nigeria room to restore output toward historical levels. Saudi Arabia plans to meet with Russia next month and indicated it thinks the worst for oil is behind us.
Although crude fell on the day, WTI and Brent continue to trade near $45.00 and well above $40.00 indicating the street is encouraged that there has been any progress at all and is now looking toward the November 30 OPEC meeting for a potential deal to end the two-year market share war.
Crude oil has picked up late in the day boosted by another drawdown in API crude oil inventories providing fundamental underpinning to the market though the ups and downs of production freeze negotiations overseas. Crude may be active again around the mid-morning weekly DOE reports.
In addition to ongoing swings in energy markets, we could see some positioning in Japanese stocks and JPY today ahead of this week’s Japan monthly data starting with retail sales tomorrow. Wednesday brings US durable goods orders and a number of Fed speakers, but unless someone really changes their tune, traders are likely to take less interest with the December meeting still a long way away and the election campaign taking up more attention.
Nike $0.75 vs stret $0.56, sales $9.06B vs street $8.86B
Significant announcements released overnight include:
US API crude oil inventories (0.75 mmbbls)
US Markit flash service PMI 51.9 vs street 51.2
US consumer confidence 104.1 vs street 99.0
US Richmond Fed (8) vs street (2) and previous (11)
UK CBI retailer sales (8) vs street 5 vs previous 9
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)
11:45 am AEST China consumer sentiment previous 111.5
7:00 am BST Norway retail sales street 0.6%
7:00 am BST Germany Gfk consumer confidence street 10.2
7:45 am BST France consumer confidence street 97
8:00 am BST Sweden consumer confidence street 95.0
9:00 am BST Italy consumer confidence street 109.0
8:30 am EDT US durable goods orders street (1.5%)
8:30 am EDT US durables ex transport street (0.5%)
8:30 am EDT US capital goods orders nondef ex air street 0.1%
10:00 am EDT FOMC Chair Yellen testimony
10:10 am EDT FOMC Bullard speaking
10:30 am EDT US DOE crude oil inventories street 3.0 mmbbls
10:30 am EDT US DOE gasoline inventories street 0 mmbbls
1:30 pm EDT FOMC Evans speaking
7:15 pm EDT FOMC George speaking
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