European stock markets are trading lower again today with major benchmarks like the Dax, FTSE
, CAC and others all trading down about 1.5-2.0% as traders continue to re-evaulate their growth and risk expectations for the Eurozone. As Greece inches every closer to a potential default, perhaps later this month, traders are starting to recognize that spillover risks are growing, pushing Eurozone stocks lower and treasury yields higher.
On top of this, the ECB’s QE program has not been as supportive as had been originally expected. To hit its target of €60B per month, it needs to purchase €15B of bonds per week. If we use a 13 week quarter, the target amount drops to €13.85B per week. To date, in the first 10 weeks of the program, the ECB is averaging purchases of €12.0B per week, so even on that basis, treasury prices may have overshot to the upside.
US markets have been following their European counterparts lower again this morning, but at a more moderate pace. Still, the Dow has been trading down over 100 points so far today. There’s no news out of the US again today and earnings season has shifted to smaller companies for the most part, so US indices still appear to be digesting last week’s employment numbers and preparing for tomorrow’s retail sales report.
Similarly, USD is dropping back as the USD Index continues to consolidate in the 94.00 to 96.00 range. Gold is rebounding strongly on the news, gaining over 1.0% and taking another run at $1,200/oz while crude oil is also up about 1.5% with WTI challenging $60.00 once again.
Among paper currencies, resource currencies like AUD and NOK are the top performers. NZD and SEK are drag behind their peers on speculation their central banks may be preparing to cut interest rates again following today’s Riksbank minutes.
GBP, CAD and EUR are all in the middle of the group today. Sterling continues to advance against USD on speculation that with the election over, the Bank of England could use tomorrow’s inflation report as an opportunity to discuss when it might start raising interest rates.
EnCana $0.01 vs street ($0.09) CFPS $0.65 vs street $0.46, production 430K boe/d above street 419K boe/d but below year ago 536K boe/d
Verizon agreed to acquire AOL this morning for $50.00 per share or $4.4B in a friendly deal.
Gap April same store sales (12.0%) vs street (7.4%)
Economic reports released overnight and this morning include:
UK same store sales (2.4%) vs street 0.6%
UK industrial production 0.7% vs street 0.3%
UK manufacturing production 1.1% vs street 1.0%
Norway mainland GDP forecast cut to 1.3% from 2.0%
Sweden consumer prices (0.2%) vs street 0.2%
Australia home loans 1.6% vs street 1.0%
New Zealand house prices 9.3% vs previous 9.5%
New Zealand house sales 27.6% vs previous 20.3%
Japan leading index 105.5 as expected
India industrial production 2.1% vs street 3.0%
India consumer prices 4.9% as expected
Economic reports due later today include:
3:00 pm BST UK NIESR GDP estimate street 0.6%
There are no major reports due for North America today.