Stock markets around the world have paused overnight to digest the flood of economic news that has come out so far this week and get ready for tomorrow’s US nonfarm payrolls and Canada employment reports. US index futures for the Dow and S&P are up 0.2%. European trading has been relatively quiet with the Dax and several other markets closed for a holiday with Japan also still closed for holidays. The FTSE is trading pretty much flat on the day so far.
The most active market on the day so far has been crude oil with WTI jumping 2.5%. Intense forest fires in Canada’s oil sands producing region have forced the evacuation of 80,000 people from the City of Fort McMurray and forced several oil sands operations to stop or dramatically reduce production for the time being.
Copper has declined again overnight following a soft China Service PMI report while gold has stabilized at a lower level which could keep the pressure on mining stocks again today.
Earnings reports may also be a big driver of trading today. Tesla Motors (NASDAQ:TSLA) beat the street and indicated it expects production to ramp up with supply chain issues behind it. Insurer Allstate (NYSE:ALL) plus Kraft Heinz (NASDAQ:KHC) and refiner Tesoro (NYSE:TSO) posted strong results along with Merck (NYSE:MRK) and Canadian Natural (TO:CNQ). Canadian big caps continue to report this week as well with Manulife Financial (TO:MFC) beating the street by a penny and Telus (TO:T) meeting expectations.
Exposure to the struggling oil and gas sector could impact banks today after National Bank of Canada announced it is taking a $250 million provision for credit losses from the oil patch in its next earnings report, a $0.54 hit to earnings per share. Traders have been worried for a while over what the oil crash may mean for bank’s exposure to energy companies and this news may start to crystallize those concerns.
Merck lowered the negative foreign impact on its earnings going forward indicating the falling USD is taking some of the pressure off US corporate earnings.
It’s been kind of a mop up day for economic news. USD is up moderately to the tune of 0.25%-0.5% against most majors. CAD has rebounded a bit but gains so far have been feeble relative to the sharp selloff of the last two days.