Stock markets around the world have carried the torch of positive momentum from yesterday’s positive US session overnight and into this morning with the FTSE, Dax
and Hang Seng posting moderate gains in the 0.3%-0.8% range. US traders appear set to keep the rally going this morning with Dow Futures up about 45 points and S&P futures trading up about 5 points.
Traders continue to respond positively to this week’s confirmation from the Fed that members are looking at two rate hikes this year rather than four, this news has knocked USD back, taking some of the forex pressure off of US companies which had impacted exports and earnings. Comments out of the ECB this morning indicating that last week’s rate cuts were necessary and that the central bank has more stimulus ammunition in its arsenal has helped to support stocks across the pond.
Crude oil continues to advance as well today with WTI crude regaining the $40.00 level for the first time in three months, providing more evidence to indicate that it has turned the corner amid falling US shale production and the potential for a producers’ meeting in April. Gains in crude has propelled oil sensitive currencies like CAD, NOK and RUB (which is also benefitting from a Bank of Russia decision to hold rates at 11.0%) to the top of the leader board. USD, meanwhile also appears to be stabilizing which has sparked a downward correction in gold.
Stocks in Canada have the potential to be particularly active today. In addition to the potential tailwind for oil stocks from the oil rally, a big acquisition by TransCanada overnight could spark action in the pipeline sector. Canada retail sales and consumer price inflation reports are due today which could give another indication on how Canada’s economic transition is going ahead of next week’s federal budget and how much pressure the Bank of Canada is under to cut interest rates again following Norges Bank’s cut earlier this week. We also get three Fed speakers today (Dudley, Rosengren and Bullard) who would be expected to confirm the Fed’s more dovish stance on interest rates.
Breaking News: CAD rallies on strong retail sales
Canada retail sales 2.1% vs street 0.6% and previous (2.1%)
Canada retail ex auto 1.2% vs street 0.4% and previous (1.7%)
Canada consumer prices 1.4% vs street 1.5% and previous 2.0%
Canada core CPI 1.9% vs street 2.0%
Canada retail sales stormed right back, a sign of an improving economy. Lower headline inflation could be partly attributed to the rebound in CAD over the last several weeks.
CAD is rallying on this news meaning traders think the Bank of Canada is likely to keep its benchmark rate at 0.50% for the foreseeable future. Rising WTI also continues to support the loonie, but traders should note it is starting to look overbought technically in the near term.
TransCanada agrees to acquire Columbia Pipeline group for $13B or $25.50 per share in a friendly all-cash deal, an 11% premium to yesterday’s closing price in Columbia’s shares.
Significant announcements released overnight include:
11:00 am AEDT NZ ANZ consumer confidence previous 119.7
7:00 am GMT Germany producer prices street (2.6%)
9:00 am GMT Norway unemployment rate street 3.3%
Upcoming significant announcements include:
8:30 am EDT Canada retail sales street 0.6%
8:30 am EDT Canada retail ex auto street 0.4%
8:30 am EDT Canada consumer prices street 1.5%
8:30 am EDT Canada core CPI street 2.0%
9:00 am EDT FOMC Dudley speaking
10:00 am EDT US consumer sentiment street 92.2
11:00 am EDT FOMC Rosengren speaking
1:00 pm EDT US Baker Hughes drill rig count previous 480
3:00 pm EDT FOMC Bullard speaking
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