U.S. stocks pared early losses to trade mixed as investors awaited fresh clues on the outlook for global trade and monetary policy. Treasuries advanced.The S&P 500 paused the post-Christmas rally of 18 percent as the next round of trade talks between America and China restart in Washington this week. Walmart Inc. surged after it announced the best holiday quarter in a decade, countering concerns about retail sales and lifting consumer sectors. European shares retreated after two days of gains, led by banks following disappointing earning from HSBC Holdings and increasingly dovish signals from the region's central bank. Automakers were also under pressure as the European Union vowed prompt retaliation if the U.S. imposes tariffs on imported vehicles. The dollar was steady against major currencies, while Treasuries traded around 2.65 percent ahead of a slew of speeches from Federal Reserve presidents and the release of last month's FOMC meeting minutes Wednesday that should shed more light on the central bank's turn to a more dovish tone.
Yesterday, USDCAD initially dropped from 1.3270 down to 1.3230 on better than expected economic data out of China which propelled equity and commodity markets higher and saw the USD broadly weaken. Canadian manufacturing data and U.S. retail sales data were both quite poor sending both USD and CAD lower across the board. The CAD was hit harder as oil prices moved lower and North American equities opened weaker as well. USDCAD climbed to 1.3338, marginally higher than last week's 1.3330 high and the highest level in nearly 3 weeks. The move higher failed to hold and within 3 hours, USDCAD dropped back to 1.3276/81. Equity markets and oil prices sharply reversed paring earlier losses while the USD broadly weakened. U.S. 4th quarter GDP was drastically revised lower by the Atlanta Fed – from 2.7% down to 1.5% while other institutions lowered expectations by about 0.5% as well. U.S. data disappointed again this morning sending the USD broadly lower from 1.3314 down to 1.3256. North American equity markets continue to surge higher on hopes that the U.S. Fed will be forced to keep interest rates low amidst the recent weakness in U.S. data and lower economic growth outlook.
U.S. stocks opened lower, Treasuries extended their advance and the dollar retreated after disappointing American retail sales data suggested the country's economic growth is slowing. The S&P 500 Index, Dow Jones Industrial Average and Nasdaq 100 all sank Thursday after the U.S. Commerce Department reported the the worst drop for retail sales in nine years, while initial jobless claims came in higher than estimated. Every sector on the S&P opened lower. Banks were among the hardest hit, as the 10-year Treasury yield sank below 2.65 percent. Defensive shares and companies with high dividend yields fell the least. Coca-Cola saw its biggest one-day loss in three years after selling fewer drinks in the Americas in the fourth quarter. The U.S. retail sales data for December -- which came out after a four-week delay due to the government shutdown -- may reinforce the expectation that the Federal Reserve will avoid raising rates this year.
Stocks extended gains on Wednesday after President Donald Trump signaled a more conciliatory stance toward China, fueling hopes of a breakthrough in the trade war. The dollar gained and Treasuries edged lower after data showed U.S. inflation remained contained. The S&P 500 Index, Nasdaq 100 and Dow Jones Industrial Average all climbed as Trump also appeared to move closer to accepting a border deal that would avoid another government shutdown. Shares in Shanghai surged the most in 5 weeks after the U.S. president said he's open to extending a March 1 deadline to raise tariffs on Chinese products if the two sides are near an agreement. The euro weakened after a report showed industrial production across the 19-nation region is falling at the fastest pace since the financial crisis. Oil added to its rebound from a two-week low after Saudi Arabia pledged to deepen output cuts. The Stoxx Europe 600 Index rose for a third day. The U.S. inflation numbers bolstered the Federal Reserve's decision to be patient on raising interest rates. And with major central banks seemingly on pause or turning dovish, investor attention now appears firmly focused on the outlook for global trade and the chances of progress at the next round of talks between the U.S. and China in Beijing. Protectionist measures have been heaping pain on many large economies, some of which are also grappling with a slowdown in growth.
Stocks rose in the U.S. and across Europe and Asia on optimism over global trade and a tentative deal among American lawmakers to avert a government shutdown. Treasuries fell and the dollar edged lower.
