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.
Shares of industrial and energy companies led declines in U.S. equities in the wake of drops in Europe and Asia as a cloudy outlook for trade and growth continued to weigh on risk appetite. Treasuries climbed, oil fell and the yen strengthened.The S&P 500, Dow and Nasdaq all opened lower a day after American markets were shut for a holiday. European bonds followed Treasuries higher and the dollar edged up for a sixth day. Earlier, shares retreated across Asia after Chinese President Xi Jinping stressed the need to maintain political stability, comments which hinted at growing concern over the country's slowing economy. News that the U.S. is seeking extradition of a top Huawei executive added to tensions.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD enjoyed another good week posting gains against the EUR, JPY, and AUD while closing the week with little change against the USD and the GBP. USDCAD initially weakened on Monday from 1.3250 up to 1.3298 as global equity markets were under pressure amidst poor economic data out of China. Tuesday saw USDCAD dip briefly to 1.3226 as equity markets and oil prices received a boost from China stimulus measures (to combat slowing growth). The USD broadly gained taking USDCAD up to 1.3295 as the Brexit parliamentary results were released before falling back to 1.3260. The GBP had lost significant ground leading up to the results on concerns the Brexit vote would not pass. GBPCAD dropped from 1.7140 down to 1.6837 accordingly as PM May's European Union withdrawal plan was defeated 432 – 202. It was also announced that a "no confidence" vote would be held the next day. Ironically, the GBP roared back (in anticipation that May would win the "no confidence" vote) erasing earlier losses and posting a weekly high of 1.7276 on Thursday. After testing 1.3235 on Wednesday, USDCAD climbed towards a two-week high Thursday morning reaching 1.3319 on upbeat U.S. economic data. U.S. 10 year yields climbed for the 4th consecutive day after having opened the week near 1 year lows. Reports that the U.S. may be willing to lift tariffs on China as trade negotiations have stalled in recent weeks saw the USD broadly decline Thursday afternoon taking USDCAD down to 1.3248. Equity markets and oil prices responded positively to the report with the latter gaining 6% over the final two trading days. On Friday, Canadian inflation was higher than expected sending USDCAD from 1.3280 down to 1.3232. The pairing would bounce back to test 1.3280 before closing the week relatively unchanged at 1.3252. The EUR and the JPY broadly weakened given the positive market sentiment / improved risk outlook on the week.
U.S. equity futures and European stocks slipped on Monday while Asian markets posted modest gains as investors weighed the latest batch of competing headlines on global growth and trade. American markets are shuttered for a holiday, but contracts on the S&P 500 fell as the Stoxx Europe 600 Index headed for its first drop in 5 days. Softening demand across that region was a key reason cited by the International Monetary Fund for a cut to its forecast for world growth, an announcement that followed data from Beijing which had helped ease concern of a continued deterioration in the world's second-largest economy. Some investors may be simply catching their breath following last week's rally in risk assets, which came amid positive manufacturing numbers and signs the U.S. and China were closing in on a trade truce. But the picture has grown more complex, a Bloomberg report that the two sides are making little progress on the key issue of intellectual property protection hints at a less optimistic outlook for talks. Meanwhile, even as December figures for industrial output and retail sales in China were buoyant, the numbers also confirmed the country's economy expanded at the slowest pace since the global financial crisis. Elsewhere, the GBP pared a loss before Theresa May returns to Parliament to explain what she's going to do next on Brexit. The U.K. prime minister has ditched cross-party talks and is set to try to get her failed deal through with votes of Conservatives and her Northern Irish allies.
Yesterday, USDCAD climbed from 1.3260 up to 1.3319 (2 week high) before falling back to 1.3248. There was a sharp move lower in the early afternoon on headlines suggesting that the U.S. may lift trade tariffs on China as trade negotiations have recently stalled. The pairing climbed back to hold near 1.3280 for the balance of the session. The CAD is the best performing currency today with USDCAD falling to 1.3232 (near weekly low) this morning after higher than expected Canadian inflation data. The CAD is also benefiting from positive market risk sentiment with global indices and oil prices climbing towards 6 week highs on reported further progress in U.S. / China trade negotiations. USDCAD has subsequently climbed back to 1.3276 followed by another decline to 1.3238.
Stocks fluctuated as a batch of disappointing earnings countered data showing strength in the U.S. economy. The dollar rose and Treasuries fell. The S&P 500 traded just below its average price over the past 50 days, a level it hasn't breached since early December. Healthcare and tech companies led gains, while Morgan Stanley declined following a weak quarterly report, pulling down banking shares. The dollar rose against most major currencies. The 10-year Treasury yield advanced for the fourth straight day to 2.73 percent after U.S. jobless claims fell to a five-week low and a gauge of factory production blew away analyst expectations. European shares edge lower following poor results from Societe Generale. The pound rose as U.K. Prime Minister Theresa May held talks with political rivals on a new Brexit deal.
