he big advance in world stock markets finally paused today. The technology and momentum play heavy NASDAQ led the declines while broader Russell 2000 also retreated. Stocks have been marching higher on anticipation that President Trump’s pro-business policies would be quickly implemented.
Today, however, traders got a reminder that the speed of government is a lot slower than the speed of business. Treasury Secretary Mnuchin indicated he is hoping to pass tax reform by August but it could slip to the end of the year while other reports suggested the infrastructure spending debate could be pushed off to 2018. Late in the day President Trump suggested he could support some form of border tax, a shift from his previous stance on the matter.
The US Dollar also retreated today, igniting rallies in a number of other currencies including GGBP, CAD, AUD and NZD. EUR bounced a bit but then struggled to make headway with polls showing Eurozkeptic Marine Le Pen gaining ground in French election polls. Rising political risks around the world sent some capital back into defensive havens, sparking rallies in gold and JPY.
Crude oil rallied early in the day on the back of the API inventory drawdown but then slumped back following the DOE reports. Even though the headline increase was less than expected, a small build sparked some profit taking rom shorter term players. Still, oil did finish the day high enough to confirm a breakout and complete an ascending triangle, positive technical signs.
Friday is relatively quiet for news, the calm before a big week to come. Singapore industrial production is the only major Asia Pacific report. In North America, the focus of scheduled news is on Canada with consumer price inflation due. Also, earnings from Royal Bank are expected with traders looking for a repeat of CIBC’s big earnings beat and dividend increase. Magna International also is expected to report results.
There have been no major announcements after the US close today.
Significant announcements released overnight include:
US DOE crude oil inventories 0.5 mmbbls vs street 3.5 and previous 9.5
US DOE Cushing oil inventories (1.5 mmbbls) vs street 0
US DOE gasoline inventories (2.6 mmbbls) vs street (1.5)
US DOE distillate inventories (4.9 mmbbls) vs street (1.0)
US natural gas (89 BCF) vs street (86 BCF)
US jobless claims 244K vs street 240K
Germany GDP update 1.7% as expected
Italy retail sales (0.2%) vs street 0.9%
UK CBI retail sales 9 vs street 4 and previous (8)
UK CBI distributor sales 25 vs street 24 and previous 26
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)
4:00 pm AEDT Singapore industrial production street 9.5%
8:30 am EST Canada consumer prices street 1.6%
8:30 am EST Canada core CPI median previous 2.0%
10:00 am EST US new home sales street 570K
10:00 am EST US consumer sentiment street 96.0
1:00 pm EST US Baker Hughes drill rig count previous 751
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