Stocks climb as China and ZEW offset IMF
US indices are higher this morning as Americans return to trading from a holiday weekend. Stock markets around the world have responded favourably to better than expected economic numbers including GDP from China overnight, which has cushioned the blow from the IMF cutting its 2015 growth forecasts for pretty much everywhere except for the US.
Expectations that the ECB may finally deliver much needed monetary stimulus at Thursday’s meeting continue to run high. German and Eurozone ZEW investor survey jumped this month and came in well above expectations. Meanwhile the line of central banks positioning ahead of the ECB decision continues to grow with Turkey joining Switzerland and Denmark in lowering interest rates.
The reaction to overnight news has been more mixed. Gold and silver are up on anticipation of increased money supply and CHF has climbed slightly as it continues to stabilize at a new level, but this has not spilled over to all defensives and JPY has dropped back today. Similarly, copper is up on the positive China news while crude oil is down is it continues to bounce around between $45 and $50.
Earnings season picks up in earnest again today with IBM and Netflix reporting after the close, so we could see more action in individual stocks over the next few weeks. Recall, key factors to watch for in earnings and guidance is the impact of the USD rally and crude oil collapse on companies’ prospects.
Johnson & Johnson $1.27 vs street $1.25
Economic reports released overnight and this morning include:
IMF 2015 GDP forecasts
Global cut to 3.5% from 3.8%
US raised to 3.6% from 3.1%
Eurozone cut to 1.2% from 1.4%
China cut to 6.8% from 7.3%
Japan cut to 0.6% from 0.8%
China GDP 7.3% vs street 7.2%
China retail sales 11.9% vs street 11.7%
China industrial production 7.9% vs street 7.4%
Germany producer prices (1.7%) vs street (1.4%)
Germany ZEW current 22.4 vs street 13.0
Germany ZEW expectations 48.4 vs street 40.0
Eurozone ZEW expectations 45.2 vs previous 31.8
Turkey interest rate surprise 0.50% cut to 7.75%
Canada manufacturing sales (1.4%) vs street (0.5%)
Economic reports due later today include:
10:00 am EDT US NAHB housing index street 58