The positive enthusiasm that drove markets around the world higher over the last 24 hours appears to be running out of gas this morning. Although the Dax
has been able to consolidate yesterday’s breakout to an all-time high, European indices have been trading moderately lower, while US indices have also dropped back slightly as they encounter significant channel resistance near their previous highs.
As we move into the core part of earnings season individual news driven action may become the primary driver for stocks rather than big macro data for the next week until traders start to position for the big FOMC meeting at the end of the month. Today, Citigroup delivered the first big miss while Best Buy reported a 0.8% drop in same store sales over the holiday selling season.
In commodity action, natural gas is soaring ahead of today’s storage report with the street looking for a big drawdown off of last week’s polar vortex. The big question though is whether this may be the last hurrah for the season or if there is more cold weather to come?
The big action in currency markets today has been the collapse of AUD (and concurrent S&P/ASX rally) off of a very disappointing job report that was pretty much as bad as Canada’s. The big drop in full-time employment and a downward revision to last month’s job increase also spooked traders. This sparked speculation that the RBA may have to cut interest rates to manage the transition away from the resource boom. This weekend’s GDP data from China may give a better indication of the challenges facing resource exporters moving forward.
Bombardier had bad and good news today. The in-service date for its flagship C-Series jet program has been delayed to the second half of 2015 to accommodate a longer than expected test flight program. Offsetting this, it booked a C-Series order from Saudi Arabia worth up to $1.89 billion for up to 26 aircraft.
Highlights of today’s earnings reports include:
Goldman Sachs adjusted EPS $5.13 vs street $4.18
Citigroup $0.82 vs street $0.95
Significant economic announcements released yesterday afternoon and overnight include:
US jobless claims 326K vs street 328K
US consumer prices 1.5% as expected vs previous 1.2%
Australia employment change (22K) vs street 10K; previous month revised down to 15K from 21K
Australia unemployment rate 5.8% as expected
Australia full-time jobs (31K) vs previous 15K
Brazil interest rate raised 50 bps to 10.50% more than the 25 bps increase to 10.25% that had been widely expected
Brazil retail sales 7.0% vs street 6.2%
Germany consumer prices 1.4% as expected
Eurozone consumer prices 0.7% as expected
Economic reports due later today include:
10:00 am EST US Philadelphia Fed street 8.7
10:00 am EST US NAHB housing market street 58
10:30 am EST US natural gas storage street (300 BCF)
11:10 am EST Outgoing FOMC chair Bernanke speaking