The big selloff we saw in Asia Pacific markets yesterday didn’t carry through US and European trading as indices in those regions tried to bounce back before slumping into their respective closes. Today is the end of the quarter, and could kick off a flurry of activity in major markets through the rest of the week with a ton of data on the way. There are several forces tugging and pulling at market sentiment these days.Three key things traders may look at in the upcoming data include: What is going on with China’s economy, is it as bad as has been feared? What does world economic activity mean for resource demand? and does US data suggest the Fed could raise interest rates this month? Some of the main factors that could influence trading the rest of this week and into October include: 1) Lots of data on the way Today’s Japanese retail, industrial and housing figures are just the beginning. New Zealand also has a number of second tier announcements today. Tomorrow brings US ADP payrolls, Germany employment and GDP for the UK and Canada, Thursday features manufacturing PMI from around the world and Japan employment, Friday wraps up a big week with the headline US nonfarm payrolls report. 2) FOMC speakers and the upcoming Fed meeting Since the last FOMC meeting, a number of voting members have been out speaking (and doing damage control after an overly dovish read of member projections sent stocks lower). FOMC members Yellen, Lacker, Williams and Dudley have all indicated the Fed remains on track to raise rates this year and/or that October is a live meeting for a decision. Hawk Lockhart and dove Evans statements came pretty much as advertised. Wednesday FOMC members Yellen, Dudley, Bullard and Brainard speaking, the latter could attract the most attention as she is the only one who hasn’t already spoken since the last Fed meeting. 3) US politics and FOMC speculation Recent US political developments, have made October more likely for an increase than December. The pending retirement of House Speaker John Boehner at the end of October means that a showdown over the budget looks unlikely with Republicans focused on picking new leadership. Press chatter suggests a short term funding bill to December could pass with a bigger showdown set for early to mid-December which coincides with the US hitting its debt ceiling. This means that the US government could be heading for a holiday shutdown. Since many government offices essentially shut down in late December anyway, this could be seen by the Republicans as a time to make a stand and statement without making people too mad at them going into a Presidential Election. It also means that the US government could be in or near shutdown mode when the Fed is scheduled to meet in December. Although, as an agency, the Fed should remain operating and able to have a meeting but the Treasury would be closed so there would be no outside support to any move. This makes October now the optimal date for liftoff this year. Which means that we are now into the last round of data before the next Fed meeting. FOMC member statements on being data dependent may now be seen as an escape clause, not looking for strong data to justify a hike but rather that only weak data would throw them off course. Stocks and commodities have certainly acted that way in the last week, falling on weak economic numbers and other dovish indicators and rallying on strong economic news or hawkish indications. 4) Seasonal trading at a potential turning point On top of all this, we appear to be nearing the later rounds of seasonal declines in stock markets. The Hang Seng, copper and the Dax holding their August lows potentially putting in double bottoms and a bear trap rebound in the Nikkei overnight, and street analysts apparently cutting their S&P forecasts in droves all suggest we could be nearing the point of maximum pessimism and approaching the end of this year’s seasonal selloff. Asia Pacific markets particularly in China were the first to fall and have been leading the way lower, so they would be expected to be the first to bottom out. Recent signs for the Hang Seng have been encouraging but Japan may play a key role. It took out its August low briefly then bounced. If it keeps rising a low could be in place. If it turns downward again, it could signal the start of another broader selloff. While recent trading appears encouraging from a contrarian standpoint, the US could bottom out a bit later because its selloff started later. A retest of the August lows remains possible in North America. Currency trading has found gold backsliding but resource currencies on the rebound led by AUD, NZD, SEK and NOK. CAD had been lagging its peers but a rebound in the oil price has helped it to catch up a bit. The loonie could be in focus around tomorrow’s Canada July GDP report with traders trying to figure out if the economy is rebalancing and recovering or falling deeper into recession. Corporate News There have been no major announcements after the US close today. Economic News Significant announcements released overnight include: US consumer confidence 103.0 vs street 97.0 vs previous 101.5 Canada industrial prices (0.3%) vs street (0.5%) Canada raw material prices (6.6%) vs street (7.5%) Upcoming significant announcements include: 9:50 am AEST Japan industrial production street 1.8% 9:50 am AEST Japan retail sales street 1.2% 2:00 pm AEST Japan vehicle production previous (5.9%) 3:00 pm AEST Japan housing starts street 7.6% 3:00 pm AEST Japan construction orders previous (4.0%) 7:45 am AEST NZ building permits previous 20.4% 10:00 am AEST NZ ANZ activity outlook previous 12.2 10:00 am AEST NZ ANZ business confidence previous (29.1) 11:30 am AEST Australia building approvals street 7.4% 11:45 am AEST China consumer sentiment previous 116.5 7:00 am BST UK Nationwide house prices street 3.8% 9:30 am BST UK Q2 GDP update street 2.6% 7:00 am BST Germany retail sales street 3.3% 7:00 am BST Germany unemployment changestreet (5K) 7:00 am BST Germany unemployment rate street 6.4% 9:00 am BST Italy unemployment rate street 12.0% 10:00 am BST Eurozone unemployment rate street 10.9% 10:00 am BST Eurozone consumer prices street 0.0% 10:00 am BST Eurozone core CPI street 0.9% 10:00 am BST Greece retail sales street (5.7%) 1:00 pm BST Poland consumer prices street (0.7%) 8:15 am EDT US ADP Payrolls street 190K 8:30 am EDT Canada July GDP street 0.7% 9:45 am EDT US Chicago PMI street 53.0 10:30 am EDT US DOE crude oil inventories street (0.35 mmbbls) CMC Markets is an execution only service provider. 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Japan kicks off a busy time for news; changing FOMC outlook; Canada GDP preview
23:00, 29 september 2015