Stock market momentum heading into today’s Asia Pacific trading appears decidedly downward with continental Europe leading the way down the drain. The Dax
has now lost over 1,000 points off its peak, while the IBEX, CAC and MIB all lost over 2% on the day. Meanwhile, rising treasury yields and higher risk perceptions no longer are contained to Greece with Italy, Spain and Portugal all on the rise as well. Cracks seem to be appearing between the different creditors like the EU and the IMF over big things like whether Greece will need to write down debt which really isn’t helping matters.
Even the birth of Princess Charlotte over the weekend wasn’t enough to keep the FTSE in the green with uncertainty about Thursday’s UK election dragging on stocks.
US stock markets have also been trending lower today but have not been hit as hard as indices in other countries. A worse than expected trade deficit highlighting the negative impact of the higher USD on the US economy was partially offset by better than expected US non-manufacturing PMI and rising new orders.
Crude oil had a big day with WTI retaking $60.00 and Brent blasting through $67.50. There are a number of factors that could account for the rally but the main ones appear to be speculation US inventory growth could slow tomorrow and rising political risk with the turmoil in Yemen apparently starting to spill over into Saudi Arabia.
USD dropped off on today’s economic news as it continues its correction of a major advance. The top performer on the day has been AUD which has posted a big rally with traders speculating that yesterday’s interest rate cut may be the RBA’s last for some time. Today, NZD could be active on New Zealand’s Q1 employment report which could indicate how much pressure is on the RBNZ to start lowering interest rates. AUD may also be active as a big week for Australia data continues with retail sales today and employment tomorrow.
The remaining service PMI reports may attract some attention but the main event many traders seem most likely to focus on is the ADP payrolls report. Traders are expecting a moderate rebound from last month’s surprise disappointment. In addition to indicating whether the US economy has started to bounce back from a rough winter, this week’s US payrolls could settle whether there is any chance of a US interest rate liftoff in June or if it is likely to be pushed back to later in the years.
Sun Life $0.73 vs street $0.78, 5% dividend increase
Electronic Arts $0.39 vs street $0.26, sales $896M vs street $852M, guides next Q earnings to breakeven below street $0.19, and sales to $640M below street $766M
Significant announcements released overnight include:
Canada trade balance ($3.0B) vs street ($0.8B)
US trade balance ($51.4B) vs street ($40.3B)
US Markit service PMI 57.4 vs street 57.8
US ISM nonmanufacturing PMI 57.8 vs street 56 5
US ISM nonman new orders 59.2 vs previous 57.8
UK construction PMI 54.2 vs street 57.4
Spain unemployment (119K) vs street (65K)
Sweden industrial production 0.3% vs previous (0.4%)
European Commission made a number of changes to its 2015 growth forecasts, including:
Eurozone raised to 1.5% from 1.3%
Germany raised to 1.9% from 1.5%
Spain raised to 2.8% from 2.5%
Greece cut to 0.5% from 2.5%
UK unchanged at 2.6%
Upcoming significant announcements include:
10:45 am NZDT New Zealand Q1 employment change street 3.3%
10:45 am NZDT New Zealand Q1 unemployment rate street 5.5%
10:45 am NZDT New Zealand Q1 avg hourly earnings street 0.9% vs previous 0.4%
11:00 am AEDT Australia new home sales previous 1.1%
11:00 am AEDT Australia retail sales street 0.4%
11:45 am AEDT China HSBC service PMI previous 52.3
3:00 pm AEDT India service PMI previous 53.0
12:00 am BST UK BRC shop prices street (1.7%)
7:30 am BST Sweden service PMI previous 57.2
8:15 am BST Spain service PMI street 57.4
8:45 am BST Italy service PMI street 52.0
8:50 am BST France service PMI street 50.8
8:55 am BST Germany service PMI street 54.4
9:00 am BST Eurozone service PMI street 53.7
9:30 am BST UK service PMI street 58.5
10:00 am BST Eurozone retail sales street 2.4%
10:00 am BST Greece unemployment rate street 25.6%
8:15 am EDT US ADP payrolls street 200K vs previous 189K
8:30 am EDT US Q1 unit labour costs street 4.5%
9:15 am EDT US FOMC Chair Yellen and IMF President Lagarde speaking
10:00 am EDT Canada Ivey PMI street 49.2 vs previous 47.9
10:30 am EDT US crude oil inventories street 1.35 mmbbls