Roller coaster ride for stocks, Loonie takes flight
It was a wild and woolly day for trading in North America. Stocks were absolutely hammered in the morning that felt like capitulation and then staged a big turnaround in the afternoon. When I was writing my technical analysis, the same words kept coming up like selling climax, bullish key reversal, bear trap bottom, washout, shakeout, all suggesting that the recent bear may finally be exhausted and a bounce starting.
A prime example of this psychological driven action was Netflix. After its earnings report Tuesday night, its shares rallied in the aftermarket but by Wednesday morning, traders were throwing out the babies with the bathwater and Netflix saw its shares crushed down from $109.50 toward $97.50 before turning around and clawing it all back, an encouraging sign.
Crude oil also had a big washout with WTI trading down 8% at one point on the day before bouncing back a bit. API inventories rose more than expected but that should have been priced in by the day’s trading. WTI has been drifting back down on the news which does give traders an excuse for another takedown, we’ll see soon if bears still have the appetite or not.
Today was also a big turnaround day for trading in CAD. The Bank of Canada maintained interest rates at its monetary policy meeting and didn’t indicate any plans for further rate cuts, delivering essentially a neutral statement that suggested it is looking to the lower loonie, federal stimulus and exports to the US to help rebalance the economy.
CAD had become extremely depressed between falling oil prices and speculation another interest rate cut could be on the way. An initial rally was offset by falling oil but as WTI regained its footing, CAD started to really soar and could be turning the corner.
Today’s Asia Pacific trading may indicate if the US afternoon bounce was just some short covering or if bargain hunters are starting to seriously come in. Energy markets may remain active through tomorrow’s US crude oil, gasoline and natural gas inventory reports. EUR could be active through the ECB meeting which is expected to be a non-event with a bigger review of its stimulus plan expected for the March meeting. .
F5 Networks $1.73 vs street $1.60, guides next Q to $1.61 to $1.64 below street $1.68
Significant announcements released overnight include:
Canada interest rate 0.50% no change expected
Bank of Canada GDP forecast 2016 1.5%, 2017 2.5%
US API crude oil inventories 4.5 mmbbls vs street 2.6 mmbbls
US consumer prices 0.1% vs street 0.2%
US core CPI 2.1% as expected vs previous 2.0%
US real average weekly earns 1.6% unchanged
US housing starts 1,149 vs street 1,200K
US building permits 1,232 vs street 1,200K
Canada wholesale sales 1.8% vs street 0.4%
Canada manufacturing sales 1.0% vs street 0.5%
UK jobless claims (4.3K) vs street 2.8K
UK rolling 3M jobs change 267K vs street 235K vs previous 207K
UK unemployment rate 5.1% vs street 5.2%
UK average weekly earnings 2.0% vs street 2.1%
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)
8:30 am AEDT NZ Business PMI previous 54.7
11:00 am AEDT NZ consumer confidence previous 118.7
11:00 am AEDT Australia New home sales previous (3.0%)
12:45 pm GMT ECB refinancing rate 0.05% no change expected
12:45 pm GMT ECB deposit facility rate (0.30%) no change expected
12:45 pm GMT ECB marginal lending rate 0.30% no change expected
1:30 pm GMT ECB Draghi press conference
1:00 pm GMT Poland industrial output street 5.5%
1:00 pm GMT Poland construction output street 2.4%
1:00 pm GMT Poland producer prices street (0.9%)
1:00 pm GMT Poland retail sales street 3.2%
8:30 pm EST US Philadelphia Fed street (5.9)
8:30 am EST US jobless claims street 278K
10:30 am EST US natural gas street (178 BCF)
11:00 am EST US DOE crude oil inventories street 2.3 mmbbls
11:00 am EST US DOE gasoline inventories street 1.7 mmbbls
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