Stocks rally off support as central bankers remain neutral to hawkish
Building on yesterday’s successful channel and moving average support tests in the US and Europe, stock markets around the world have been rallying overnight. While this mainly appears to be a trading bounce within current consolidation ranges there have been some news developments of note as well.
China retail sales and industrial production, while mixed, indicated that the Chinese economy is softer than in the past, but not collapsing either. Retail sales holding up suggests that the transition from an export to a consumer driven economy may slowly be underway.
UK employment figures were also generally supportive with only a minor increase in jobless claims while the unemployment rate fell again and continues to approach 5%. Slowing wage growth was one problematic spot, but has been ignored by traders as GBP continues its rebound on the news. Traders appear to be focusing more on comments from Bank of England Governor Carney that the UK economy is strong enough to overcome weakness abroad.
Other central bankers speaking overnight have also been taking a more neutral to hawkish tone. In Japan, BoJ Governor Kuroda indicated the bank is halfway to meeting its inflation target while board member Harada also indicated he sees inflation heading toward the 2% target. This suggests that the Bank is likely to continue but not increase its current QQE program.
FOMC voter speakers also continue to point toward a December interest rate hike. Chicago Fed President Evans indicated he is looking forward to the first rate hike, having previously indicated he may not dissent to the dovish side on liftoff. Meanwhile San Francisco Fed President Williams indicated the concerns over China from last summer have dissipated and there’s a strong case to raise interest rates next month.
USD has levelled off relative to other currencies but is holding at a higher level indicating that traders have priced in the growing likelihood of a December rate hike. Crude oil has also stabilized, with traders shrugging off a weak API inventory report as they await tomorrow’s DOE inventories.
Anheuser Busch Inbev to purchase SABMiller for £44.00 per share, or £71B
Molson Coors to purchase the remaining 58% of Miller Coors is didn’t own for $12B
Macy’s due before US markets open this morning
CGI Group $0.82 vs street $0.79
Significant announcements released overnight include:
UK jobless claims 3.3K vs street 1.4K
UK unemployment rate 5.3% vs street 5.4%
UK average weekly earnings 3.0% unchanged vs street 3.2%
UK earnings ex bonuses 2.5% vs street 2.7% and previous 2.8%
China retail sales 11.0% vs street 10.9%
China industrial production 5.6% vs street 5.8%
China fixed assets 10.2% as expected
China foreign investment 4.2% vs previous 7.1%
US API crude oil inventories 6.3 mmbbls vs previous 2.8 mmbbls
Upcoming significant announcements include:
There are no announcements scheduled for North America today. Government offices and banks are closed for Remembrance Day / Veterans Day.
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