he heavy selling of the last week or so had pushed a number of markets into oversold territory, and it appears today that a number of relief rallies have started. Most notably, crude oil is on the rebound today with Brent and WTI both gaining over 1%. There wasn’t any fundamental news overnight to spark the rally, it’s been technically driven with bargain hunters coming back in following a successful test of the $30.00 round number. Like $50.00 and $40.00 before, $30.00 appears to be well defended for now but that could falter over the longer term if nothing else changes. Crude could be active through the day again with API inventories due in the afternoon.
The crude oil rally could help to shore up support for energy stocks today which could help energy weighted markets like the FTSE
and the S&P/TSX. Oil sensitive currencies have been mixed today. While RUB has rallied, NOK has been underperforming. CAD is flat against USD with the oil bounce being offset by some speculation on whether the Bank of Canada could cut interest rates again at this month’s meeting.
The other big story in currency trading today has been a slide in GBP in the wake of disappointing industrial production and same store sales figures. Signs of softness in the UK economy takes the pressure off of the Bank of England to raise interest rates ahead of this week’s meeting.
Stock markets are bouncing back this morning with continental European indices like the DAX IBEX and CAC leading the charge. US markets are also in the green today but rising at a more moderate pace. Alcoa earnings beat the street and guidance was good. Although sales were soft, considering how bleak the outlook has become for mining companies lately, overall it was a neutral to slightly positive kickoff to earnings season with railroad CSX reporting after the close tonight and more results due later in the week.
Although the news calendar for today is relatively light, we could see traders position ahead of developments due later in the week. In addition to more earnings reports, China trade, the Bank of England and US retail sales could potentially move the markets in the coming days.
Alcoa $0.04 vs street $0.02, sales $5.25B below street $5.32B, forecasts aluminium demand to grow 6% in 2016. Industry growth tracking ahead of forecast path to double between 2010 and 2020.
Eldorado Gold putting its Greek mining projects on care and maintenance and reducing its capital allocation to the country.
Significant announcements released overnight include:
UK same store sales 0.1% vs street 0.5% & prev (0.4%)
UK industrial production 0.9% vs street 1.7%
UK manufacturing production (1.2%) street (0.8%)
NZ ANZ commodity prices (1.8%) vs previous (5.6%)
Japan consumer confidence 42.7 vs street 46.6
Upcoming significant announcements include:
3:00 pm GMT UK NIESR GDP estimate previous 0.6%
1:00 pm EST Canada finance minister Morneau speaking
3:15 pm EST FOMC Lacker speaking
After 4:00 pm EST CSX earnings
4:15 pm ish EST US API crude oil inventories
9:00 pm EST US President Obama State of the Union address
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