Service PMI reports from around the world have been mixed. Australia was the top performer climbing back above 50 and continuing a string of positive economic reports for that country similar to the positive run the US and Canada have been having this week as well. Russia also had a big improvement while the UK disappointed. With economies in resource producing countries apparently improving, resource stocks may continue to attract renewed attention in Canada and the US once again, particularly base metal miners.
Crude oil is holding on to yesterday’s gains with WTI consolidating its breakout over $32.50. Another big increase in US inventories had a limited impact indicating the current poor supply/demand situation has been priced into the market already. Instead, traders appear to be looking forward, anticipating a proposed meeting between OPEC and non-OPEC producing countries to try and sort out the situation. The street responded favourably from comments out of Venezuela that 15 countries may attend, but rumours out of Nigeria that producers could target $50/bbl has had no impact. This indicates that traders are willing to believe a meeting could take place this month, but there is a lot of healthy scepticism out there over whether anything may actually come out of it. Considering where we have come from, an agreement to confirm a production freeze is probably the best anyone should really expect.
It appears that markets have moved into a holding pattern that could last through the day as traders digest this week’s economic and employment figures and await tomorrow US nonfarm payrolls and Canada labour force reports. US ADP payrolls were better than expected indicating a strong and steady US employment market.
Overnight, France posted a positive employment report which along with better than expected Eurozone retail sales, takes some of the pressure off the ECB to bring in more stimulus which may be holding back the CAC and the Dax today while helping EUR to bounce back. Later this morning, US service PMI reports and factory orders could have an influence on trading and FOMC speculation.
Canadian Natural CFPS $1.26 vs street $1.09, cuts 2016 capex to $3.5-$3.9B from $4.5-$5.0B
George Weston $1.43 vs street $1.45
Costco $1.24 vs street $1.28, Feb same store sales US 3% Canada (7%) international (3%) due to lower gasoline and higher USD
Significant announcements released overnight include:
France Q4 unemployment change (47K) vs previous 75K
France Q4 unemployment rate 10.3% vs street 10.5%
UK Nationwide house prices 4.8% vs street 4.9%
UK Halifax house prices 9.7% vs street 10.4%
Eurozone retail sales 2.0% vs street 1.3%
NZ ANZ commodity prices 0.4% vs previous (2.3%)
Australia trade balance ($2.9B) vs street ($3.2B)
Service PMI reports:
UK 52.7 vs street 55.1
Sweden 55.8 vs street 58.1
Spain 54.1 vs street 54.0
Italy 53.8 vs street 52.8
France 49.2 vs street 49.8
Germany 55.3 vs street 55.1
Russia 50.9 vs previous 47.1
Australia 51.8 vs previous 48.4
China Caixin 51.2 vs previous 52.4
Japan Nikkei 51.2 vs previous 52.4
Singapore Nikkei 51.6 vs previous 52.5
India Nikkei 51.4 vs previous 54.3
Upcoming significant announcements include:
8:30 am EST US jobless claims street 270K
10:00 am EST US factory orders street 2.1% vs previous (2.9%)
9:45 am EST UK Markit service PMI street 50.0
10:00 am EST US ISM non-manufcturing PMI street 53.1
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