U.S. stocks pared gains as ongoing political and economic uncertainties countered signs of a strong start to the earnings season. The pound edged higher against the dollar before a vote on the U.K.'s government. The S&P 500 cut into an advance that took it within a whisker of its average price over the past 50 days, a level it hasn't breached since early December. Financials buoyed major indexes after quarterly reports from Goldman Sachs and Bank of America. Netflix retreated after surging on Tuesday, while payment processor Fiserv tumbled after announcing it will acquire First Data Corp. for $22 billion. In Europe, Deutsche Bank gained after regulators were said to favor a merger with a European lender. U.K. stocks retreated and the nation's bonds fell as Prime Minister Theresa May's government faced a no-confidence vote, which if successful would force an election.
Technology shares pushed major indexes higher after China ratcheted up stimulus measures to combat slowing growth. Treasuries and the dollar advanced.
The S&P 500 rose for the first time in three sessions as senior Chinese officials vowed to cut taxes to boost the economy, lifting technology companies battered by concerns about the rising impact of the U.S.-China trade war. The 10-year Treasury yield fell below 2.70 percent, while the dollar gained against major peers. European stocks edged higher, while the euro dropped after German data confirmed the weakest year for growth since 2013. The pound fell as U.K. politicians prepared for a vote on Brexit. Oil rose above $51 a barrel.
U.S. stocks declined as weak Chinese trade data spurred concerns about slowing global growth. Treasuries rose and the USD dropped. The S&P 500 fell after rising for a third straight week Friday, led by technology shares after slumping Chinese exports fueled worries about the growing impact of the U.S.-China trade war on worldwide growth. PG&E plunged after the utility said it will file for bankruptcy in California and its chief executive officer will exit. Citigroup advanced after reporting earnings, helping to lift banks. The 10-year Treasury yield dropped for a second session, while the dollar fell against most peers. In Europe, the Stoxx Europe 600 Index snapped four days of gains, dragged lower by technology companies. The euro was steady after data showed industrial output slowed, while the pound edged higher before Tuesday's crucial vote on Brexit.
Yesterday, USDCAD climbed from 1.3210 up to 1.3259 before falling back to 1.3220 as U.S. Fed Chairman Powell re-confirmed the dovish shift by the U.S. Fed. Broad-based USD selling resumed overnight taking USDCAD down to 1.3182 – a retest of Wednesday's low. Oil prices broke above $53 overnight having now rallied by 25% over the past two and a half weeks. The CAD has been the best performing currency in 2019 and has gained in 8 out of 9 days vs. the USD. The pairing bounced back to 1.3220 ahead of the U.S. inflation report. Inflation did decline last month meeting economists' forecasts and the USD has staged a widespread recovery taking USDCAD up to 1.3275 – marginally above yesterday's 1.3259 high. The pairing has since fallen to 1.3250. Oil prices have erased earlier gains and are now down on the day.
U.S. stocks retreated as concerns about a retail sales slowdown triggered a plunge in consumer shares and investors weighed the consequences of political tensions in America with the partial government shutdown continuing. West Texas crude slipped below $52 a barrel after Wednesday's 5 percent increase, putting it on track for its first drop in two weeks. All major equity indexes were lower, with the S&P 500 Index dragged down by retailers and the consumer discretionary shares. Treasuries and the dollar rose slightly as U.S. filings for unemployment benefits fell to a four-week low
The Bank of Canada indicated less urgency in its push toward raising interest rates as the economy copes with slumping oil prices and adjusts to previous hikes. The Ottawa-based central bank left its overnight benchmark rate unchanged at 1.75% for a second straight decision Wednesday, saying the nation has dipped into a temporary slowdown that will create a modest amount of excess capacity and curb inflationary pressures. Weaker-than-expected consumption and housing activity also suggests the 5 hikes since mid-2017 may be having a stronger impact than expected, policy makers said. Overall, it's a marking down of Canada's near-term outlook that reflects weakness in one of the country's key industries. The Canadian dollar rose, however, after the central bank reiterated it still expects to eventually hike multiple times to a neutral range of somewhere between 2.5 percent and 3.5 percent.
Stocks surged Tuesday after the Trump administration said there was progress coming out of its two-day mid-level trade talks with China. The dollar rose with Treasury yields, and crude climbed toward $50 a barrel on expectations the market will be tightened by OPEC's output cuts. All major U.S. equity benchmarks were higher. The S&P 500 was up nearly 1 percent while the Dow Jones Industrial Average leaped more than 250 points, as transportation stocks and automakers paced gainers.