Rising US GDP and Ukraine tensions get markets moving again
After a couple of days of low volume consolidation, global markets are on the move again today, driven by two main factors.
Overnight reports that Ukraine has been invaded by 15K Russian soldiers have sent European and US stocks sharply lower while sparking a big rally in precious metals, gold, silver and platinum as capital seeks out defensive havens again. It’s getting increasingly difficult for Russia to claim troops finding their way into Ukraine as being lost.
Some of the moves, however, have been tempered a bit in the last few minutes since the US surprised the street and revised its stellar Q2 GDP growth even higher, up to 4.2%. This has helped to shore up US indices for not and sparked a rally in USD on anticipation that this will keep the pressure on the Fed to act on interest rates sooner than previously planned. The rebound in USD has taken some of the wind out of gold’s sails. Gold and silver still need to retake $1,300 and $20.00 respectively to confirm that this action is more than just another trading bounce.
CAD has remained active overnight, and continues to outperform other majors as it builds on yesterday’s big breakout. Sentiment toward Canada remains positive on speculation that more Canadian companies may become takeover candidates. Higher than expected weekly earnings indicates that the economy is starting to pick up and may limit the Bank of Canada’s ability to go more dovish from here. Tomorrow’s GDP and producer price inflation reports may spark more action in the loonie with the street looking for signs of whether Canada is still lagging the US or starting to reap the benefits of the economic pickup stateside.
Even with some help from US GDP, US indices find themselves retreating with the S&P back closer to 1,990 and the Dow sliding back closer to 17,000 and away from 17,150. With a long weekend approaching in North America and a big week for economic news on the way, we may see more trading action and opportunities as traders position on anticipation of upcoming developments.
TD Bank $1.15 vs street $1.10
CIBC $2.23 vs street $2.22
Economic reports released overnight and this morning include:
US GDP update 4.2% vs street 3.9% and previous 4.0%
US core PCE inflation 2.0% as expected
US jobless claims 298K vs street 300K
Canada average weekly earnings 3.3% vs previous 2.4%
Germany unemployment change 2K vs street (5K)
Germany unemployment rate 6.7% as expected
Germany consumer prices 0.8% as expected
Spain GDP 1.2% as expected
Spain consumer prices (0.5%) vs street (0.6%) vs previous (0.3%)
Sweden retail sales 2.3% vs street 4.3%
Italy retail sales (2.6%) vs street (0.6%)
UK CBI sales 37 vs street 27
Australia new home sales (5.7%) vs previous 1.2%
China industrial profits 13.5% vs previous 17.9%
Economic reports due later today include:
10:00 am EDT US pending home sales street (4.0%)
10:30 am EDT US natural gas street 77 BCF