The big swings
of the last few days in stocks, commodities and currencies have subsided a bit overnight and in some cases reversed with recent market-moving developments like increased hawkishness at the Fed, renewed speculation about Brexit, Alcoa’s poor start to earnings season more OPEC talks and swings in US election momentum having run their course for now.
Today finds many markets consolidating recent moves while traders await new developments or rumours to act upon. US index futures are down 0.2% and looking vulnerable, while the FTSE is down 0.3% but holding 7,000. The Dax and WTI crude oil are both essentially flat. USD has slipped back slightly enabling GBP and resource currencies like gold and CAD to rebound a bit. GBP has stopped the bleeding and has begun to bounce back from a major selloff posting 1%+ gains against USD and EUR after UK PM May agreed to allow Parliamentary to debate and vote on her Brexit negotiation plans.
There is still lots of potential news that could move the markets this week. First up are the minutes of the last FOMC meeting with traders looking for confirmation of the hawkish tone coming out of FOMC members since the meeting that has even seen some of the more dovish members predicting an interest rate increase later this year. Currently the street is pricing in a 70% chance of a rate hike by December so a dovish surprise would likely have more impact than hawkish leanings.
Oil markets may also remain active with the potential for more OPEC and Russia speculation around side meetings at an oil conference in Turkey with API inventories due this afternoon and DOE inventories tomorrow. Anything can happen with Brexit or US election sentiment at any time, while earnings pick up again on Friday with three big banks (JPMorgan, Citigroup and Wells Fargo) all reporting.
With big market swings subsiding today we could see more emphasis on individual stocks and sectors. Smartphone producers and suppliers could attract more attention as the fallout from the Galaxy Note 7 termination continues with Samsung putting out a profit warning. Alcoa’s disappointing results may continue to influence trading in miners, while Biotech stocks may remain active trading contrary to Hillary Clinton’s election prospects due to her threats to go after the drug companies.
There have been no major corporate announcements in North America this morning.
Australia consumer confidence previous 101.4
Japan machine orders street 7.9%
Japan machine tool orders previous (8.4%)
France consumer prices street 0.4%
Eurozone industrial production street 1.5%
Upcoming significant economic announcements include:
8:00 am EDT FOMC Dudley speaking
9:40 am EDT FOMC George speaking
2:00 pm EDT FOMC meeting minutes
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