It’s been a mixed day for markets around the world as some of the themes that had driven market action into the end of 2016 start to unwind and in some cases reverse course.
The big moves in indices and currencies that dominated late 2016 were driven by repositioning for Trump Administration. The street now appears to have fully priced in the upside of Trump putting the balance of risks to the downside for USD and US stocks.
The new Congress is already sitting, with confirmation hearings and talks about what to do about Obamacare getting underway. Tomorrow's press conference and the inauguration on January 20th could accelerate the shift from speculating on what he could do to reacting to what he actually does.
Tonight brings outgoing President Obama’s farewell speech where the street will looking to see if he decides to go out graciously or continues his recent program of Scorched Earth/try to make things difficult for the incoming administration. This could determine if Donald Trump will be able to spend his first days in office moving forward his own agenda or having to put out the fires President Obama leaves behind, such as his moves to start fights with Russia and Israel in recent weeks. (Likely a combination of both).
Today was a positive day for metal prices with copper gaining 2.8% and gold advancing into the $1,180s on follow through from yesterday’s Chinese inflation reports whicf the street saw as indicating growing resource demand. This has had a positive impact on the Hang Seng and AUD as well. As we have seen in Japan lately, however, a rising currency is dragging on the Australian stock market a bit. Meanwhile the opposite effect continues to play out in the UK with a Brexit crushed GBP sending the FTSE higher.
Crude oil remained under pressure for a second straight day with WTI falling another 2.2% but managing to remain above $50.00/bbl. Positive headline news out of OPEC has been offset by concerns higher prices could bring US production back on line with the US rig count up over year for the first time in ages last week, and questions about higher Iraq exports even ghough overall production is being cut back.
Late in the day, the World Bank indicated it expects the world economy to grow 2.7% this year up from 2.4% in 2016, and the US to grow 2.2% up from 1.6% last year. This could influence trading in resource related markets today. Later on UK economic figures, US energy inventories and US political developments could keep the pot boiling.
There have been no major announcements after the US close today
Significant announcements released overnight include:
Canada housing starts 207K vs street 190K
NZ QV house prices 12.5% vs previous 12.4%
US API crude oil inventories 1.53 mmbbls
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:00 pm EST US Obama farewell speech
9:30 am GMT UK trade balance street (£3.5B)
9:30 am GMT UK industrial production street 0.7% vs previous (1.1%)
9:30 am GMT UK manufacturing production street 0.4% vs previous (0.4%)
9:30 am GMT UK construction output street 2.0%
10:00 am GMT Greece consumer prices previous (0.9%)
10:30 am EST US DOE crude oil inventories street 2.00 mmbbls
10:30 am EST US DOE gasoline inventories street 2.5 mmbbls
10:30 am EST US DOE distillate inventories street 3.0 mmbbls
TBA US President Elect Trump press conference
1:20 pm EST FOMC Dudley speaking