The S&P 500 Index opened higher, as did the Dow Jones Industrial Average and Nasdaq 100, after U.S. lawmakers said they reached an "agreement in principle" on border security funding that would avert a second government shutdown. President Donald Trump is said to be undecided on whether to accept the deal. On trade, Trump wants to meet his Chinese counterpart "very soon," a White House adviser said in a TV address.
U.S. equities were mixed at the start of a week that could be pivotal for global trade, while lawmakers in Washington continue to negotiate a contentious spending bill. The dollar strengthened for an 8th day. The S&P 500 was little changed Monday after starting the session higher. Stocks are coming off a lackluster week, with investors awaiting high-level U.S.-China trade talks. The threat of a shutdown in Washington is also in focus, as political tensions flare between Congress and the president. Volumes have been lower than average all session, and some investors may be sitting on the sidelines waiting for more potent market catalysts to emerge. Equities gained in China as exchanges reopened after a holiday. Trading in the rest of Asia was mixed. Trade tensions are ratcheting up as investors evaluate the prospects for a U.S.-China deal before the March 1 deadline for higher tariffs, as warnings mount that the dispute is curbing the global economic expansion and denting corporate profits. Japan's securities markets were shut for a holiday, and the yen weakened.
Yesterday, the CAD weakened for the 4th consecutive day taking USDCAD from 1.3201 up to 1.3317 – the highest level since Jan. 25th and more than two cents higher than last Friday's 3 month low of 1.3069. Coincidentally, oil prices were down nearly 3% on the day towards 3 week lows. Also, the USD index was higher testing the 2019 high. USDCAD tested 1.3330 overnight before falling to 1.3232 this morning after a surprisingly strong Canadian jobs report. Over 30,000 full time jobs were created in January while Canada has outpaced the U.S. in job growth by nearly a 2-1 margin over the past 5 months. After declining the past four days, the CAD is the best performing currency on the day despite global equity markets under pressure again. There seems to be little progress being made to improve U.S. / China trade relations. USDCAD has since rebounded and holding a 1.3260 – 1.3280 range.
U.S. stocks fell while Treasuries rallied after concern mounted that a slowdown in the global economy is spreading at the same time investors remain on edge over threats ranging from a government shutdown to rising trade tensions and Brexit turmoil. The S&P 500 dropped the most in a week, and the Stoxx 600 snapped a seven-day rally as the European Commission downgraded its economic estimates. The dollar edged higher to extend its rally. Crude slumped below $54 a barrel in New York and the 10-year Treasury rate slipped to 2.66 percent. The pound reversed losses after the Bank of England left rates unchanged and cut its growth forecast for the U.K. economy. Earlier in Japan, shares fell amid a raft of corporate earnings.
U.S. stocks fluctuated in thin trading as investors weighed corporate earnings against persistent concerns over trade and another government shutdown. The dollar extended its rally to a 5th day. The S&P 500 was little changed after bouncing back from some early weakness, with volumes 10% below the 30-day average. President Donald Trump's speech to Congress did little to remove trade and shutdown concerns, putting the focus on earnings-related moves. Investors remained on edge with the deadline for Congress to reach a deal on keeping the government open fast approaching with little sign of compromise. There are also looming meetings in Beijing next week between U.S. trade representatives and their Chinese counterparts. Global equities are close to levels not seen since November, in part spurred by the Federal Reserve's tilt toward a neutral policy stance. Further clues on what 2019 holds may come Wednesday from Chairman Jerome Powell's first public comments following the January meeting and interest-rate decision.
U.S. stocks pushed higher for a fifth day, with sentiment getting a boost from corporate results and strong earnings from oil giant BP that lifted European equities. The euro edged lower. The S&P 500 matched its longest rally of the year, as stocks continued to rebound from the pre-Christmas rout. American earnings were mixed, with Alphabet slipping after announcing a big rise in spending, while Estee Lauder surged on its results. Pemex bonds jumped after Mexico's president said he'll announce extraordinary measures to support the oil firm. Crude slumped.
