Stocks are still stuck at session lows. There isn't a single sector sporting a gain today.
Meanwhile, the dollar remains near its session high.
June light sweet crude holds at $99.46/barrel after trading in a $98.45 to $104.60 range. Last Friday, WTI bottomed at $94.63, which put the front contract down $20.20 or 21.3% from the 31-month high of $114.83 posted May 2. The front contract has closed below its 55-day moving average (at $105.39 currently) since last Thursday and needs to back above to resume gains. WTI briefly dipped below its 100-day (at $98.06 currently) last Friday and again Monday, but has held above that level since. A close below the 100-day would be viewed negatively.
Selling interest this session has offset the gains the stocks had made during the course of the past two sessions. All three major equity averages are now down with losses of 1% or more, strong quarterly reports have helped a couple of stocks put together enviable gains. Teva Pharma (TEVA 48.46, +1.32) posted an upside surprise this morning. Meanwhile, Macy's (M 28.24, +1.90) not only posted better-than-expected earnings, it also raised its forecast and doubled its quarterly dividend to $0.10 per share.
Canada’s dollar dropped for the first time in four days against the greenback as crude oil fell after a report showed U.S. inventories rose to a two-year high and North American stocks declined.
The Canadian dollar weakened a day after Finance Minister Jim Flaherty said the government wants to avoid extreme currency fluctuations.
Crude oil for June delivery fell 4.8% to $98.90 a barrel.
Supplies of crude in the U.S., Canada’s biggest trading partner, jumped 3.78 million barrels to 370.3 million in the week ended May 6, the Energy Department said today in a weekly report. Inventories were forecast to climb by 1.5 million barrels. The increase puts supplies at the highest level since May 8, 2009.
Canadian employers added a net 58,300 jobs in April after a decrease of 1,500 in the previous month, Statistics Canada reported last week. The median forecast of economists was for an increase of 20,000. The jobless rate unexpectedly dropped to 7.6%.
The nation reported a fourth straight trade surplus in March, the longest string since November 2008 and a sign that exporters are recovering from the global recession.
The surplus widened to C$627 million ($658 million), larger than the C$400 million median forecast.
The pound gained versus the dollar and the euro after the Bank of England said it sees inflation “markedly higher” in the near term, boosting speculation that borrowing costs will rise from record low levels.
The Bank of England left its main interest rate at a record-low 0.5 percent on May 5, three days after King indicated he favors keeping borrowing costs on hold, even as inflation accelerates at twice the bank’s 2% limit.
AUD/USD draggs down, holding around new session low on $1.0682. Barclays Capital technical analysts say "a break over Fibo resistance in the $1.0915 area would suggest a run-up to the $1.1014" On the downside a break of support at $1.0660 would be needed "to signal that further downside correction". Aussie printed high of $1.1014 May 2 and then tumbled 4.4% to $1.0532 May 5.
Stocks have been undercut by a selling interest. All three major equity averages now trade at new session lows with marked losses.
The market's downturn coincides with an upturn by the dollar, which now sports a 1.0% lead over the euro. At the same time, it has cut its loss against the British pound to less than 0.3% on increased speculation over the potential rate hike by the Bank of England.
Yellow metal continues to extend losses to a day's low of $1505.20, a fall of over $21 on the day, with the move prompted by sharp falls in copper.
Silver has also fallen to almost $2.5 to $37.05 after Asian highs of $39.50.
Metals now trading around $1511 and $37.48 respectively.
USD/JPY Y81.50, Y82.00
Getting pulled lower by euro-dollar slippage, though euro-sterling also getting pressed lower and taking away some of the weight. Cable extends pullback off earlier highs at $1.6518 to $1.6455, but seen meeting demand ahead of $1.6450. Further demand seen into $1.6435 with talk of stops dotted from below this level and extending toward $1.6400.
Stocks were headed for a weak open Wednesday, after the government reported a widening trade deficit and commodity prices pull back.
U.S. stocks rose for the third straight day Tuesday, as investors were encouraged by Microsoft's $8.5 billion deal to buy Skype, along with solid corporate earnings reports and economic data.
Economy: The U.S. trade deficit widened to $48.2 billion in March, the Commerce Department said Wednesday. Economists were expecting a $47.7 billion trade deficit.
Companies: Automaker Toyota (TM) said Tuesday that while net income almost doubled and sales increased 0.2% for the fiscal year ended March 31, the earthquake that hit Japan earlier this year cost the company about ¥100 billion.
Also, insurer American International Group (AIG, Fortune 500) and the Treasury decided to move ahead with a $9 billion stock offering, despite the recent low price of the stock. Shares of AIG were down about 2% in premarket trade.
Before the opening bell, department store chain Macy's (M, Fortune 500) reported earnings per share of 30 cents, compared with 5 cents last year. The company also announced it was doubling its quarterly dividend to 10 cents per share on common stock. Shares of Macy's jumped 5% in premarket trade.
Dow component Cisco (CSCO, Fortune 500) is slated to issue its results after the closing bell. Analysts expect that the communications equipment maker earned 37 cents a share.
"The trade report is indicative of vigorous activity. Both exports and imports of goods exploded in March, up 6.1% and 5.7% respectively. The upside surprises relative to forecast were widespread across categories, especially on the export side."
The euro slipped against the majority of its most-traded peers on speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt.
German Chancellor Angela Merkel yesterday said Greece needs to stay the course on budget cuts to deserve an extension of the 110 billion-euro ($158 billion) lifeline granted last year.
The pound surged as the Bank of England said U.K. inflation may reach 5 percent this year.
The pound strengthened to a one-month high versus the euro after the Bank of England said the outlook for growth has deteriorated in the past three months and that it sees inflation “markedly higher” in the near term.
Spiked to $1.6465 on initial react to release of the BOE Inflation Report, from around $1.6420, with rate easing back to $1.6440/35 on profit take sales, rate had ben on the rise into the release, with fresh demand into the dip extending recovery to $1.6470. Resistance now seen into $1.6480 with stronger interest placed between $1.6500/10, ahead of $1.6545/50.
Nikkei + 0.46% 9,864.26
The yen and the Swiss franc slid versus most major counterparts, with Japan’s currency dropping against the euro for the first time in six days, as stocks and commodities advanced, damping demand for safer assets.
The euro fluctuated versus the dollar after a spokesman for German Chancellor Angela Merkel said a restructuring of Greece’s debt isn’t being considered, while a European Union official said the nation’s fiscal progress is being studied.
French Finance Minister Christine Lagarde said in Zurich today the EU will keep up its efforts to aid Greece after bailing out the country a year ago.
The German newspaper Handelsblatt reported Euro-area countries are readying a further “two-digit” billion-euro loan for Greece, the newspaper reported, citing unidentified “euro- zone sources” in Brussels. The exact figure is still to be decided, the newspaper said, adding that a figure of some 60 billion euros is being discussed in Brussels.
The Athens newspaper Kathimerini said, without citing its sources, that the IMF also is arranging new aid for Greece, an 80 billion-euro ($115 billion) to 100 billion-euro plan
Speculation about new financial assistance from Europe and the IMF came after S&P yesterday downgraded Greece’s credit rating for the fourth time since April 2010, rekindling concern that the region’s debt crisis is escalating. The Swiss franc dropped after data showed inflation slowed in April.
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