The biggest developments and market action overnight has been in currency markets. Sterling has been in the spotlight following a big, long-awaited UK Supreme Court ruling on Brexit. The high court made two decisions; the government must hold a vote in Parliament before triggering article 50 and the government does not have to consult with regional bodies with devolved powers (Scotland, Wales, Northern Ireland).
This news has been seen by the street as potentially delaying but not stopping the Brexit process. GBP is down relative to other major currencies but losses are light relative to recent gains and this feels more like a trading correction than a downturn. For example, GBPUSD
has dropped toward $1.2400 from $1.2500 but it’s important to remember that just over a week ago that pair was trading near $1.2000.
Meanwhile, despite howls from the EU, who would prefer to see the UK isolated and fearful they could lose their ability to bully the island nation, the UK continues to look elsewhere for trade partners. UK PM meets with US President Trump on Friday. Overnight there have been reports of potential discussions between the UK and China while indications of talks between the UK and Australia were reported earlier in the week.
Trade remains a top topic of discussion around the world. Following President Trump’s decision to pull the US out of the Trans Pacific Partnership there has been chatter about keeping the rest of the deal afloat with Australia mentioned as a potential leader, with other reports suggesting China could take a bigger role in trade following last week’s positioning comments in Davos. Today, President Trump is expected to meet with the CEOs of the Big 3 automakers to discuss bringing jobs back to the US.
Stock markets have been steady overnight with US index futures, the FTSE
and the Dax all trading pretty much flat. The focus for trading is likely to shift toward individual stocks with the heart of earnings season underway today. Keep an eye on DuPont as the company reported red hot earnings but guidance was a bit soft. How the chemical producer reacts to its mixed news could give an indication of whether the street is prepared to reward positive results or if high expectations have already been priced in to the market. Johnson and Johnson beat the street by a smaller amount. More results are due today from big companies like Alibaba, 3M, Lockheed Martin, Verizon and others.
The US Dollar index is up 0.4% today. The greenback has bounced back a bit despite comments from Treasury Secretary nominee Mnuchin indicating the high US Dollar could have a negative impact on the new administration’s economic plans. Gold is steady, consolidating recent gains. Crude oil is down slightly amid ongoing questions over whether a rebound in US production and oilfield activity could offset OPEC production cuts.
DuPont $0.51 vs street $0.41 wow! Guides next Q $1.36 below street $1.42, expects merger with Dow Chemical to close in H1 some time
Johnson & Johnson $1.58 vs street $1.56
Yahoo! $0.25 vs street $0.21
UK Supreme Court Decisions on Brexit:
Government must consult Parliament before triggering Article 50 8-3
Government does not have to consult devolved regions before triggering 11-0
Japan flash manufacturing PMI 52.8 vs previous 52.4
France flash manufacturing PMI 53.4 as expected
France flash service PMI 53.9 vs street 53.2
Germany flash manufacturing PMI 56.5 vs street 55.4
Germany flash service PMI 53.2 vs street 54.5
Upcoming significant economic announcements include:
9:45 am EST US flash manufacturing PMI street 54.5
10:00 am EST US existing home sales street 5.51M
10:00 am EST US Richmond Fed street 7
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.