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Exhausted Stocks Pause Amid Hawkish Fed Talk

By Colin CieszynskiMarket OverviewFeb 16, 2017 08:35
ca.investing.com/analysis/exhausted-stocks-pause-amid-hawkish-fed-talk-200175924
Exhausted Stocks Pause Amid Hawkish Fed Talk
By Colin Cieszynski   |  Feb 16, 2017 08:35
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The relentless drive higher by stock markets has stopped for a rest overnight. US index futures are trading down ‎0.1%, the Dax is down 0.2% while the FTSE and Nikkei are down 0.5%. Crude oil is steady while USD is down slightly against gold and major currencies.

There hasn't been much in the way of overnight economic news except for ‎a better than expected Australian jobs report. Therefore the pause appears to be mainly due to technical exhaustion. It's too early to tell is a top may be forming or if this is a rest stop within a bigger advance.

One thing that could give US traders pause ‎is increasing signs the Fed could raise rates at its March meeting. Following on from FOMC Chair Yellen's testimony, regional Fed Presidents have been talking hawkishly. Last night, NY Fed President Dudley indicated he expects to see a small rate hike in the coming months if forecasts work out.

Philadelphia Fed President Harker continues to look toward three hikes this year, the Fed's party line while Boston Fed President Rosengren thinks we could see even more increases than that. This morning, Fed Vice-Chair Fischer suggested 2-3 hikes possible this year. The US dollar index is holding just above 101.00, indicating the street expects four rate hikes this year. Expectations in Fed Funds for a March rate hike moved up to 36% from 15% a couple of weeks ago.

It's a big day for earnings in Canada today. Results from Encana (TO:ECA), TransCanada (TO:TRP) and Cenovus (TO:CVE) in the energy sector have come in above expectations, indicating rising energy prices are paying off. ‎Canadian Tire (TO:CTCa) beat the street on sales and earnings with Tire same store sales up a strong 8.1%. Sun Life (TO:SLF) and Fortis (TO:FTS) also beat the street by wide margins. Bombardier (TO:BBDb) disappointed again, posting an even deeper loss than the market had been expecting. Gold earnings were mixed with Barrick (TO:ABX) and Goldcorp (TO:G) beating the street while Agnico Eagle (TO:AEM) and Kinross (TO:K) fell short of expectations.

Exhausted Stocks Pause Amid Hawkish Fed Talk
 

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Exhausted Stocks Pause Amid Hawkish Fed Talk

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