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Stocks And Oil Stabilize, CAD Remains Soft, Sterling Steady

By CMC Markets (Colin Cieszynski)Market OverviewJan 14, 2016 04:40
ca.investing.com/analysis/stocks-and-oil-stabilize,-cad-remains-soft,-sterling-steady-380049
Stocks And Oil Stabilize, CAD Remains Soft, Sterling Steady
By CMC Markets (Colin Cieszynski)   |  Jan 14, 2016 04:40
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It’s been another big night for trading in world markets. Although mainland China markets stabilized with Shanghai rising nearly 2%, other indices continue to be rocked by uncertainty. Japan’s Nikkei fell 2.6% on very weak machine tool orders, while Australian stocks fall after a retrenchment in employment growth even though it wasn’t as bad as expected. The potential risks and broader impact of China market volatility and its weak economy remain uncertain with FOMC members taking different sides on the potential impact in speeches this week while ECB minutes suggested no impact has materialized as of yet and risks of a China led global meltdown are subsiding.

This morning finds US indices trading down marginally but it is hard to say if this means that yesterday’s selling pressure is subsiding or if the bulls, who have tried to spark rallies the last two days only to fail, remain on the sidelines. Earnings from JPMorgan (N:JPM) beat the street, an encouraging sign for the banks. Intel's (O:INTC) earnings after the close may attract a lot of attention with traders trying to see if the emerging trend of positive earnings but weak 2016 guidance seen earlier in the week continues or not.

Crude oil continues to hold above $30.00 on both WTI and Brent, indicating significant support in place around that level. Gold has leveled off near $1,190 consolidating yesterday’s gains, and indicating that capital flows toward defensive havens have subsided for the moment.

CAD, however, continues to weaken with CAD/USD remaining below $0.7000 following yesterday’s breakdown on speculation that the Bank of Canada could cut interest rates next week. The last time the Governor Poloz cut rates back in July, CAD/USD was above $0.8000; now it’s under $70.00 a huge decline by forex standards over six months. Traders could take this to mean either that another cut has been more than priced in, or that the dollar has fallen so much that it has done the central bank’s stimulus work for it and no cut is needed.

Another issue is what a cut could do to housing prices which remain high in some cities but have weakened in others. Today’s Canada new house prices could give an indication of the state of the real estate market. Earnings due this morning from Shaw Communications (TO:SJRb) may also attract attention from Canadian traders particularly in the wake of yesterday’s announcement of its plans to sell Shaw Media over to Corus Entertainment (TO:CJRb).

In Europe today, continental indices started the day off weak but have started to claw back some of their losses over the last hour or so. In UK markets, both the FTSE and GBP, have strengthened after the Bank of England meeting ended with no surprises on either the decision or the vote with still one hawkish dissenter. GBP had been weakening in recent days ahead of the meeting and has started to rebound. EUR, meanwhile has picked up

ECB meeting minutes showed a lot of indecision and contention at the central bank with some members looking for a 0.20% deposit rate cut rather than the 0.10% cut that was decided on, some members wanting to front-end QE purchases, others wanting to wait and see more of the effects of the current program EUR is basically holding steady indicating traders see the minutes as a non-event.

Corporate News

JP Morgan Chase (N:JPM) $1.32 vs street $1.26, revenue $23.75B vs street $23.25B

Shaw Communications operating earnings $626M vs street $63M earnings, AGM later in the day

After 4:00 pm EST Intel (O:INTC) earnings

Economic News

Significant announcements released overnight include:

UK interest rate and QE 0.50% and £375B, 8-1 vote no changes or surprises

Poland interest rate 1.50% no change as expected

Germany GDP 1.7% as expected

Germany wholesale prices (1.0%) vs previous (1.1%)

Sweden consumer prices street 0.1% as expected

Italy industrial production 0.9% vs street 2.5%

Japan machine orders 1.2% vs street 6.3%

Japan machine tool orders (25.8%) vs (17.7%)

Japan producer prices (3.4%) vs street (3.5%)

Australia employment change (1K) vs street (10K) vs previous 71K

Australia full-time 17K vs previous 41K

Australia part-time (18K) vs previous 30K

Australia unemployment rate 5.8% vs street 5.9%

Upcoming significant announcements include:

8:30 am EST Canada new house prices street 0.2%

8:30 am EST US jobless claims street 275K

8:30 am EST FOMC Bullard speaking

10:30 am EST US natural gas street (177 BCF)

Disclaimer: CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Stocks And Oil Stabilize, CAD Remains Soft, Sterling Steady
 

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Stocks And Oil Stabilize, CAD Remains Soft, Sterling Steady

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