U.S. stocks fell to a one-week low as banks retreated and investors awaited news on the trade front. The dollar strengthened a fifth day. The S&P 500 headed for its fifth drop in six days, as the torrid post-Christmas rally continued to falter near the 2,800 level that's capped advances for several months. Lenders led the declines, even as Treasury yields rose. Industrial companies slumped with trade in focus after President Donald Trump turned his ire toward India as he looks to clinch a deal with China. European shares fell, while equities in Japan, Korea and Australia slumped after China lowered its target for GDP growth.
U.S. shares posted modest gains after the White House and China were said to close in on a trade deal, while the dollar strengthened and Treasury yields slipped. The S&P 500 Index approached a five-month high at the open before gains moderated. The Stoxx Europe 600 advanced alongside Asian equities after reports on the trade deal, which was said to require Beijing to follow through on pledges ranging from better protecting intellectual-property rights to buying more U.S. products in exchange for no increase in tariffs. The yuan strengthened. The dollar firmed against most major peers even after U.S. President Donald Trump warned against it becoming too strong. Stocks are looking for a catalyst after this year's rally in global equities showed signs of stalling last week, and the signs of progress between Beijing and Washington seemed to boost sentiment. An extra lift came as China was said to plan a 3% point cut to its VAT tax rate for manufacturing to support the economy, which Morgan Stanley estimated could add 0.6 percent to growth. Investors will get the latest read on the U.S. economy with the monthly jobs report Friday. Elsewhere, the pound was mostly steady amid optimism U.K. lawmakers are avoiding a hard Brexit by moving toward supporting Prime Minister Theresa May's proposed deal.
Yesterday, USDCAD initially climbed from 1.3150 up to 1.3206 on the back of a better than expected 4th quarter U.S. GDP result. Month-end flows then prevailed taking USDCAD back down to 1.3140. The pairing then eased higher towards 1.3175 in late trade. Overnight, global equity markets moved higher while oil prices tested the $58 level – the highest since Nov. 13, 2018. USDCAD dropped to 1.3130 accordingly before spiking higher after Canada's 4th quarter GDP came in much weaker than expected. USDCAD climbed to 1.3240 before retracing to 1.3210. A second wave has just eclipsed the 1.3250 level – a 2 week high. Oil prices have also completely retraced earlier gains and the CAD is the worst performing currency on the day. Currently, the TSX and the DJIA are up 0.17% and 0.61% respectively. EURCAD is up 0.75% trading between 1.4918 and 1.5093 – near 1 month highs. GBPCAD is up 0.50% trading between 1.7356 and 1.7576 – near 8 month highs. JPYCAD has rebounded from 3 month lows - up 0.35% trading between 0.01172 and 0.01184. Gold is down 0.70% trading between $1,303 and $1,315USD/oz – near 1 month lows, silver is down 1.7% trading between $15.32 and $15.63USD/oz – near 1 month lows, while oil has fallen from 31/2 month highs - down 1.60% trading between $56.44 and $58.06.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.caThe GBP and the CAD were the best performing currencies this week. Early in the week, USDCAD climbed to 1.3285 before falling to 1.3150 on broad-based USD weakness. The USD and the JPY were broadly weaker on market optimism over U.S. / China trade relations. The CAD lost ground during Thursday's session on comments from the Bank of Canada: "We judge that we will need to move our policy rates up into a neutral range over time, to a point where it is not stimulating or constraining economic growth. However, the path back to that neutral range is highly uncertain. We will watch the data as they come in, and use judgement." USDCAD climbed from 1.3163 up to 1.3245 before reversing sharply and ending the week near 1.3130 – 3 week lows. Canadian retail sales data was not as bad as initially feared while oil prices rallied sharply (3%+) to trade near $58 – the highest level since mid-November 2018.
