Stock markets around the world have carried the torch of positive momentum from yesterday’s positive US session overnight and into this morning with the FTSE, Dax and Hang Seng posting moderate gains in the 0.3%-0.8% range. US traders appear set to keep the rally going this morning with Dow Futures up about 45 points and S&P futures trading up about 5 points.
Traders continue to respond positively to this week’s confirmation from the Fed that members are looking at two rate hikes this year rather than four, this news has knocked USD back, taking some of the forex pressure off of US companies which had impacted exports and earnings. Comments out of the ECB this morning indicating that last week’s rate cuts were necessary and that the central bank has more stimulus ammunition in its arsenal has helped to support stocks across the pond.
Crude oil continues to advance as well today with WTI crude regaining the $40.00 level for the first time in three months, providing more evidence to indicate that it has turned the corner amid falling US shale production and the potential for a producers’ meeting in April. Gains in crude has propelled oil sensitive currencies like CAD, NOK and RUB (which is also benefiting from a Bank of Russia decision to hold rates at 11.0%) to the top of the leader board. USD, meanwhile also appears to be stabilizing which has sparked a downward correction in gold.
Stocks in Canada have the potential to be particularly active today. In addition to the potential tailwind for oil stocks from the oil rally, a big acquisition by TransCanada (TO:TRP) overnight could spark action in the pipeline sector. Canada retail sales and consumer price inflation reports are due today which could give another indication on how Canada’s economic transition is going ahead of next week’s federal budget and how much pressure the Bank of Canada is under to cut interest rates again following Norges Bank’s cut earlier this week. We also get three Fed speakers today (Dudley, Rosengren and Bullard) who would be expected to confirm the Fed’s more dovish stance on interest rates.