Energy stocks have pulled back in recent trade. The sector was just up about 2.5% 30 minutes ago, but now it trades with a 1.8% gain. That puts the sector in line with what materials stocks have achieved.
Meanwhile, large-cap tech stocks have managed to move higher in afternoon action. Strength among the likes of Dell (DELL 16.85, +0.95) and Apple (AAPL 340.31, +4.17) has helped give the Nasdaq Composite a nice lead over its two counterparts.
Minutes show active discussion of exit strategy, with "a range of views" but agreed this "did not mean that the move toward such normalization would necessarily begin soon." Some said need to be prepared to tighten later; a few wanted action later this yr;FOMC agreed no action in the end. Most preferred once asset sales are appropriate, "such sales should be put on a largely predetermined and preannounced path; however, many of those participants noted that the pace of sales could nonetheless be adjusted in response to material changes in the economic outlook. Several other participants preferred instead that the pace of sales be a key policy tool and be varied actively in response to changes in the outlook. A majority of participants preferred that sales of agency securities come after the first increase" in FF target. Many wanted to return SOMA to all Tsys "perhaps over 5 yrs." More gradual asset sales might allow an earlier FF rate hike. Most prefer returning to FF target, talked about a corridor target system of IOER low/DR top.
Stocks have gradually extended their gains to set a fresh session high. The move has put increased pressure on Treasuries, such that the benchmark 10-year Note is now down almost half of a point. That has taken the Note's yield up to 3.16%. Just yesterday the Note's yield set a 2011 low near 3.10%.
The dollar was mixed against its most-traded counterparts before minutes of the Federal Reserve’s last meeting are released today.
The euro fluctuated against the dollar amid shifting investor appetite for riskier assets as U.S. stocks swung between gains and losses.
Sterling fell against all of its 16 most-traded counterparts as minutes of the British Bank of England’s May 5 meeting showed most policy makers said higher interest rates might hurt the recovery. New Zealand’s dollar was the best performer against the greenback after the nation’s producer prices and consumer confidence increased.
“The markets are in an inflection point,” said Jessica Hoversen, a New York-based analyst at the futures broker MF Global Holdings Ltd. “The data suggest the economic momentum is cooling; we’re just trying to figure out how much it’s going to cool.”
Stocks have been range bound for the past hour or so. The pause comes as the major equity averages come into contact with the lower end of last week's trading range. Whether stocks breakout and extend the move or turn lower could offer participants directional cues for the stock market's near-term trend.
Barclays Capital technical analysts say after testing trend resistance earlier in the week, dollar-Swiss has been edging lower again. They say "as momentum rolls bearish from overbought levels, we would view a close below Chf0.8780 (overnight low) as targeting a return to Chf0.8550." Barring a rally back over Chf0.8975 (trendline), the analysts prefer "to stay bearish (short below Chf0.8895).
The energy sector has rallied to a 1.8% gain on the back of sharply higher oil prices. Oil prices had already been up solidly this morning, but a bullish inventory report has taken the energy component up to $99.60 per barrel, which makes for a 2.8% gain. Oil services stocks like Halliburton (HAL 46.70, +1.37), Baker Hughes (BHI 70.62, +1.76), and National Oilwell Varco (NOV 67.05, +1.65) are sporting the most impressive gains.
Oil prices extend rally through $100 to a high of $100.26 after the release of the weekly DOE Inventory data. Next resistance at $100.51, with a break here extending to $101.20. Currently WTI crude oil holds at $99.85 per barrel.
The S&P 500 is up barely a pt at 1329.60, after trading in a 1326.65 to 1331.23 range. CitiFX technical analysts note that Tuesday's close at 1328.98, was below 1329 (the low from May 5). S&P supports come in a 1294 (April 18 low at 1294.98) and 1248 (March 16 low at 1248.83)
USD/JPY holds around Y81.34 after rate absorbed offers around the Y81.00 level earlier. Bids mentioned from Japanese names below Y81.00 possibly linked to importers. Dollar printed highs on Y81.41.
