Different asset classes have been heading in vastly different directions, a sign of indecision among traders following Wednesday's FOMC decision and French debate and the upcoming nonfarm payrolls (Friday) and French election (Sunday). In the US, the wheels of political progress may be starting to move with the House potentially set to vote on health care reform today.
US index futures are trading up 0.3% this morning, boosted by strong results from major insurance companies led by Manulife, MetLife and Prudential. Facebook and Tesla Motors may also be active after reporting earnings overnight. Yesterday's comments from the Fed about Q1 weakness being transitory has been seen as supportive of an outlook for strong economic and earnings growth.
European indices are up as well with the FTSE
up 0.3% the Dax up 0.9% and the CAC up 1.0%. Traders still appear to be expecting a Macron win after last night's debate. Generally positive service PMI reports, especially for the UK and Italy, plus a big month for Spanish employment also appear to be boosting spirits.
Commodities, on the other hand, have been hit hard again overnight. Copper is down 0.5% adding to a 4% decline yesterday. Nickel, lead and zinc are all down 2-3% today. This weakness weighed on resource currencies like AUD and NZD overnight. WTI and Brent Crude are down 1.0% on press reports that two main factions in Libya’s civil war have made a breakthrough agreeing to unite institutions and the military, reducing the risk of further production disruptions.
CAD is down slightly this morning but Canadian resource stocks could come under pressure again today. Canadian Natural missed expectations while Penn West beat the street.
US and Canada trade reports are out today which could take on added significance with NAFTA negotiation talks coming. Today's speech from Bank of Canada Governor Poloz may also be significant. Earlier this year, he had warned that the BoC stands ready to cut interest rates if US trade policy changes impact the Canadian economy. This had been downplayed after a successful summit and the Keystone XL approval. Since the last Bank of Canada meeting, however, President Trump has ramped up the Blame Canada hype so traders will be looking to see Governor Poloz puts a rate cut back on the table. Whether he does or not could have a significant impact on CAD trading today.
Facebook $1.04 vs street $1.12, sales $8.03B above street $7.83B
Tesla Motors ($1.33) vs street ($0.82) sales $2.7B vs street $2.6B
Manulife Financial $0.53 vs street $0.51
Prudential Financial $2.79 vs street $2.64
MetLife $1.41 vs street $1.28
Penn West $0.11 vs street $0.09
Canadian Natural $1.46 vs street $1.54
Gildan Activewear $0.39 vs street $0.35
Significant announcements released overnight include:
Norway interest rate 0.50% no change as expected
UK service PMI 55.8 vs street 54.5
Germany service PMI 55.4 vs street 54 7
France service PMI 56.7 vs street 57.7
Spain service PMI 57.8 vs street 57.7
Italy service PMI 56.2 vs street 53.6
Spain unemployment change (129K) vs street (79K)
Eurozone retail sales 2.3% vs street 2.1% vs previous 1.8%
China Caixin service PMI 51.5 vs previous 52.2
Singapore Nikkei PMI 52.6 vs previous 52.2
NZ ANZ commodity prices (0.2%) vs previous 0.4%
Australia trade balance $3.1B vs street $3.2B
Upcoming significant economic announcements include:
8:30 am EDT Canada trade balance street ($1.0B)
8:30 am EDT US trade balance street ($44.5B)
8:30 am EDT US jobless claims street 248K
10:00 am EDT US factory orders street 0.4% vs previous 1.0%
11:30 am EDT ECB Draghi speaking
4:25 pm EDT Bank of Canada Poloz speaking
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