Following a big breakout day Wednesday, stock markets in North America were mixed with the Dow continuing to climb, while the S&P and NASDAQ paused to consolidate recent action.
It has been another big day for earnings. Toymaker Mattel was hammered for a 17% loss following poor results. Caterpillar traded down slightly. Potash Corp. fell 2.7% on an earnings and guidance miss. Late in the day, MicroSoft and Intel beat the street while Google disappointed.
Relations between the US and its trading partners has remained a big focus today particularly with Mexico’s President Nieto cancelling a meeting with US President Trump that had been set for next week over the US plan to build a wall along the border between their countries. President Trump indicated that he plans to make Mexico pay for the wall by imposing a 20% border tax on US imports from Mexico. Needless to say, the Mexican Peso fell with trade relations between the two countries deterioriating rapidly.
In other US news, Speaker of the House Paul Ryan outlined the Republicans agenda for Congress with plans to focus on repealing and replacing parts of Obamacare first, then tax reform by August. Ryan would reportedly prefer to address immigration in the fall but President Trump has been trying to get that addressed sooner. The timing could be important for markets because the longer it takes Congress to approve infrastructure spending the longer it will take to reach corporate earnings. With infrastructure stocks soaring right now, there is a growing risk that some stocks may be getting caught up in the hype and ahead of their short to medium term prospects.
Brexit remains in focus as well with legislation published today, a white paper due shortly and UK PM May scheduled to meet President Trump tomorrow. Today PM May has been speaking to a Republican retreat in Pennsylvania. UK GDP exceeded expectations with US GDP due Friday.
Crude oil rallied today in reports that Iraq is close to reaching its promised cuts. Tomorrow focus turns back to the US with rig count data due in the afternoon.
Today is a bit of a crossover day for Asia Pacific trading. JPY has been under pressure enabling the Nikkei
to stage a rally. Australia traders return from holiday just in time for Chinese traders to prepare for the Lunar New Year holiday and next week’s market closures. Inflation reports are due today from Japan and Australia. The main economic events in the US tomorrow are the Q4 GDP and durable goods reports.
Google $9.36 vs street $9.64, sales $21.2B vs street $20.6B
Microsoft $0.83 vs street $0.79, sales $26.1B vs street $25.2B
Intel $0.79 vs street $0.75, guides next Q EPS $0.65 vs street $0.61
Celestica $0.41 vs street $0.32
Significant announcements released overnight include:
US advance goods trade bal ($65.0B) vs street ($65.3B)
US jobless claims 259K vs street 247K
US flash service PMI 55.1 vs street 54.4
US new home sales 536K vs street 588K
US leading index 0.5% as expected vs previous 0.0%
US natural gas (119 BCF) vs street (120BCF)
UK Q4 GDP 2.2% vs street 2.1%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
10:30 am AEDT Japan consumer prices street 0.2% vs previous 0.5%
11:30 am AEDT Australia producer prices previous 0.5%
11:30 am AEDT Australia export prices street 12.1% vs previous 3.5%
8:30 am EST US Q4 GDP street 2.2% vs previous 3.5%
8:30 am EST US Q4 personal consumption street 2.5% vs previous 3.0%
8:30 am EST US Q4 core PCE inflation street 1.4% vs previous 1.7%
8:30 am EST US durable goods orders street 2.6% vs previous (4.5%)
8:30 am EST US durables ex transport street 0.5%
8:30 am EST US capital goods orders nondef ex air street 0.2% vs previous 0.9%
10:00 am EST US consumer sentiment street 98.1
1:00 pm EST US Baker Hughes drill rig count previous 694
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