USD rallies, stocks slip as weak flash PMI reports overshadow strong Amazon earnings
US indices are flat so far to finish the week while European markets have been mixed and Asia Pacific indices fell overnight after Flash PMI reports indicated that financial crises in Europe and China earlier this month have taken a toll on the world economy. China’s flash PM fell deeper into contraction territory while France manufacturing fell below the 50 line. France services plus the German reports also came in below expectations.
The only positive report so far has been out of Japan (above 50 and beating the street) which is interesting as it comes on a day when the IMF warned the country about deflation and suggested the Bank of Japan may have to stimulate even more aggressively than it has been already.
Currency markets have had a particularly strong reaction to the flash PMI reports. USD has rallied to the top of the group with JPY tagging along closely behind. USD strength has sent gold lower again although oil has been able to stand its ground.
On the other hand, signs of a soft Chinese economy sent AUD and NZD sharply lower on speculation demand for their resources could potentially fall even further and put pressure on the RBA and RBNZ to keep cutting interest rates.
EUR has also been soft today, not only on soft PMI reports but also on concerns the upcoming round of Greek negotiations could become contentious again. The start to talks has been delayed apparently partly because a secure location in Athens to hold the meetings has yet to be found an ominous sign.
Amazon.com reported stellar earnings overnight but it now looks like the impact of that news may be contained mainly to its own shares with a possible halo effect on the technology sector but a broader boost appears unlikely. US markets and particularly USD may be active again following the release of US flash PMI, particularly if the report has any influence on speculation of when the Fed may start raising interest rates with an FOMC meeting next week.
Anthem has agreed to purchase Cigna for $188.00 per share in a $54.2B cash and stock deal in the health insurance sector
American Air $2.62 vs street $2.60
Amazon.com $0.19 yes a Q2 profit vs street ($0.15), sales $23.1B vs street $22.4B
Visa $0.74 vs street $0.58
Starbucks $0.42 vs street $0.41, same store sales 7.0% vs street 6.1%, new partnership with Pepsi for ready to drink products in Latin America,
AT&T $0.69 vs street $0.63
EnCana CFPS $0.22 vs street $0.29
Celestica $0.25 vs street $0.23. Company has agreed to sell its Toronto property (at Don Mills and Eglinton)` including its head office and manufacturing facility to a group of developers for $137 million, contingent on finding a new site for its Toronto operations and approval of the redevelopment plan within two years
Significant announcements released overnight include:
China flash manufacturing PMI 48.2 vs street 49.7
Japan flash manufacturing PMI 51.4 vs street 50.5
France flash manufacturing PMI 49.6 vs street 50.8
France flash service PMI 52.0 vs street 53.8
Germany flash manufacturing PMI 51.5 vs street 51.9
Germany flash service PMI 53.7 vs street 54.0
Eurozone flash manufacturing PMI 52.2 vs street 52.5
Eurozone flash service PMI 53.8 vs street 54.2
NZ trade balance ($60M) vs street $100M
Singapore industrial production (4.4%) vs street (0.4%)
Upcoming significant announcements include:
9:45 am EDT US flash manufacturing PMI street 53.6
10:00 am EDT US new home sales street 548K
1:00 pm EDT US Baker Hughes drill rig count previous 857
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