Stock markets in Europe and north America have been bouncing back this morning a bit from yesterday’s big selloff. While some of this may be due to short covering and bargain hunting, better than expected data out of Europe also appears to be playing a role.
German employment numbers beat the street, and although the headline Eurozone consumer price inflation figure went negative, core inflation actually rose. This suggests that economic conditions in Europe may not be quite as dire as traders had been pricing into continental indices
and EUR, and taking some of the pressure off the ECB to act aggressively.
Brent crude dipped briefly below $50.00 and has bounced back successfully testing that big round number. Now that $50 has been achieved by both main oil markets, some of the pressure has eased and we appear to be getting a technical bounce. With WTI still below $50, however, further declines later on can’t be ruled out.
USD and USD indices had been climbing into today’s ADP payrolls numbers and have eased back a bit following the report. A solid 241 K increase beat the street and has been seen as generally positive but not a barn burner like last month’s 300K+ nonfarm payroll increase. This means that the Fed likely remains on track to start raising interest rates around mid-year as has been widely expected for some time.
With crude oil falling and USD rising in recent weeks the better than expected US trade balance and worse that expected Canadian trade balance are not a huge surprise.
We could see more action in the markets through the day with more news on the way. Canadian PMI could impact trading in CAD and Canadian stocks. US energy inventories could keep the pot boiling for crude oil and gasoline. Although there was a lot of information released after the December FOMC meeting including a press conference with Chair Yellen, this afternoon’s Fed minutes could still attract attention from traders looking for signs of whether the Fed may start raising interest rates in April, June, or some other time. This could keep trading active in gold, paper currencies and stocks active well into the afternoon.
Monsanto $0.47 vs street $0.35
Eli Lilly guides 2014 FY EPS to $3.10-$3.20 below street $3.24
Economic reports released overnight and this morning include:
US ADP payrolls 241K vs street 225K
US trade balance ($39.0B) vs street ($42.0B)
Canada trade balance ($0.6B) vs street ($0.2B)
Germany retail sales 1.0% vs street 0.6%
Germany unemployment change (27K) vs street (5K)
Germany unemployment rate 6.5% vs street 6.6%
Italy unemployment rate 13.4% vs street 13.3%
Eurozone unemployment rate 11.5% as expected
Eurozone consumer prices (0.2%) vs street (0.1%)
Eurozone core CPI 0.8% vs street 0.7%
Economic reports due later today include:
10:00 am EST Canada Ivey PMI street 53.0 vs previous 56.9
10:30 am EST US crude oil inventories street 0 7 mmbbls
2:00 pm EST US FOMC minutes