fter taking a drubbing on Tuesday, stock market bulls in Europe and the US staged a counterattack yesterday. Rumours out of Greece that a deal seems to be being worked out at the staff level ignited rebounds in EUR and sending major European indices to 1% gains across the board with the MIB, IBEX and CAC leading the way just as they had led the decline on Monday.
Although reports of progress were quickly denied once again by Greece’s creditors, European indices held on to their gains and enthusiasm spread to North America where indices also posted a moderate rebound. With the situation in Greece rapidly coming to a head and election results showing disenchantment with the status quo and the establishment across the continent, the pressure to reach a solution on Greece has grown rapidly so developments on this front may continue to drive trading action in the coming days.
Crude oil trading was also interesting today with Brent falling 2.4% while WTI fell only 0.8%, narrowing the spread. Brent appears to be influenced more by speculation that OPEC may continue the supply war at its meeting next week. On the other hand, speculation US oil inventories could decline again in tomorrow’s weekly report appears to have attracted some relative support to WTI.
In Canada today, the Bank of Canada decision and statement was pretty much a non-event with CAD essentially trending sideways afterward. The TSX followed its international counterparts higher on the day, led by the Industrials and Consumer Discretionary sectors Financials were in the middle of the pack on the first day of bank earnings. Although results fell from a year ago, they did not drop as much as feared and both Bank of Montreal and National Bank announced dividend increases.
Interestingly, neither the Bank of Canada nor the two commercial banks that reported discussed the impact of the oil crash on their results or outlook. This suggests that with the price having bounced back from the low $40s to high $50s over the last few months, the situation appears to have stabilized for now, and can be offset by the positive impact of the loonie remaining relatively low lately.
With EUR staging a resurgence, JPY has been underperforming its peers again with the Bank of japan still in full QE mode. JPY pairs could be active over the rest of the week with a number of major Japanese economic indicators due starting today with retail sales. This could be volatile as we start lapping last year’s sales tax increase.
AUD and NZD have been on the rebound lately with metal prices stabilizing and the Greece rumours enabling some capital to return to risk markets. There’s no news for either country today so the dollars may be influenced more by broader global forces in the short term.
There are no major corporate announcements today.
Significant announcements released overnight include:
Canada interest rate 0.75% no change as expected
US API Crude oil inventory 1.27 mmbbls vs street (1.5 mmbbls)
Upcoming significant announcements include:
9:50 am AEST Japan retail sales street 5.5% vs previous (9.7%)
8:00 am BST Spain retail sales street 2.6%
8:00 am BST Spain GDP street 2.6%
9:00 am BST Norway unemployment rate street 4.1%
9:30 am BST UK GDP street 2.5%
8:30 am EDT Canada jobless claims street 270K
8:30 am EDT Canada industrial prices street (0.1%)
8:30 am EDT Canada raw material prices street 1.6%
10:00 am EDT US pending home sales street 10.9%
10:30 am EDT US natural gas storage street 99 BCF
11:00 am EDT US crude oil inventories street (2.0 mmbbls)
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