The big story in overnight trading was how quickly the speculation on Iran potentially ready to join a deal among suppliers was trumped by weak fundamentals. A surprise 4.4 mmbbl increase knocked the wind out of oil markets sending WTI down 1.6% and Brent down 1.0%. Oil may remain active today particularly around DOE inventories with traders looking for confirmation of the BOE report.
Global equity market trading remains subdued with US indices flat this morning and the Dax
up 0.4%. A usually seasonally quieter period with many players on holiday and limited news combined with people waiting to see what Fed Chair Yellen has to say on Friday has many traders sitting on their hands at the moment. The FTSE is down 0.2% held back by the continuing recovery in GBP as Brexit fears fade.
Canadian banks are in the spotlight this morning. Banks rallied yesterday on a positive kickoff to earnings week and today's report from the Royal Bank of Canada was even better. RBC reported record earnings of $1.72 per share up 7% over year and above the $1.70 street estimate. RBC raised its dividend by 2% a sign management remains encouraged about its future prospects.
Most importantly, RBC cut its credit loss provision by 31% from last quarter on reduced provisions to the oil and gas sector. Questions about oilpatch exposure has dragged on sentiment toward the banks and improved confidence in the oilpatch could provide a general boost to banks and energy companies
Yesterday new home sales nearing levels last seen nine years ago provided more evidence of a robust US economy. Today traders may look to house prices and sales of existing homes for more indications on the strength of consumer spending.
Royal Bank of Canada $1.72 ex one-time gains vs street $1.70, 2% dividend increase, cuts provision for credit losses by 31% from last quarter to $318M.
US API crude oil inventories 4.46 mmbbls
NZ trade balance street ($325M)
Japan leading index previous 98.4
Germany Q2 GDP update street 3.1%
Norway unemployment rate street 4.7%
Upcoming significant economic announcements include:
9:00 am EDT US FHFA house prices street 0.3%
9:00 am EDT US existing home sales street 5.51M
10:30 am EDT US DOE crude oil inventories street (0.85 mmbbls)
10:30 am EDT US DOE gasoline inventories street (1.7 mmbbls)
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