Traders were in a risk on mood today responding positive to better than expected economic numbers out of the Eurozone and the UK while continuing to take a positive spin from Fed Chair Yellen’s Monday comments. While headlines focused on her being more vague on the timing of the next Fed rate hike, she also talked positively about the US economy overall, and indicated people should not read too much one data point.
Growing confidence in the US and European economies and the potential for higher resource demand from them propelled stocks higher Tuesday particularly in Europe which played catch up after underperforming the US and UK on Monday. The S&P reached its highest level since August 2015 while the Dow tested 18,000 and the NASDAQ Composite approached 5,000. A selloff in copper and gold levelling off weighed on miners which held back the FTSE
but by the end of the day, Canadian stocks outperformed their US counterparts which could bode well for the start in Australia today.
Overnight AUD and NZD have remained very strong, continuing to respond favourably to yesterday’s decision by the RBA not to cut interest rates again and its neutral statement. Meanwhile, the climbing NZD suggests that some traders may be speculating that the RBNZ may not deliver the 0.25% rate cut the street is widely expecting, which suggests the Kiwi Dollar may remain quite active over the next 24 hours creating trading opportunities. Sentiment toward resource currencies in general remains positive with CAD and NOK rallying on the back of climbing oil prices.
WTI and Brent crude both finished the day trading above the big $50.00/bbl psychological barrier suggesting they may be ready to resuming advancing after a pause. A 3.6 mmbbl drop in API inventories indicates that the US market continues to come back into balance which may continue to support prices heading toward tomorrow’s DOE inventory reports.
Also note that Japanese markets could be active today around Japan GDP figures. A positive report could buy the Bank of Japan some time to assess the effect of previous stimulus although it may also reduce pressure on the government to bring in more fiscal measures.
There have been no major corporate announcements so far this evening.
Significant announcements released overnight include:
API crude oil inventories (3.6 mmbbls) vs street (2.1 mmbbls)
Canada Ivey PMI 49.4 vs street 51.0 vs previous 53.1
Latest UK Brexit polls:
ORB/Telegraph Remain 48% Leave 47%
Times/YouGov Remain 43% Leave 42%
Eurozone GDP 1.7% vs street 1.5%
Eurozone household consump 0.6% over quarter vs street 0.5%
UK same store sales 0.5% vs street 0.3% vs previous (0.9%)
UK Halifax house prices 9.2% vs street 8.9%
UK Halifax house prices/mnth 0.6% vs street 0.3%
Germany industrial production 1.2% vs street 1.0% vs previous 0.3%
Norway industrial production (5.2%) vs previous (4.0%)
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:50 am AEST Japan GDP street 1.9% vs previous 1.7%
9:30 am BST UK industrial production street (0.4%)
9:30 am BST UK manufacturing production street (1.5%)
8:15 am EDT Canada housing starts street 189K