e’ve been seeing a retrenchment in stocks to start the new month as traders digest Friday’s big Bank of Japan driven moves. Stock market indices are pretty much red across the board although declines are pretty small suggesting that this is more of a trading correction than renewed bearishness.
Also, I’m not seeing capital flows into defensive havens like gold or JPY, so this just looks like normal trading so far. The USD index remains stuck below 100.00 even after the Bank of Japan which suggests it may be peaking and could be vulnerable should the Fed start to back away from the recent party line if 4 rate hikes expected this year.
With the impact from the Bank of Japan’s rate cut having worked its way through the markets, focus has turned to manufacturing PMI reports from around the world today. Chinese reports were mixed with the official manufacturing and non-manufacturing figures a little below expectations offset by a better than expected Caixin report. On balance, the PMI reports suggest the Chinese economy is still sluggish but not collapsing. This suggests that the country’s recent stock market plunges have been overdone, and not a reflection of the broader economy which is likely why their impact has been more contained lately.
Crude oil is mixed today with Brent trading up slightly and WTI down slightly. WTI is still holding near $32.00 which suggests today’s action is normal backing and filling following its recent big recovery bounce. This difference can also be seen in oil sensitive currencies with CAD underperforming relative to NOK today. NOK could also be benefitting from renewed interest in European currencies in general with EUR.GBP and SEK also among the stronger performers, and from Norway’s better than expected manufacturing report. The UK, Spain and Germany also beat the street on PMI this morning while Sweden and Italy were below expectations.
There’s lots more potential news that could move the markets today. On the economic side there’s US personal income and spending and the core PCE inflation rate the Fed likes to use. Manufacturing PMI reports for the US and Canada could attract attention on both sides of the border. There’s also another big round of earnings reports headlined by Google after the close today.
Aetna $1.37 vs street $1.21, guides 2016 EPX to $7.75 below street $8.05
Significant announcements released overnight include:
Australia TD inflation 2.3% vs street 2.0%
Australia commodity index (25.8%) vs previous (23.3%)
Manufacturing PMI reports:
China official 49.4 vs street 49.6
China non-manuf 53.5 vs previous 54.4
China Caixin 48.4 vs street 48.1
Australia 51.5 vs previous 51.9
Japan 52.3 vs previous 52.4
India 51.1 vs previous 49.1
UK 52.9 vs street 51.6
Germany 52.3 vs street 52.1
France 50.0 as expected
Spain 55.4 vs street 52.5
Italy 53.2 vs street 54.8
Norway 49.2 vs street 46.0
Sweden 55.5 vs street 56.0
Greece 50.0 vs previous 50.2
Poland 50.9 vs street 51.8
Russia 49.8 vs street 47.5
Upcoming significant announcements include:
8:30 am EST US personal income street 0.1%
8:30 am EST US personal spending street 0.2%
8:30 am EST US core PCE inflation street 1.4% vs previous 1.3%
10:00 am EST US construction spending street 0.6%
Manufacturing PMI Reports:
9:30 am EST Canada RBC previous 47.5
9:45 am EST US Markit street 52.7
10:00 am EST US ISM street 48.5
10:00 am EST US ISM new orders previous 49.2
10:00 am EST US ISM prices paid street 35.0 vs previous 33.5
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