Markets in Europe and North America have been trading in the red again this morning, but losses have been a lot less than yesterday with the FTSE flat, the Dax
down only 0.3% and index futures for the Dow and S&P down only about 0.4% so far. The Nikkei took a 5% plunge against the rising Yen. It remains to be seen if the bears are done or resting up for another push downward.
Crude oil, meanwhile, has also bounced back a bit today despite comments from the International Energy Agency that the oversupply in the market is worse than it previously expected. I think this is a case of officialdom catching up with the market, recent pressure on oil prices has clearly already priced in oversupply expectations. Meanwhile, reports out overnight of brokers suggesting oil could fall under $20 confirms the depth of the negative sentiment out there. Amid these conditions, WTI peeked above $30.00. Although it wasn’t able to hold above it yet, it has been holding $29.50, the midpoint of a $26.50 to $32.50 trading range that has been emerging.
Action so far this morning suggests that some of the selling pressure is starting to ease, but at the same time, shell-shocked bulls appear to be reluctant to step in and because of this, we could have an inside day in many markets. The NASDAQ 100 remains in focus having successfully retested support at 3,900 yesterday, potentially completing a double bottom and suggesting that while individual stocks remain vulnerable (Tesla was hammered yesterday even before Wednesday’s earnings), the broader sector may be getting washed out. Action in bellweather Apple (which actually went up yesterday) may indicate if this is the case or not.
Currency trading so far today reflects current indecision. Some capital is clearly still going defensive with gold consolidation yesterday’s rally just below $1,200 while JPY and CHF continue to advance. At the same time, resource currencies like CAD, AUD and NZD are bouncing back suggesting some short covering and bargain starting in risk markets.
USD is sliding slightly in the absence of any news while EUR is up slightly despite more dovish talk out of the ECB. This suggests traders are expecting Fed Chair Yellen to continue the recent shift in Fedspeak back to the dovish side at her testimony to Congress tomorrow.
It’s relatively quiet for North American news during market hours but things pick up again after the close with API oil inventories, Disney earnings and New Hampshire presidential primary results.
Coca-Cola $0.38 vs street $0.37
Significant announcements released overnight include:
NZ QV house prices 12.6% vs previous 14.2%
Australia NZB Business conditions 2 vs previous 3
Japan machine tool orders (17.2%) vs previous (25.7%)
UK BRC same store sales 2.6% vs street 0.3%
UK trade balance (£2.7B) vs street (£3.0B)
Germany industrial production (1.2%) vs street (0.6%)
Germany trade balance €18.8B vs street €20.0B
Greece industrial production 5.2% vs street 2.4%
Upcoming significant announcements include:
4:15 pm EST US API crude oil inventories