Opening Bell: Oil Higher; Gold Lower; U.S. Dollar Drifts

Key Events

US futures offered up a mixed picture this morning, with S&P 500 barely in the green after initially sliding, though the NASDAQ 100 and Dow looked a bit more robust. Stocks in Europe bounced back from a lower open with enough gusto to turn losses into gains. Shares of auto manufacturers popped, driving the STOXX Europe 600 into positive territory, after China announced it was considering a proposal to cut import duties on passenger cars.

Earlier, during the Asian session, most local indices pared declines, with both South Korea's KOSPI and Japan's TOPIX pushed higher by technology stocks. The South Korean index jumped 1.1 percent on optimism that the upcoming summit between the US and North Korea may yield economic benefits to the southern portion of the peninsula too. Japanese equities gained 0.25 percent, hitting a two-month high.

Chinese shares bucked the trend. They struggled to join the upbeat tech ride after a US probe into Huawei Technology (SZ:002502) exacerbated investor fears of an escalating trade war. The Shanghai Composite and Hong Kong's Hang Seng closed 1.35 percent and 0.9 percent lower respectively.

Global Financial Affairs

Yesterday, the S&P 500 bounced back from an early loss, climbing 0.18 percent. Energy shares outperformed with a 0.8 percent leap. However, the biggest story was posted by Technology shares, which manage to rebound—albeit by a paltry 0.2 percent—from a slide that had pulled the broader market down. Technically, the SPX price formed a bullish hammer, right on top of the uptrend line since the February 2016 bottom, after bouncing off the 200 DMA.

As had been predicted, Facebook's (NASDAQ:FB) user privacy scandal didn't stop the social media heavyweight from crushing earnings estimates. The tech giant reported a 62.5 percent YoY growth, with a $1.69 EPS against $1.35 forecast.

While it may be understandable that advertisers can't afford to drop the world's largest social media platform, what surprised is that even after the user privacy scandal Facebook is still trying to rectify, user growth met expectations; 70 million users were added in the first quarter, despite the data breech. It may be true that there'ss no such thing as bad publicity. Facebook also announced another stock buyback, to the tune of $9 billion.

Samsung (OTC:SSNLF) also posted record earnings on Wednesday, for a fourth straight quarter; net income rose to $10.7 billion. However, the company warned of softer phone demand, adding fuel to fears that chipmakers may have peaked.

After closing above 3 percent for the first time in four years yesterday, yields on US 10-year Treasurys retreated, though they held above that key level. Meanwhile, the dollar trimmed an earlier decline and advanced.

In the short term, the general perception of rising interest rates and softer European growth is boosting the greenback. However, if one looks at the bigger picture, the global de-dollarization of central bank reserves threatens to severely squeeze demand for the US currency.

At present, the euro is the preferred reserve currency for central banks, as an alternative to the USD. As well, the yuan may also become a strong contestant if China's efforts in that direction, including the recent launch of yuan-denominated oil contracts, succeed.

The euro extended a decline ahead of the European Central Bank rate decision, as German 10-year bund yields tumbled more than 3 percent—far more than the 0.25 percent decline seen in their US counterparts.

WTI crude pushed further above $68 a barrel after French President Emmanuel Macron said he believes US President Donald Trump will withdraw from the Iran nuclear deal, casting a cloud over Middle East geopolitics.

Up Ahead

• US GDP data is due Friday.
• Amazon (NASDAQ:AMZN) releases its corporate results after the close today, for the quarter ending March, with a $1.22 EPS forecast, versus $1.48 for the same quarter last year.
• After today's ECB rate decision, investors will watching for any sign during Mario Draghi's press conference that officials are preparing a shift in stimulus plans.
• The Bank of Japan announces its latest policy decision on Friday and releases updated economic projections.
• The leaders of North and South Korea meet on Friday.

Market Moves

Stocks

• Canada's S&P/TSX Composite closed higher on Wednesday, up 32.75 points, 0.21 percent.
• The STOXX Europe 600 jumped 0.2 percent.
• Futures on the S&P 500 climbed less than 0.05 percent.
• The MSCI All-Country World Index gained less than 0.05 percent, the first advance in more than a week.
• The UK’s FTSE 100 fell 0.1 percent.
• Germany’s DAX dropped 0.3 percent, the largest climb in more than a week.
• The MSCI Emerging Market Index jumped 0.1 percent, the first advance in a week.
• The MSCI Asia Pacific Index slid less than 0.05 percent to the lowest level in almost three weeks.

Currencies

• The Canadian loonie is trading this morning at 0.7793 against the US greenback. It finished the day yesterday down 0.03%, or at 0.7790.

• The Dollar Index climbed less than 0.05 percent to the highest since January 15, extending its upside breakout of a bullish ascending triangle, which may turn into a bottom.
• The euro gained less than 0.05 percent to $1.2167.
• The British pound dipped less than 0.05 percent to $1.3927, the weakest in more than six weeks.
• The Japanese yen advanced 0.1 percent to 109.31 per dollar, the first advance in more than a week.

Bonds

• Canada’s 10-year yield dropped 1.21 percent this morning to 2.358.

• The yield on 10-year Treasuries decreased two basis points to 3.01 percent, the first retreat in more than a week and the biggest tumble in more than two weeks.

• Germany’s 10-year yield declined two basis points to 0.62 percent, the largest decrease in more than a week.
• Britain’s 10-year yield decreased one basis point to 1.525 percent.

Commodities

• WTI crude increased 0.1 percent to $68.14 a barrel.
• Copper declined 0.4 percent to $3.15 a pound.
• Gold increased 0.1 percent to $1,324.99 an ounce.