EUR/USD $1.4150, $1.4200, $1.4300, $1.4305, $1.4325, $1.4345
USD/JPY Y81.00, Y81.50, Y80.00
GBP/USD $1.6350, $1.6540
AUD/USD $1.0565, $1.0560, $1.0500
EUR/USD fell below $1.4200, but recovered soon. Overnight, the pair stalled ahead of its 55-day moving average (at $1.4288 Weds) and then retreated. Technical support at $1.4185/80 ($1.4184 - 61.8% of $1.4120/1.4287 move). There is a risk of selling the euro rally.
U.S. stocks were poised to open little changed Wednesday, with tech shares gaining attention on the heels of Dell's results.
But any gains could be tempered and trading could be choppy as investors remain worried about the economy. Investors may get some insight into what the Federal Reserve is thinking when the minutes from the last policy meeting are release later in the day.
Tech stocks will be in focus again on Wednesday.
Dell (DELL, Fortune 500) reported record earnings, even as PC sales slumped. Dell's stock jumped more than 6% in premarket trade.
Economy: In the afternoon, investors will turn their attention to minutes from the Federal Reserve's April meeting for hints on how the Fed will bring its stimulus program known as QE2 to a close.
Companies: Target (TGT, Fortune 500) posted earnings per share of 99 cents, up 9.8% from the same quarter a year ago. Shares were little changed in premarket trade.
Office supply giant Staples (SPLS, Fortune 500) reported a 2% rise in sales to $6.2 billion, and net income rose of $198 million. The results were just shy of forecasts and the company issued a tepid outlook, sending shares of down nearly 6% in premarket trading.
EUR/JPY holds around Y115.40/50 level after posting an earlier low of Y115.33. USD/JPY options at Y81.00 and Y81.50 expire for the NY cut and continue to pull the spot into a tight range ahead of tonight's FOMC minutes.
EUR/USD failed to make a clear break back above the overnight Asian low at $1.4233 with rate now backing off to $1.4208. Support seen into $1.4205/00 ahead of $1.4185/80 ($1.4184 61.8% $1.4120/1.4287).
08:30 UK Claimant count (April) 12400 -2000 6400 (700)
08:30 UK Claimant count rate (April) 4.6% 4.5% 4.5%
08:30 UK Average earnings (3 months to March) Y/Y 2.3% 2.1% 2.0%
08:30 UK Average earnings ex bonuses (3 months to March) Y/Y 2.1% - 2.2%
08:30 UK ILO Jobless rate (March) 7.7% 7.8% 7.8%
The pound fell as minutes from the Bank of England’s May 5 meeting showed the majority of policy makers warned against raising borrowing costs, and a report revealed unemployment claims rose.
At the central bank’s May meeting, the Monetary Policy Committee voted 6-3 to hold interest rates at 0.5% as members said an increase “could adversely affect consumer confidence.”
U.K. unemployment claims rose in April at the fastest pace since January 2010, according to a separate report.
Jobless benefit claims increased by 12,400 from March to 1.47 million, the Office for National Statistics said today. The median forecast of economists was for no change. Unemployment measured by International Labour Organization methods fell by 36,000 to 2.46 million people in the quarter through March.
Of the central bank’s nine policy makers, Andrew Sentance maintained his call for a half percentage-point increase in the key rate from a record low of 0.5 percent.
Chief Economist Spencer Dale and Martin Weale continued a push for a quarter-point increase. They said the case for a move now was “finely balanced” according to the minutes.
Governor Mervyn King and the other five members of the Monetary Policy Committee voted for no change.
Adam Posen kept up a call for more bond purchases.
EUR/USD printed highs on $1.4285 before retreated to $1.4215.
GBP/USD fell from $1.6290 to $1.6133.
USD/JPY rose from Y80.90 to Y81.20.
US data starts at 1100GMT with the weekly MBA Mortgage Application Index, which is followed at 1430GMT by the weekly EIA Crude Oil Stocks. Later on, at 1800GMT, the FOMC meeting minutes are due.
