Stock markets around the world have been trading mixed overnight and into this morning amid a number of developments.
The Nikkei soared 1.0% overnight on better than expected Japanese flash manufacturing PMI and comments from President Trump suggesting China was taking steps to deal with the North Korea situation.
Although flash PMI reports for France and Germany were also positive, the Dax is up only 0.1% while the CAC is down 0.5% and the Euro is down slightly. Traders appear wary to take on new positions ahead of Sunday's first round of Presidential voting.
It has been a close race among four candidates for two spots in the next round. The latest polls suggested Macron was pulling away but that was before ISIS staged a terrorist attack on the Champs-Elysees last night where a police officer was killed. It remains to be seen if this will have any impact. Three of the four candidates have called off events for today with Melenchon continuing, refusing to let the terrorists win. Strong results for Le Pen and-or the surging Melenchon, who are both critical of the EU, could spark volatility when markets reopen Monday, while strong support for Macron and-or Fillon could calm fears of political disruption.
Heightened market volatility is likely over the election period, this could result in widened spreads. We recommend that you monitor positions carefully, consider the use of appropriate risk management tools and maintain a sufficient account surplus throughout this period.
Sterling and the FTSE are down slightly this morning after UK retail sales came in well below expectations. Higher prices apparently dampened sales.
US markets responded favourably to indications that negotiations continue on health care reform and that sweeping tax reforms are apparently on the way, hopefully to be passed by the end of the year. On the other hand, talks to avoid a government shutdown as early as next week appear to be getting bogged down with the President wanting money for the military and a border wall in exchange for continued funding of Obamacare. Earnings from overnight and this morning have been mixed with Visa, Suntrust Banks, Honeywell and GE all beating the street while toymaker Mattel missed badly again due to an inventory overhang from slow Christmas holiday sales.
Mid-morning brings flash manufacturing and service PMI reports. Following the initial reaction to this and overnight news, traders may spend the day preparing for what could be a big weekend for political developments, particularly in Europe.
Visa $0.86 vs street $0.79
Mattel ($0.32 vs street ($0.17), sales $735M vs street $791M
General Electric $0.21 vs street $0.17
Honeywell $1.66 vs street $1.62
Suntrust Banks $0.91 vs street $0.84
SNC Lavalin has agreed to purchase WS Atkins for $3.6B or £20.80
Significant announcements released overnight include:
Japan flash manufacturing PMI 52.8 vs previous 52.4
France flash manufacturing PMI 55.1 vs street 53.1
France flash service PMI 57.7 vs street 57.0
Germany flash manufacturing PMI 58.2 vs street 58.0
Germany flash service PMI 54.7 vs street 55.5
UK retail sales 1.7% vs street 3.3%
UK retail ex auto 2.6% vs street 3.8%
Upcoming significant economic announcements include:
8:30 am EDT Canada consumer prices street 1.8% vs previous 2.0%
8:30 am EDT Canada core CPI – common street 1.3%
9:30 am EDT FOMC Kashkari speaking
9:45 am EDT US flash manufacturing PMI street 53.8
9:45 am EDT US flash service PMI street 53.2
10:00 am EDT US existing home sales street 5.60M
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