US markets find themselves on the back foot this morning, with major indices
following their European counterparts lower.
Although Apple’s results appeared to be a smashing success, other results showed weakness in consumer spending. While people still appear to be madly in love with iPhones, iPad sales were soft. Also, Ford, Whirlpool and Coach all missed on one or more of sales, earnings and guidance, confirming a slowdown in consumer spending on big ticket items. On the other hand, UPS results indicate that transportation companies continue to benefit from lower fuel prices, while Big Pharma also continued to deliver strong earnings.
USD, meanwhile, is trading lower for a second straight day while traders await tomorrow’s FOMC decision. Traders still appear to be looking for signs that weakening US economic figures could force the Fed to push off interest rate liftoff until later in the year.
Gold has levelled off to consolidate yesterday’s big rebound back above $1,200, and has passed the leadership torch over to resource currencies like AUD, NOK, NZD and CAD. SEK is lagging its peers slightly following a mixed bag of Swedish numbers. AUD and NZD could be benefitting from reports that China may be preparing to ramp up stimulus through bond purchases to help some of its regions restructure their debts.
Bank of Canada Governor Poloz indicated in testimony this morning that the rate cut earlier this year is helping the economy. He also noted that CAD performance has been in line with its ongoing relationship to the oil price and that he still expects the Canadian economy to rebound in the second half of this year.
Surprisingly GBP is outperforming USD and EUR (slightly) despite a soft UK Q1 GDP report, while the FTSE is down less than the Dax. Although Greek treasury yields have continued to fall indicating the street is pleased with yesterday’s reshuffling of the debt negotiation team, the situation is not over yet with PM Tsipras suggesting that a deal that doesn’t end austerity could be put to a referendum.
Trading may remain active today as traders position for tomorrow’s Fed announcement. After the US close tonight Twitter earnings and trade figures for New Zealand are due.
Apple $2.33 vs street $2.15, revenues $58.0B vs street $55.9B, 61.1 million iPhones shipped, guides next Q sales to $46-48B, 11% dividend increase and increases its buyback program to $140B from $90B, company to return $200B of cash to shareholders over the next two years, up 50%.
UPS $1.12 vs street $1.09
Ford $0.23 vs street $0.26
Whirlpool $2.14 vs street $2.37, cuts 2015 year guidance to $12.00-$13.00 from $14.00-$15.00
Coach $0.36 vs street $0.35, sales $929M below street $950M
Merck $0.85 vs street $0.74
Pfizer $0.51 vs street $0.49
Barrick Gold $0.05 vs street $0.09
Economic reports released overnight and this morning include:
UK Q1 GDP 2.4% vs street 2.6% and previous 3 0%
Sweden consumer confidence 97.1 vs street 100.8
Sweden manufact confidence 93.7 vs street 102.1
Sweden trade balance SEK 4.2B vs street SEK 2.0B
Sweden producer prices 2.3% vs previous 1.9%
Sweden retail sales 4.6% vs street 3.4%
Japan retail sales (9.7%) vs street (7.5%)
Australia leading index 0.5% vs previous 0.4%
Economic reports due later today include:
8:45 am EDT Bank of Canada Poloz and Wilkins house testimony
10:00 am EDT US consumer confidence street 102.2
10:00 am EDT US Richmond Fed street (2) vs previous (8)