On Friday, the CAD was the top performing currency as U.S. employment data was mixed while oil prices surged towards 10 week highs. USDCAD dropped from 1.3160 down to 1.3069 – the lowest level since Nov. 7th before climbing back to close the week at 1.3090. There was very little movement overnight as Chinese markets are closed all week for the Lunar New Year holiday. The USD is marginally stronger this morning across the board taking USDCAD up to 1.3146 despite slightly weaker than expected U.S. economic data. Oil prices have also given back Friday's gains. The pairing has since declined to 1.3118 and subsequently bounced back to 1.3135.
Yesterday, USDCAD dropped from 1.3150 down to 1.3120 before climbing back to 1.3165 ahead of the Canadian November GDP report, which met expectations. The pairing subsequently moved back to hold near 1.3130 for the balance of the session despite oil prices falling 3% after reaching $55.48 – the highest level since Nov. 21. USDCAD climbed to 1.3160 overnight on the back of some weaker than expected data out of China before returning to 1.3130 ahead of the U.S. jobs report. The results were mixed (stronger headline but large negative revision and weak wage inflation) ultimately sending USDCAD down 1.3108. After a bounce to 1.3135, the pairing has fallen to 1.3084 – the lowest level since Nov. 7th.
U.S. stocks edged higher, extending the biggest monthly stock rally in almost three years, as better-than-expected corporate earnings and the Federal Reserve's dovish turn lifted investor sentiment.
The S&P 500 Index traded near an eight-week high with technology shares outperforming while materials companies dragged on the gauge. General Electric Co. rallied with Facebook Inc. after quarterly results beat estimates. Emerging-market shares extended gains while Treasury yields and the dollar fell a day after signals from the Fed that it will be "patient" on interest-rate moves and flexible on the path for reducing its balance sheet. Meanwhile, the Stoxx Europe 600 Index declined after a positive start, with banks among the biggest drags as energy companies rose following strong results from Royal Dutch Shell. Italian shares retreated after the country fell into recession.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD was the best performing currency behind the GBP this week. The bulk of the gains came during Friday's session. The main catalysts were positive market sentiment (which generally boosts the value of the commodity currencies), oil prices testing 2 month highs, and a broadly weaker USD. The U.S. government shutdown entered its 34th day this week – the longest shutdown on record. Several key U.S. economic releases were delayed while the shutdown will likely have a slight negative effect on first quarter GDP. The CAD initially weakened earlier in the week on negative market risk sentiment. There were some global growth concerns from a slowing China economy. There is the risk that U.S. tariffs and prolonged U.S. / China trade negotiations will further dent China's economy. Also, there were some weaker than expected corporate earnings with several companies offering a reduced outlook citing a slowing economy in China. USDCAD tested the 1.3350 – 80 range multiple times (3week high) during the week before moving sharply lower on Friday and closing near 1.3210 (near 2 month low).
U.S. equities climbed after the latest batch of corporate earnings bolstered confidence in the economy as investors awaited the Federal Reserve rate decision and any developments on trade. The Nasdaq 100's gains topped 1% as technology shares rallied after Apple Inc. posted results that exceeded analyst estimates, while a positive report from Boeing Co. helped boost industrial stocks. The Stoxx Europe 600 Index's gains were led by U.K. companies after lawmakers voted to renegotiate Brexit. The latest corporate earnings offer some reassurance for investors after a series of lackluster results in January added to concerns about the health of the global economy. Investors expect the Fed to keep interest rates on hold at their meeting today, but policy makers' statement will be scrutinized for hints on the outlook for rates. Meanwhile, Chinese negotiators are meeting U.S. counterparts in Washington for talks to resolve the ongoing trade dispute. The pound was steady after losses Tuesday when lawmakers voted against a key proposal that sought to rule out the prospect of the U.K. crashing out of the European Union without a deal. Members of Parliament including Prime Minister Theresa May instead backed a proposal to strip out the most difficult part of her proposed divorce package and re-open talks with the European Union.
