After breaking out to new all-time highs yesterday, the Dow, Nasdaq and S&P 500 are in a holding pattern this morning. Trading slightly lower in normal backing and filling, US stock and index traders appear reluctant to push onward ahead of this afternoon’s release of the minutes from the last FOMC meeting. Some action in US retailers appears possible though on reports that marginally beat expectations from Target, Lowes and Staples.
The minutes may have a big influence on trading today. The street took the meeting statement as an indication that the Fed was shifting to a more hawkish tone. This was also seen in how the previous two hawkish dissenters were bought back into the fold and a dovish dissenter emerged. Traders may react to any clues to when US interest rate increases may start, particularly if there is any reason to change the broad expectation of a mid-2015 first rate increase.
Other central bank news has also influenced trading today:
JPY has been under pressure overnight after the Bank of Japan maintained its higher rate of QE as expected. There was one hawkish dissenter who wanted to scale back to the previous pace of purchases. Governor Kuroda indicated that there is a risk inflation could fall below 1% in the near term although he maintained his 2% goal. JPY dragged AUD and NZD along for the ride downward but all three have moved up off their lows as the morning has progressed.
Bank of England minutes showed no change in the voting but apparently the discussions had a wide range of opinions on the outlook for GDP and inflation. Overall, the minutes were seen as being a bit less dovish than last week’s inflation outlook and have helped to boost GBP a bit while capping the recent FTSE
Continental indices and currencies for the most part, continue to bask in the glow of yesterday’s positive German ZEW investor survey with EUR, CHF, NOK and SEK on the rise and the Dax leading continental indices higher.
CAD is trading softer to USD today but with Crude oil and gold up slightly today, Canadian energy producers and miners may continue to attract renewed interest which could help the S&P/TSX to maintain its momentum.
Target $0.54 vs street $0.47, same store sales 1.2% vs street 0.5%, narrows FY guidance to $3.15-$3.25 from $3.10-$3.30.
Lowes $0.59 vs street $0.58, same store sales 5.1% vs street 4.1%, raises FY guidance to $2.68 from $2.63
Staples $0.37 vs street $0.36
Metro Inc. $1.32 vs street $1.27
Economic reports released overnight and this morning include:
Bank of Japan decision no changes to interest rates or QE target as expected
Bank of England minutes 7-2 in favour of maintaining interest rates, dissenters hawkish, no change from last month
US housing starts 1,009K vs street 1,025K
US building permits 1,080K vs street 1,040K
Eurozone construction output (1.7%) vs previous (0.3%)
Economic reports due later today include:
10:30 am EST US crude oil inventories street (1.4 mmbbls)
2:00 pm EST US FOMC meeting minutes