TI crude oil had been rolling over in recent days but today’s inventory report appears to have been the straw that broke the camel’s back. A surprise increase in gasoline inventories combined with a smaller than expected decrease in US oil inventories (which confirmed the API report) sent oil hurtling lower, particularly after it broke its 50-day average, triggering technical bearishness.
The oil selloff impacted oil sensitive currencies like CAD and also energy stocks. This sector plunge acted as an anchor for major indices which already have been struggling as traders take profits against earnings reports. Through the day today, the Dow underperformed the S&P due to a negative reaction to IBM’s sales shortfall which sent Big Blue’s shares down 5%. After the close, another round of positive reports has come out with railroad CSX, America Express, and Qualcomm reporting results well above expectations.
GBP retrenched a bit after the UK House of Commons voted to dissolve and call an election for June 8. Early polls show the Conservatives with a substantial lead and the potential to boost the size of its majority as it prepares for Brexit negotiations. A pullback is not a surprise and was relatively small compared with to yesterday’s huge gains.
In other currency action, gold and JPY dropped back a bit during a lull jn political tensions. Traders should not, however, confuse a quiet phase with a reduction in tensions, risks could ramp up again any time, particularly next week when US aircraft carriers are expected to start arriving off North Korea.
Today’s Asia Pacific trading may focus primarily around energy, metal and other resource prices following through to resource stocks and currencies, particularly Australian markets. NZD could be active around inflation data while JPY may respond to Japanese trade figures. Tomorrow morning in North America brings another round of earnings reports and the expected announcement of measured designed to cool the scorching hot Ontario housing and rental markets.
Canadian Pacific $2.50 vs street $2.49
CSX $0.51 vs street $0.43
American Express $1.34 vs street $1.28
Qualcomm $1.34 vs street $1.19
eBay $0.49 vs street $0.48
Significant announcements released overnight include:
UK House of Commons votes 522-13 to dissolve and call an election for June 8
US DOE crude oil inventories (1.0 mmbbls) vs street (1.4 mmbbls)
US DOE gasoline inventories 1.5 mmbbls vs street (2.0 mmbbls)
US DOE distillate inventories (1.9 mmbbls) vs street (1.0 mmbbls)
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)
8:45 am AEDT NZ consumer prices street 2.0% vs previous 1.3%
9:50 am AEDT Japan trade balance street ¥608B
9:50 am AEDT Japan exports street 6.2%
9:50 am AEDT Japan imports street 10.0%
10:00 am BST Eurozone construction output previous (6.2%)
8:30 am EDT US jobless claims street 240K
8:30 am EDT US Philadelphia Fed street 25.5
10:00 am EDT US leading index street 0.2%
10:30 am EDT US natural gas street 49 BCF
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