There has been a lot of news for traders to digest today but the biggest move by far has been in energy markets followed by metals.
Crude oil plunged 5% Thursday taking WTI down close to $45.00 and Brent under $50.00. Oil has been struggling for several days now but traders appear to have thrown in the towel on a combination of factors including: US production continuing to rise (especially in the Gulf of Mexico) offsetting OPEC production cuts, Russia being cagey about committing to extending its own cuts, and progress toward peace in Libya reducing the risk of production disruptions going forward. A bigger than expected build in natural gas storage didn’t help energy sentiment either. Natural gas fell 1.9% while gasoline fell 3.8%.
Meanwhile, concerns about a slowing economy in China and around the world kept the pressure on base metals today. Nickel, Zinc and Lead lost 2-3% while Copper digested a 4% loss from earlier in the week.
Gold also continued to plunge Thursday. Polls suggesting Macron won the final French Presidential debate kept capital flowing out of defensive havens heading toward Sunday’s vote. Technical selling sparked by yesterday’s breakdown below $1.250 plus the 50 and 200-day averages may also have been a factor.
Energy and metal price declines dragged on stock markets in North America Thursday. The US SPX energy sector fell 2.3% the worst performer among the eleven major groups. In Canada, a 2.8% loss for the Energy sector combined with a 2 5% drop for materials dragged the S&P/TSX down to a 0.8% loss outperforming its US peers to the downside.
Resource currencies all felt the pressure from falling commodity prices with MXN and RUB losing over 1% on the day while AUD, NZD, and NOK fell about 0.7% and CAD fell about 0.3%. Market action in resource stocks suggests that Australian miners and energy stocks could be in for a rough ride again today.
Friday morning brings US nonfarm payrolls one of the biggest announcements of the week. Last month payrolls came in shockingly low at 98K, way below street and ADP. This time the street is expecting 190K, slightly above Wednesday’s ADP payrolls which fell back toward 175K. I think we could get a strong upward revision to last month of about 40K. Jobless claims have remained low so I also think we could see an increase of 175K
Canada employment is also out Friday morning. After several months of coming in low and calling for declines, the street has moved up its forecast to 10K. I think 20K similar to last month is reasonable.
Activision Blizzard $0.31 vs street $0.21
CBS $1.04 vs street $0.95
Significant announcements released overnight include:
Canada trade balance ($0.1B) vs street ($1.0B)
US trade balance ($43.7B) vs street ($44.5B)
US jobless claims 238K vs street 248K
US continuing claims 1,964K vs street 1,990K
US Q1 productivity (0.6%) vs street (0.1%)
US factory orders 0.2% vs street 0.4% and previous 1.0%
US natural gas 67 BCF vs street 62 BCF
UK service PMI 55.8 vs street 54.5
Germany service PMI 55.4 vs street 54.7
France service PMI 56.7 vs street 57.7
Spain service PMI 57.8 vs street 57.7
Italy service PMI 56.2 vs street 53.6
Spain unemployment change (129K) vs street (79K)
Eurozone retail sales 2.3% vs street 2.1% vs previous 1.8%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:30 am AEDT Australia construction PMI previous 51.2
11:30 am AEDT Australia RBA monetary policy
8:30 am EDT US nonfarm payrolls street 190K vs previous 98K
8:30 am EDT US private payrolls street 188K vs previous 89K
8:30 am EDT US manufacturing payrolls street 10K
8:30 am EDT US unemployment rate street 4.6%
8:30 am EDT US average hourly earnings street 2.7%
8:30 am EDT Canada jobs change street 10K vs previous 19K
8:30 am EDT Canada full-time jobs previous 18K
8:30 am EDT Canada part-time jobs previous 1K
8:30 am EDT Canada unemployment rate street 6.7%
10:00 am EDT Canada Ivey PMI previous 61.1
11:30 am EDT FOMC Fischer speaking
12:45 pm EDT FOMC Williams speaking
1:30 pm EDT FOMC Rosengren, Evans, Bullard panel discussion
1:30 pm EDT FOMC Yellen speaking