U.S. equities were mixed following gains in Europe as investors weighed the latest corporate earnings and the chances of a trade breakthrough between the world's biggest economies. Industrial companies led advances as 3M Co. struck an optimistic tone after reporting a profit that beat estimates, while technology stocks dragged on major U.S. indexes. Almost all sectors climbed in the Stoxx Europe 600. Treasuries and the dollar were little changed. West Texas crude climbed as the U.S. slapped a de facto ban on oil from Venezuela. After a robust start to the year for equities, investors are looking for reasons to chase the rally in a corporate earnings season that's been indecisive so far. Chinese Vice Premier Liu He arrived in Washington for what the White House is describing as "very, very important" trade talks this week. Against the backdrop of U.S.-China stress and geopolitical tensions in Venezuela, traders they also need to navigate the Federal Reserve rate decision, developments in the U.K.'s Brexit process and a potential slew of American economic data that was delayed by the government shutdown.
U.S. stocks fell after Caterpillar and Nvidia blamed slowing global growth for disappointing results, adding to concern the trade war with China is hitting corporate profits. The dollar and Treasuries were little changed. The S&P 500 began a crucial week for trade and monetary policy by halting a 3 day advance, as the sector bellwethers doused enthusiasm over the young earnings season. The Dow Jones Industrial Average sank 300 points, with all but two of its 30 members in the red. The equipment maker sank 7.7% after pinning its biggest quarterly profit miss in a decade on weak demand from China. The chipmaker plunged 12% after slashing its revenue forecast. AMD, Micron and Lam Research lost at least 3.5%. The disappointing results come ahead of a busy week for American corporate reports, highlighted by Microsoft, Apple and 10 other Dow components. Investors will also grapple with trade negotiations, a Federal Reserve policy decision and there will be another series of potentially key votes in the U.K. Parliament about Brexit. To cap it all, a flurry of American economic figures including GDP and jobs data are also set for release.
Yesterday, USDCAD climbed from 1.3345 up to 1.3375 (3 week high) before falling back to 1.3333. The pairing then climbed back to hold near 1.3350/60 for the balance of the session. USDCAD opened today near 1.3360 – the 4th consecutive day that the 1.3360 – 1.3370 level has been tested. Positive market sentiment and higher oil prices (near 2 month highs) during the Asian session saw USDCAD fall to 1.3311 amidst broad USD weakness. Reports that Trump advisor Roger Stone had been arrested saw the USD fall further – taking USDCAD down to 1.3238 this morning – a 2 week low. There has been a corrective bounce to 1.3270 followed by another move lower. Key U.S. economic data continues to be delayed as we enter day 34 of the record U.S. government shutdown.
A rally in semiconductor stocks helped push the Nasdaq Composite Index higher, while broader indexes were lower amid concern the U.S. and China may be further from a trade resolution than investors had hoped. The euro trimmed a drop as ECB President Mario Draghi said the central bank had all of its "toolbox still available" as risks shift to the downside. The Dow Jones and S&P 500 Index declined after Secretary of Commerce Wilbur Ross said the world's two biggest economies remain "miles and miles" apart on trade, while still acknowledging that there is a "fair chance" of a deal.
U.S. stocks fell as better-than-expected earnings reports from IMB, Procter & Gamble and United Technologies did little to allay concern that global growth is slowing this year. The dollar's six-day rally stalled and crude oil was flat after an earlier increase. The S&P 500 and Nasdaq indexes turned lower, led by losses among energy, materials and financial companies. The Dow was little changed. White House Council of Economic Advisers Chairman Kevin Hassett said that if the partial government shutdown extends through March, there's a chance of zero economic expansion this quarter, though "humongous" growth would follow once federal agencies reopen. Oil's retreat weighed on energy producers and service providers. Doubts over foreign trade and politics continue to permeate global markets. White House adviser Lawrence Kudlow said late Tuesday that negotiations between the U.S. and China next week will be "determinative," leaving traders on edge about the prospects for a deal. Meanwhile, the Senate is set to vote Thursday on legislation to reopen the government, though it's not clear that any measures will pass.