EUR/GBP breaks above resistance at stg0.8815, extends recovery to stg0.8824 with offers noted toward stg0.8825 so far able to cap the cross. More stops are reported above stg0.8825. A break here to open a move on toward stg0.8840/45, more between stg0.8855/65.
Yesterday, gold failed to sustain a move below the 16-week support line and bounced from the 38.2% Fibonacci level. Gold trades within the 2-week res line at $1497.00. Daily studies are mixed. Further res seen at $1510/1512.7 (21-DMA and 23.6% Fibonacci).
The euro was buoyant against the dollar on Wednesday after recovering from a seven-week low earlier in the week, but wariness over Europe's sovereign debt problems kept investors nervous about piling up euro positions.
The euro drew support from a recovery in oil prices and precious metals, while a downward trend in U.S. Treasury yields weighed on the dollar.
"The euro is still in a correction phase after recent declines. It has the potential to advance towards $1.43-$1.44 on hopes for more buybacks by foreign investors," said Hideki Amikura, a forex manager at Nomura Trust and Banking. "But the euro could lose ground again once rounds of corrective buying are over," Amikura said.
Still, investors are nervous as the region's debt crisis is far from over.
Europe's top financial officials broke a taboo on Tuesday and acknowledged for the first time that Greece may have to restructure its debt, which could stoke the region's sovereign debt crisis.
The euro drifted lower against the yen after gaining support in early trade on expectations of yen-selling flows linked to M&A deals by Japanese corporations.
Japan's Toshiba Corp is close to closing a deal to buy Swiss-based meter maker Landis+Gyr for about $2.5 billion, an industry source said on Tuesday.
Separately, Takeda Pharmaceutical will reach an agreement on Wednesday with Swiss-based Nycomed to acquire the company for about 1 trillion yen ($12 billion), the Nikkei financial daily reported. [ID:nWNAB9664]
U.S. housing starts and building permits fell in April, while factory output slumped, suggesting the economy got off to a weak start in the second quarter, U.S. data showed on Tuesday.
The New Zealand dollar advanced after news that producer input prices rose 2.2% in the three months to March 31 from the previous quarter, the sixth straight increase and the largest quarterly movement since September 2008.
The Aussie was undermined after Moody's Investors Service downgraded credit ratings of the country's four major banks to Aa2.
EUR/GBP tested stops above stg0.8810 and retreated to current stg0.8798. Next offers stg0.8810/15, more stops above stg0.8825.
GBP/USD tries to break lower $1.6180 and posts lows at $1.6177 ($1.6176 Tues low). The $1.6185 level is the Ichimoku cloud daily cloud base. A clear lower to meet demand in the $1.6155/45 area, covering Friday's lows at $1.6147.
Apr Claimant Count Unemployment +12,400 m/m; Rate 4.6%
UK Jan-Mar ILO Unemployment Rate 7.7%
The yen dropped the most in almost three weeks versus the dollar after Bank of Japan Governor Masaaki Shirakawa said the economy is in a “very severe” state, fueling bets monetary policy may be eased further.
The Japanese currency weakened against most of its major counterparts.
The pound rose from almost a one-month low versus the dollar as U.K. inflation accelerated to the highest level since 2008, increasing pressure on the Bank of England to raise interest rates.
U.K. consumer prices increased 4.5% last month from a year earlier after a 4% gain in March, the Office for National Statistics said today. The median forecast of economists was a 4.1% rise. Core inflation accelerated to a record. The British central bank has held its official bank rate at 0.5% since March 2009.
Japan’s economy has been in a severe situation since the March 11 earthquake and the central bank is committed to ending deflation, Shirakawa told today. The government hoped for “flexible” action by the bank to support the economy and will also closely watch the currency, according to a statement approved by Prime Minister Naoto Kan’s Cabinet.
Ministers for the first time also floated the idea of talks with bondholders over extending Greece’s repayment schedule. Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Juncker said.
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