It has been an up and down day for stock markets around the world with the potential for significant trading action to continue right through the weekend. US and European indices started the day off in the red following on from yesterday’s Asia Pacific losses. As the day progressed, indices regained their footing and US indices like the Dow and S&P plus European indices like the DAX
and IBEX were able to climb back up into positive territory.
One market that lagged behind and stayed in the red through the day was the FTSE with voting underway in the UK election. Polls have just closed and initial exit polls suggesting the Conservatives well ahead of Labour have sparked rallies in both GBP and the FTSE. A second exit poll has suggested a potentially closer result but so far Cable and stocks have held on to their initial gains.
It’s still early and more poll and actual results could move these markets in either direction throughout today’s Asia Pacific trading hours potentially creating opportunities for both sides.
US jobless claims landed in the 260s for a second week in a row, their best result in years, beating the street. This offset Wednesday’s disappointing ADP payrolls report, and helped both US stocks and USD to bounce back and gain back lost ground.
Jobless claims also sent mixed signals into Friday’s nonfarm payrolls. The street is looking for a big rebound back up to 230K but considering that ADP claims stayed low, I’m thinking 180K and a 10K upward revision to last month. A reading above 250K could put a June rate hike back on the table, a number between 200K and 250K would suggest July or September possible while another reading below 200K could push liftoff off toward the end of the year.
A strong nonfarm payroll report could help USD to rebound while a weak report could keep the pressure on. Stocks could see quick moves in both directions in reaction to the report because each side could take something away. For example, a weak report would be positive for liquidity but negative for the corporate earnings outlook and the opposite for a strong report.
Crude oil came crashing back to earth today with WTI and Brent both falling over 3% and WTI giving up the $60.00 level. There wasn’t anything specific to spark the fall so it was likely a combination of factors including bullish technical exhaustion, a rebound in USD, and conflict in Yemen remaining contained to that country and border areas.
With crude oil selling off it comes as no surprise that CAD was hit hard today. Ongoing reaction to the generational change Alberta election result and anticipation of Friday’s Canada jobs report may also be playing a role. The street is expecting a 5K decline as jobs retrench from a 28K increase last month, similar to yesterday’s Australian employment result. I think we’ll see full time jobs bounce back a bit but it’s hard to see the oil price rebound having any meaningful impact until after breakup so I’m thinking a 5K increase overall. A better than expected result could help CAD to rebound from today’s takedown but the loonie’s performance also depends on what the oil price does.
Other resource currencies have also been tumbling including AUD, NZD and SEK. NOK has outperformed its peers today after Norges Bank held interest rates steady.
Resource currencies, China sensitive indices and commodities may all be active today on China trade news, which could give an indication of what’s happening on the resource demand side and indicate if its economy has stabilized or if China is still slowing.
CBS $0.78 vs street $0.75
Significant announcements released overnight include:
Norway interest rate 1.25% no change as expected
US jobless claims 265K vs street 279K vs previous 262K
US natural gas 76 BCF vs street 74 BCF
Canada building permits 11.6% vs street 2.0%
Germany factory orders 1.9% as expected
Upcoming significant announcements include:
Next 18 hours UK seat by seat election results
TBA China trade balance street $39.6B
TBA China exports street 1.6%
TBA China imports street (12.2%)
7:00 am BST Germany industrial production street 0.5%
7:00 am BST Germany trade balance street €20.0B
8:00 am BST UK Halifax house prices street 7.8%
9:30 am BST UK trade balance street (£2.4B)
10:00 am BST Greece consumer prices street (2.0%)
8:30 am EDT US nonfarm payrolls street 230K vs previous 126K
8:30 am EDT US private payrolls street 225K vs previous 129K
8:30 am EDT US unemployment rate street 5.4%
8:30 am EDT US participation rate previous 62.7%
8:30 am EDT US average hourly earnings street 2.3% vs previous 2.1%
8:30 am EDT Canada jobs change street (5K) vs previous 28K
8:30 am EDT Canada full-time jobs previous (28K)
8:30 am EDT Canada part-time jobs previous 56K
8:30 am EDT Canada unemployment rate street 6.9%
8:15 am EDT Canada housing starts street 182K
1:00 pm EDT US Baker Hughes drill rig count previous 905
9:30 pm EDT China consumer prices street 1.6%
9:30 pm EDT China producer prices street (4.5%)