Stocks and currencies have been active on a good news/bad news speech from ECB President Draghi at his press conference.
The good news: things are looking up for Europe, the ECB raised, yes raised its GDP forecasts for 2015 and 2016. This sent EUR and stocks higher
The bad news: the forecast depends on full implementation of ECB decisions and structural reforms. This send EUR and stocks right back down again.
The most important news: The ECB lowered its inflation forecast for 2015, indicated it could go negative for a while and then rebound later this year and into 2016. In other words, the ECB has confirmed that the impact on inflation is likely to be temporary and that inflation pressures are expected to build going forward. This means that interest rate hikes in the US and UK may be put off for a little while but not forever.
QE news: Asset purchases are scheduled to start Monday March 9th and the program is currently expected to run through September 2016 depending on inflation and other factors. It could be shortened or extended.
The Chinese government cut its 2015 growth forecast to around 7.0% from 7.5% last year but this was widely expected and allays fears for now that multiple PBOC rate cuts recently could be suggesting even slower growth. The Hang Seng traded lower on the news but US and UK indices
have been in the green. The biggest impact of this news has been on Asia Pacific currencies. JPY, AUD and NZD have dropped to the bottom of the league table. NZD has been the worst performer on the day after the RBNZ launched talks to separate residential investment properties into its own asset class and then introduce new mortgage rules for it.
Crude oil is up moderately today within its current range while NOK has been on the rebound with Brent outpacing WTI to the upside and widening the spread back to almost $10.00. Gold is holding steady near $1,200 with traders waiting for confirmation the ECB’s QE program is growing its balance sheet which has been steady the last two months.
US jobless claims came in above 300K last week, partly offsetting some of the positive news from yesterday’s upward revisions to ADP payrolls. Today we may see more traders position ahead of tomorrow’s nonfarm payrolls report, which I will preview in today’s evening note.
Canadian Natural $0.69 vs street $0.67, 2.2% dividend increase
Canadian Solar $1.28 vs street $1.34, guides Q1 sales to $725-$775M vs street $630M, guides 2015 year sales to $2.8B-$4.0B below street $3.3B
Costco $1.35 vs street $1.18
Abbvie agreed to purchase Pharmacyclics producer of a blood cancer product for $21B
Economic reports released overnight and this morning include:
UK interest rate 0.50% no change as expected
ECB interest rate no change as expected
ECB QE program asset purchases to start Monday March 9th
2015 GDP raised to 1.9% from 1.5%
2016 GDP raised to 1.5% from 1.0%
2015 inflation cut to 0.0% from 0.7%
2016 inflation raised to 1.5% from 1.3%
US jobless claims 320K vs street 295K
Germany factory orders (3.9%) vs street (1.0%)
Italy GDP (0.5%) vs street (0.3%)
UK Halifax house prices 8.3% vs street 8.5%
Sweden industrial production 0.8% vs street (0.4%)
Greece unemployment rate 26.0% vs street 25.7%
Australia retail sales 0.2% vs street 0.4%
Australia trade balance ($980M) vs street ($950M)
Economic reports due later today include:
10:00 am EST US factory orders street 0.2%
10:00 am EST Canada Ivey PMI previous 42.6