esterday’s positive momentum has continued overnight and into this morning’s trading although the pace of gains has slowed somewhat. Mixed news overnight appears to have dampened bullish spirits a bit but not crushed them. Meanwhile, bears remain unable to use negative news to mount a counterattack, a sign of exhaustion on their side.
Following another day of gains in Asia Pacific markets, continental indices are rising today with the Dax
up 1.5% The FTSE has declined 0.3% and is lagging a bit with the 2-day EU Brexit summit underway although this may partly be due to a nice 0.5% bounce for GBP which has been underperforming lately. EUR is sliding following dovish ECB minutes that showed the central bank remains concerned about the inflation outlook and is still looking at additional stimulus for March even going so far as to debate taking action even sooner.
US index futures for the Dow, S&P and NASDAQ are trading up 0.3-0.6%. An early morning rally has moderated a bit after the OECD cut its 2016 GDP growth forecast for the US and several other countries blaming reduced trade and sluggish demand. Declines have been orderly so far suggesting a normal trading correction. Wal-Mart earnings were slightly disappointing while a big miss from Dish Network indicates cable providers continue to struggle with cord cutting. In Canada there’s already been a positive retailer surprise out of Canadian Tire this morning which could offset mixed results from gold producers.
Overnight comments from St. Louis Fed President Bullard provided what looks to be an accurate summary of current Fed thinking. He suggested it would be unwise to continue normalizing policy with inflation falling (which lowers the neutral interest rate anyway).having previously been among the more hawkish faction this suggests the Fed could be leaning to delay the next rate hike out beyond March. He also suggested that the Fed still has lots of tools available for stimulus including more QE before having to resort to negative interest rates (which suggests recent negative US rate talk has been more to put the threat out there in a bid to keep the other central banks in line than a serious policy option).
Crude oil continues to advance today with Brent taking a run at $35.00 and WTI hanging on to recent gains. US API inventories had a surprise drop overnight so traders may look to today’s DOE report for confirmation. Oil, gasoline and natural gas could all be active through the morning around storage reports plus any additional comments from producing countries about this week’s supply talks and potential freeze. CAD and NOK are steady this morning but MXN has been staging a big catch-up rally.
Wal-Mart $1.43 vs street $1.46, sales $129.7B below street $130.6B, guides 2016 EPS to $4.00-$4.30 around street $4.14, 2.0% dividend increase
Canadian Tire $3.01 vs street $2.58, sales $3.3B vs street $3.5B, same store sales Tire 2.0%, Sport Chek 1.6%, Marks (5 2%)
Barrick Gold $0.08 vs street $0.06
Iamgold ($0.16) vs street ($0.10), proven and probable reserves fall 11% due to depletion
Newmont Mining $0.04 vs street $0.13
Dish Network $1.61 vs street $1.72
Significant announcements released overnight include:
US API crude oil inventories (3.3 mmbbls) vs street 1.1 mmbbls
OECD 2016 GDP Forecasts
World cut to 3.0% from 3.3%
US cut to 2.0% from 2.5%
Canada cut to 1.4% from 2.0%
UK cut to 2.1% from 2.4%
Eurozone cut to 1.4% from 1.8%
Germany cut to 1.3% from 1.8%
China 6.5% no change
Japan cut to 0.8% from 1.0%
Japan trade balance (¥645B) vs street (¥658B)
Japan exports (12.9%) vs street (10.9%)
Japan imports (18.0%) vs street (15.8%)
Australia employment change (8K) vs street 13K and previous (1K)
Australia full-time (40K) vs previous 17K
Australia part-time 32K vs previous (18K)
Australia unemployment rate 6.0% vs street 5.8%
China consumer prices 1.8% vs street 1.9%
China producer prices (5.3%) vs street (5.4%)
NZ producer input prices (1.2%) vs previous 1.6%
NZ producer output prices (0.8%) vs previous 1.3%
NZ ANZ consumer confidence 119.7 vs previous 121.4
France consumer prices 0.2% as expected
Sweden consumer prices 0.8% vs street 0.5%
Upcoming significant announcements include:
12:30 pm GMT ECB minutes
8:30 am EST US jobless claims street 275K
8:30 am EST US Philadelphia Fed street (3.0)
10:00 am EST US leading index street (0.2%)
10:30 am EST US natural gas street (150 BCF)
11:00 am EST US DOE crude oil inventories street 5.3 mmbbls
11:00 am EST US DOE gasoline inventories street 0.4 mmbbls
11:00 am EST US Bloomberg implied oil demand previous 16,418 mmbbls
3:30 pm EST FOMC Williams speaking
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