t’s been another active day for trading across global markets with a lot of potentially market-moving news still on the way. Indices in the US and Germany continued to drift steadily downward with traders taking money off the table against earnings news. Another disappointing result from Deutsche Bank sent is shares south and dragged on the Dax
. In the US traders failed to respond to positive earnings from Facebook, indicating that the massive late 2016 rally had already priced in very high expectations for US earnings. After the close, Amazon.com fell 4% after beating the street on earnings but coming in short of expectations on sales.
It’s has been another big day for trading in UK markets between the Bank of England and more Brexit developments. The Bank of England maintained current interest rates and QE target as expected. The MPC raised its 2017 UK GDP forecast to 2.0% from 1.4% but at the same time indicated there remains slack in the UK economy. There also were mixed comments over inflation with some members more worried than others. Overall, the statement indicates that the UK is unlikely to raise interest rates this year, but additional stimulus looks unlikely as well. Meanwhile the UK followed Wednesday’s initial positive votes on Brexit by publishing the promised White Paper adding more colour to the twelve priorities PM May outlined last week. Sterling sold off on all of this news but losses in Cable were contained by the $1.2500 round number and GBP started to recover later in the day.
Concerns that political instability could impact trade flows and the global economy continued to roil currency markets. While rattling sabres at North Korea and Iran may be par for the course, and tensions over trade and currencies with China and Mexico were to be expected, President Trump picking an argument with a natural ally like Australia indicates the old order is changing and the future uncertain. This uncertainty has accelerated flows of capital back into defensive havens like gold and JPY.
It has been a big week for trading and it’s not over yet with a lot of scheduled news on the way and who knows what could pop up from the White House. Service PMI reports are due from around the world which could impact a number of markets.
The main event Friday is the US nonfarm payrolls report which could spark another round of Fed speculation trading in USD and stocks. The greenback has continued to retreat following Wednesday’s dovish FOMC statement, where the central banker indicated it still sees inflation as low and room for employment to grow without sparking inflation. Earlier this week, ADP posted a stellar private sector payrolls report of 246K jobs way above the 165K the street had expected. January was a month of turmoil in government jobs ending in a federal hiring freeze. Still, I think that that the new year unleashed another round of pent up hiring demand and am thinking 225K jobs plus a 20K upward revision to last month.
Amazon.com $1.54 vs street $1.37, sales $43.7B below street $44.7B, guides next Q sales to $33.25-$33.75B below street $36.0B
Visa $0.86 vs street $0.78
Amgen $2.89 vs street $2.79
Open Text $0.54 vs street $0.52
Significant announcements released overnight include:
US jobless claims 246K vs street 250K
Bank of England decision no change to interest rates or QE as expected
UK construction PMI 52.2 vs street 53.8
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 NZ ANZ commodity prices previous 0.7%
9:00 am GMT Norway unemployment rate street 3.2%
10:00 am GMT Eurozone retail sales street 1.8% vs previous 2.3%
8:30 am EST US nonfarm payrolls street 175K vs previous 156K
8:30 am EST US private payrolls street 170K
8:30 am EST US manufacturing payrolls street 4K vs previous 17K
8:30 am EST US unemployment rate street 4.7%
8:30 am EST US average hourly earnings street 2.8%
9:15 am EST FOMC Evans speaking
10:00 am EST US factory orders street 0.7% vs previous (2.4%)
1:00 pm EST US Baker Hughes rig count previous 712
Non-Manufacturing / Service PMI reports:
9:30 am AEDT Australia previous 57.7
10:30 am AEDT Singapore previous 52.0
10:30 am AEDT Japan previous 52.3
12:45 pm AEDT China Caixin mfg street 51.8
4:00 pm AEDT India previous 47.6
9:30 am GMT UK street 55.8
8:55 am GMT Germany street 53.2
8:50 am GMT France street 53.8
8:45 am GMT Italy street 52.5
8:15 am GMT Spain street 54.7
9:45 am EST US Markit previous 55.1
10:00 am EST US ISM street 57.0
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