Stocks weaken, bonds bounce as traders prep for Greece, OPEC and payrolls news
Stock markets around the world have been falling overnight while bonds have bounced back a big in what appears to be somewhat of a defensive rotation as traders start to position ahead of Friday’s Super Bowl of Trading.
Friday brings a number of key developments that could impact markets around the world.
Greece has an €300 million payment due to the IMF, the first of four this month. Apparently Greece has the money for this one but has not given the order to make payment amid conflicting reports on how well or poorly negotiations are going. Whether this all comes to a head today, next week or later in the month, EUR and European indices may remain active on the potential for big developments.
OPEC is meeting Friday to decide on production quotas for the next six months. Reports swirling this week have indicates that since OPEC appears to be winning the supply/market share war it has been staging against US shale producers, a cut to production looks unlikely. This prospect appears to have limited the upside of the recent oil price rally in the low $60s for WTI and knocked the oil price back a bit yesterday and overnight. Oil may remain volatile through the OPEC decision.
Economic data out of the US has been sending a mixed message about how strongly the economy has rebounded or not out of its winter struggles. Friday’s US nonfarm payrolls may help to set the record straight and spark another round of speculation on when the Fed may start raising interest rates.
Canadian employment figures also due Friday morning may impact action in the Loonie by giving a better indication of how much pressure the Bank of Canada may be under to cut interest rates again following last week’s soft Canadian GDP report.
The biggest news driven action overnight has been a selloff in AUD after Australian trade and retail sales reports came in worse than expected. The Bank of England meeting was pretty much a non-event with nothing to suggest that current trend toward a rate hike in mid-2016 has changed. GBP retreated after the meeting but has started to rebound.
Later today, European markets could be active with IMF President Lagarde speaking on the US as she could get questions on Greece. CAD trading could be influenced by Canadian PMI data. US and European stocks, commodities and currency markets particularly EUR could see more positioning ahead of tomorrow’s events, particularly if more Greece rumours circulate.
There have been no major corporate announcements so far this morning.
Economic reports released overnight and this morning include:
Bank of England decision no changes to interest rate or QE as expected
Brazil interest rate 0.50% increase to 13.75% as expected
US jobless claims 276K vs street 278K
France Q1 umemployment rate 10.3% vs street 10.4%
France Q1 unemploymnt chng (38K) vs street 8K
Greece unemployment rate 25.6% vs street 25.2%
UK Halifax house prices 8.6% vs street 8.5%
Australia trade balance ($3 8B) vs street ($2.1B)
Australia retail sales 0.0% vs street 0.3%
Upcoming significant announcements include:
9:30 am EDT IMF Lagarde speaking
10:00 am EDT Canada Ivey PMI street 55.0 vs previous 58.2
10:30 am EDT US natural gas storage street 118 BCF
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