The U.S. economy cooled by less than expected last quarter as business investment picked up, suggesting growth could be stronger for longer as the Federal Reserve takes a patient approach to interest rates. The 2.6 percent annualized rate of gains in gross domestic product from October to December compared with the 2.2 percent median estimate of economists surveyed by Bloomberg. It followed a 3.4 percent advance in the prior three months, according to a Commerce Department report Thursday that was delayed a month by the government shutdown. Treasury yields and the dollar rose following the data.The report shows how Republican-backed tax cuts may have continued to aid growth and help bring the full-year figure to 3.1 percent, just above President Donald Trump's 3 percent goal. While the expansion is poised to become the nation's longest on record at midyear amid a still-healthy consumer, supportive Fed and robust labor market, the pace could cool amid the trade war, slowing global growth and fading impact of fiscal stimulus.
Stocks extended losses after U.S. Trade Representative Robert Lighthizer said America is pushing for a trade deal with China that includes significant structural changes to the Asian nation's economic model. "With Lighthizer, we know he tends to be on the hawkish side of the spectrum in terms of policy", said Quincy Krosby, chief market strategist at Prudential Financial Inc. Equities were already trending lower amid fresh headwinds from disappointing corporate earnings and geopolitical tension in Asia. The pound headed for its highest close since last June, spurred by a promise from U.K. Prime Minister Theresa May for a vote to delay Brexit if her proposed deal fails. Oil posted its second daily increase as Saudi Arabia, OPEC's most powerful member, signaled that it's incline to extend supply cuts into the second half of the year. Investors have added the India-Pakistan flare up to a host of uncertainties they're tracking, from China trade talks to Brexit, that could rein in a recovery in global equities from December lows.
Global stocks dropped on Tuesday as the rush of optimism over U.S.-China trade talks from earlier in the week faded. The pound rallied as U.K. Prime Minister Theresa May promised a vote to delay Brexit if her proposed deal fails. S&P 500 Index opened in the red and European stocks edged lower after U.S. President Donald Trump raised the possibility of signing a new trade deal with Chinese counterpart Xi Jinping, but cautioned an agreement "might not happen at all." Tesla fell after regulators asked a judge to hold Elon Musk in contempt for violating last year's SEC settlement. Equities slipped throughout Asia and the yen strengthened. Treasuries climbed while European bonds were mixed. The dollar held losses after data showed U.S. housing starts tumbled in December.
U.S. equities jumped to almost 4-month highs, tracking stock gains in Europe and Asia, after President Donald Trump postponed the date for boosting tariffs on Chinese imports, taken as a sign of progress in trade talks. Bonds fell and the dollar retreated. The S&P 500 and Dow Jones Industrial Average climbed to the highest levels since early November, while the trade headlines boosted carmakers in Europe, fueling an advance in the Stoxx European 600 Index. Also in focus this week will be a hearing from Federal Reserve Chairman Jerome Powell, where investors will get the latest read in monetary policy. Elsewhere, the pound was little changed versus the euro as U.K. Prime Minister Theresa May pushed back the deadline for Parliament to vote in her Brexit deal.
Yesterday, USDCAD initially climbed from 2 week lows up to 1.3205 before revisiting the 1.3160 level on weaker than expected U.S. data. Equity markets were mostly lower on the day while the Bank of Canada reported that business investment has been less robust but is expected to gain momentum this year. "We judge that we will need to move our policy rates up into a neutral range over time, to a point where it is not stimulating or constraining economic growth. However, the path back to that neutral range is highly uncertain. We will watch the data as they come in, and use judgement." USDCAD popped back above 1.3200 on the BOC comments and quietly edged up towards 1.3230 in late NA trade. Overnight, global equity markets moved higher while oil prices climbed towards $58 – mid November highs. USDCAD dropped to 1.3203 before bouncing back to 1.3225 ahead of the Canadian retail sales data. December retail sales were not as bad as expected and the CAD has broadly rallied this morning. USDCAD has fallen back towards 1.3185 – near 2 week lows.
U.S. stocks fell in thin trading, while Treasuries declined as investors grappled with the latest twists in global trade and weaker-than-expected economic data.The S&P 500 headed for its first decline in four sessions as traders weighed headlines showing uneven progress in trade talks between the U.S. and China as a March 1 deadline for more tariffs approaches. Health-care stocks led declines as Johnson & Johnson slid after the company said it received subpoenas from federal prosecutors tied to its talc baby-powder products.
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.