peculation that a Fed rate hike may be coming in September which was sparked hawkish comments from Atlanta Fed President Lockhart yesterday, has unravelled this morning. The combination of more moderate comments out of Fed Governor Powell who remains undecided on raising rates and a soft ADP payrolls figure has cut the wind out from under the hawks for now. This all could change again after Friday’s nonfarm payrolls report so trading may remain active through the rest of the week.
Today’s developments have sparked a rally in US indices, which also could get a boost from better than expected earnings out of Time Warner, Activision Blizzard and First Solar. Walt Disney, on the other hand, has been trading lower overnight after sales came in below expectations and management indicated operating earnings could take a $500M hit next year from the higher USD.
Two currencies in particular have taken advantage of the USD giving back ground. CAD has benefitted from a better than expected Canadian trade balance and another oil price rally. GBP has received a boost from speculation that tomorrow’s Bank of England meeting and inflation report may bring comments on when Governor Carney is thinking about raising rates and if the timetable could be moved up from current expectations of a mid-2016 liftoff.
Time Warner $1.25 vs street $1.03, sales $7.35B vs street $6.90B
Walt Disney $1.45 vs street $1.41, sales $13.10B vs street $13.22B
Activision Blizzard $0.13 vs street $0.08 sales $759M vs street $667M, guides next Q sales to $930M above street $850M
First Solar sales $896M vs street $790M, guides next Q sales to $3.5-$3.6B above street $3.3B
Significant announcements released overnight include:
US ADP payrolls 185K vs street 215K
US ADP revision cut to 229K from 237K
US trade balance ($43.8B) vs street ($43.0B)
Canada trade balance ($0.5B) vs street ($2.9B)
UK BRC shop prices (1.4%) vs previous (1.3%)
Spain house transactions 17.0% vs previous 6.0%
Italy industrial production (0.3%) vs street 1.4%
Eurozone retail sales 1.2% vs street 2.0%
NZ unemployment rate 5.9% as expected
NZ employment change/quarter 0.3% vs street 0.5%
NZ employment change/year 3.0% vs street 3.4%
NZ average hourly earnings 1.2% vs street 0.5%
Service / Non-Manufacturing PMI reports
China Caixin 53.8 vs previous 51.8
Australia 54.1 vs previous 51.2
Japan 51.2 vs previous 51.8
Singapore 51.3 vs previous 51.1
India 50.8 vs previous 47.7
UK 57.4 vs street 58.0
Sweden 56.6 vs previous 54.9
Spain 59.7 vs street 55.8
Italy 52.0 vs street 53.0
France 52.0 as expected
Germany 53.8 vs street 53.7
Eurozone 54.0 vs street 53.8
Upcoming significant announcements include:
10:30 am EDT US DOE crude oil inventories street (2.0 mmbbls)
Service / Non-Manufacturing PMI reports
9:00 am EDT Brazil previous 39.9
9:45 am EDT US Markit previous 55.2
10:00 am EDT US ISM street 56.2
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