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Earnings and inflation propel stocks, GBP and CAD upward

Stock markets have roared back to life overnight breaking their doldrums. US index futures are up 0.4% for the Dow and 0.5% for the S&P plus the NASDAQ. Overseas markets have been even stronger with the Hang Seng up 1.5%, the Dax up 1.2% and the FTSE up 0.8%. 

Two ‎factors have combined to drive stocks higher today. First, earnings reports continue to come in stronger than expected. Netflix earnings per share were double what the street was expecting and IBM also posted a strong report, driving technology stocks higher. Tech may remain in focus through the day with Intel and Yahoo! scheduled to report after the close. Earnings reports from other sectors including financials, health care and airlines have also been positive. 

Second, the US Dollar has started to slide a bit, lifting the lid off stocks. Inflation rose more than expected in the UK and New Zealand making it less likely the Bank of England or the RBNZ may try to cut rates again this year. This shift to neutrality makes the hawkish Fed less lonely and further indicates the recent round of stimulus may be near an end.

We also may be seeing seasonal factors kicking in behind stocks with better than expected loan activity in China also helping sentiment. On the other hand, Ford idling production due to slowing auto sales is a warning sign traders should be aware of. 

Sterling has popped ‎for a penny on the inflation figures and appears to be recovering. Meanwhile, resource dollars have been rallying too with CAD, AUD and NZD all posting sizable gains on the day. The Bank of Canada is expected to confirm its neutral stance at tomorrow's meeting. 

Crude oil is trading up slightly with WTI still bouncing around $50.00. Commodities, resource stocks and resource currencies may be active this evening between API oil inventories and key China reports which include Q3 GDP, industrial production and retail sales.   

Corporate News

NetFlix    $0.12 vs street $0.06, US new subscriber adds 370K vs stret 310 K, international new subscriber adds 3.2M way above guidance 2.0M, company guides Q4 domestic streaming adds 1.45M above street 1.27M, guides Q4 international streaming adds to 3.75M above street 3.32M.

Goldman Sachs    $4.88 vs street $3.82

Johnson & Johnson    $1.68 vs street $1.65

IBM    $3.29 vs street $3.23

United Continental    $3.11 vs street $3.07

Ford     cutting back production at some US plants due to slower auto sales

Economic News

China new Yuan loans        1,200B vs street 1,000B and previous 948B

NZ consumer prices        0.2% vs street 0.1% and previous 0.4%

UK consumer prices        street 0.9% vs previous 0.6%
UK core CPI            street 1.4%
UK retail prices            street 2.0% vs previous 1.8%
UK producer input prices    street 7.4%
UK producer output prices    street 1.1%
UK house prices        street 7.8% vs previous 8.3%

Upcoming significant economic announcements include:

8:30 am EDT        US consumer prices        street 1.5% vs previous 1.1%
8:30 am EDT        US core CPI            street 2.3%
8:30 am EDT        US real average weekly earn    previous 0.4%


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