Gold breaks out, stocks rally heading toward central bank meetings
It’s been a titanic battle for dominance between the bulls and bears over the last ten days, but today’s broad based rally suggests that for now the bulls have gained the upper hand. Another big selloff in mainland China overnight was completely ignored by traders in North America and Europe who drove markets higher through the day.
Gains were broad based across asset classes with stocks, crude oil, copper and resource currencies led by CAD, AUD and NZD posting significant gains. Traders responded favourably to a number of earnings reports particularly news that luxury retailer Coach beat the street. A rise in consumer confidence also helped give the bulls more conviction today.
Interestingly even with capital going back into risk markets in a big way, gold staged a big technical breakout, completing a cup with handle base. This came as the FOMC started a two day meeting with speculation growing that the Fed could come out with a dovish statement. At a minimum, it’s unlikely the Fed is going to go more hawkish and project more rate hikes than the 4 which have already been priced in to USD. With the USD apparently peaking, the door has been left open for gold to rebound.
In addition to the Fed, traders may also prepare for the RBNZ decision which comes out an hour later, and the Bank of Japan later in the week which could influence trading in USD, NZD and JPY today.
Between all of these meetings, a continuing deluge of earnings reports and a number of GDP reports due later in the week, trading may remain active across markets. Oil has come under pressure in late day trading today with API reporting another big increase in oversupply. Apple reported mixed results beating the street on earnings despite a shortfall in sales.
Apple $3.28 vs street $3.23, sales $75.87B below street $76.60B, guides next Q sales to $50.0-$53.0B below street $55.6B
Molson Coors profit warning! Guides Q4 EPS to $0.46-$0.52 below street $0.56
Canadian National $1.18 vs street $1.11, 20% dividend increase
Noble Energy 44% dividend cut
Significant announcements released overnight include:
US API crude oil inventories 11.4 mmbbls vs street 1.6 mmbbls
US FHFA house prices 0.5% as expected
US flash service PMI 53.7 vs street 54.0
US consumer confidence 98.1 vs street 96.5
US Richmond Fed 2 as expected vs previous 6
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)
10:30 am AEDT Australia leading index previous (0.2%)
11:30 am AEDT Australia consumer prices street 1.6%
12:30 pm AEDT China industrial profits previous (1.4%)
12:45 pm AEDT China consumer sentiment previous 113.7
7:00 am GMT UK Nationwide house prices street 4.7%
8:00 am GMT Sweden consumer confidence street 97.5
10:00 am EST US new home sales street 500K
10:30 am EST US DOE crude oil inventories street 4.1 mmbls
10:30 am EST US DOE gasoline inventories street 0 mmbbls
2:00 pm EST US interest rate and FOMC statement 0.50% upper bound no change expected
3:00 pm EST NZ interest rate and RBNZ statement 2.50% no change expected
9:00 am NZST Thu
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