Stocks continue to sport impressive gains, but the major averages have slowly drifted lower during the course of the past couple of hours.
Financials had some difficulty attracting buyers this morning, but were able to bounce off of the flat line to trade modestly higher. However, the sector has since forfeited that gain so that it is now back at the flat line. Diversified banks have been a considerable burden to the sector following the latest report from Wells Fargo (WFC 28.61, -1.46). Earnings from Wells Fargo were slightly better than expected, but the firm's revenue figure disappointed.
Intel (INTC 21.10, +1.24) remains a top performer in the Dow, following the firm's pleasing quarterly report. Fellow blue chip IBM (IBM 165.81, +0.41) had an upside earnings surprise of its own, but the stock only recently pushed into positive territory. As for AT&T (T 30.17, -0.14), the stock only had a brief stay in positive territory after it posted an upside earnings surprise this morning.
The euro advanced for the first time in four days against the yen and gained versus the dollar on speculation the European Central Bank will raise interest rates further even as nations such as Greece struggle to contain sovereign-debt turmoil.
The 17-nation euro rose as a boost in German manufacturing outweighed Greece’s record two-year note yield above 20 percent. The cost of insuring Greek government debt rose to a record yesterday, with contracts indicating investors see a greater than 60 percent chance of default within five years. Greece’s two-year yield rose 39 basis points to a record 20.73 percent.
The ECB governing council member Nout Wellink said yesterday in Toronto the central bank’s April 7 interest-rate increase sent to investors an “extremely important” signal aimed at preventing expectations of higher inflation.
“The ECB’s message has been very clear, which is that they want to continue to raise interest rates,” Kathy Lien, director of currency research at the online trader GFT Forex in New York. “That in conjunction with positive data is helping to keep the euro propped.”
Germany’s purchasing managers’ index for manufacturing unexpectedly climbed to 61.7 this month from 60.9 in March, according to Markit Economics. The median forecast of economists iwas for a decrease to 60. A reading above 50 signals an expansion.
Aussie stalled around $1.0691, with resistance seen ahead of a $1.0700 barrier. The pair holds currently at $1.0678. Traders note that the barrier at $1.06 didn't prevent the break and the $1.07 barrier is unlikely to contain a new push higher.
Stocks recently eased lower, but they have since reclaimed those gains. Support remains widespread.
Even though stocks are still in such strong shape, Treasuries really haven't suffered intense selling. Rather, the benchmark 10-year Note is only down a handful of ticks so that its yield is back up near 3.40%. Some knee-jerk selling earlier this week came in response to news that analysts at S&P issued a negative outlook on the AAA rating of U.S. debt, but Treasuries were quick to recover as cooler minds regarded the announcement as something less than surprising given that U.S. debt levels have been at dizzying heights for quite a while.
BMO says Mar existing home sales at +3.7% to 5.10m was better than expected "but was unable to erase February's deep loss." The March gain "was led by single-family homes (+4%) followed by condos (+1.6%)."
EUR/JPY kicked lower as euro-dollar and dollar-yen receive joint kicks. Cross tumbles from Y120 to Y119.25. Widening Greek spreads cited by traders along with some profit taking. Cross has since bounced back to Y119.85.
EUR/USD $1.4200, $1.4220, $1.4230, $1.4300, $1.4310, $1.4350, $1.4400, $1.4460, $1.4500
USD/JPY Y82.00, Y82.05, Y83.00, Y83.15, Y83.50, Y83.75
GBP/USD $1.6300, $1.6290, $1.6150, $1.6100
EUR/GBP stg0.8900USD/CHF Chf0.9050, Chf0.9100
Strong earnings from the technology sector have investors in high spirits Wednesday, with expectations of a strong start to the trading session.
Tech leaders Intel (INTC, Fortune 500), IBM (IBM, Fortune 500) and Yahoo (YHOO, Fortune 500) all beat Wall Street estimates when they reported their latest quarterly earnings after the close Tuesday.
In premarket trading, Yahoo shares surged 4%, Intel rose 6% and IBM slipped 1%.
Companies: Technology investors are eagerly awaiting results from Apple (AAPL, Fortune 500), which reports after Wednesday's closing bell.
Apple earnings are expected to jump to $5.35 a share, bolstered by sales of the Verizon iPhone and the iPad.
United Technologies (UTX, Fortune 500) reported quarterly earnings of $1.11 per share, up 19% from a year earlier. The aerospace and machinery maker's stock jumped nearly 3% in premarket trading.
Another Dow component, AT&T (T, Fortune 500), posted higher net income that was in line with expectations. The phone service provider edged higher in premarket trading.
Wells Fargo (WFC, Fortune 500) reported quarterly net income of $3.8 billion, up 48% from a year earlier. The stock dipped 1.8% in premarket trading.
Economy: The National Association of Realtors will report the latest existing home sales a half hour after the opening bell. Economists are looking for existing home sales to rise by 5 million annualized units.
The Energy Information Administration will report its latest data on U.S. crude oil inventories.
GBP/USD printed a new session high on $1.6398, with triggered stops above $1.6390 before profit taking counted the move. Minor offers seen in place between $1.6400/05, a break to expose stronger resistance at $1.6420/30.
06:00 Germany PPI (March) 0.4% 0.7% 0.7%
06:00 Germany PPI (March) Y/Y 6.2% 6.5% 6.4%
UK BoE meeting minutes (06-07.04)
The pound slumped against the euro as minutes of April’s Bank of England meeting indicated most policy makers thought the past month’s data indicated a weaker economy, damping prospects for interest-rate increases.
Policy makers voted 6-3 to keep the benchmark rate at a record low 0.5%, judging support for the economic recovery should take precedence over tackling inflation. Andrew Sentance maintained his call for an increase to 1%, while Martin Weale and Spencer Dale wanted a move to 0.75%.
“Markets should be a little surprised to find no further members voted for an increase in rates,” said Neil Jones at Mizuho Corporate Bank Ltd. “The pound is being sold as a reflex action by disappointed bulls.”
Data released since the meeting has showed U.K. inflation unexpectedly slowed in March for the first time in eight months.
EUR/USD continues morning rally to a daily highs above $1.4500. But rate failed to break above the resistance at $1.4545 and retreated to $1.4501.
GBP/USD fell after VHC minutes to the lows around $1.6306 before corrected back up to $1.6390. rate remains under pressure.
USD/JPY holds within the Y82.70/90 range.
US data starts at 1400GMT with Existing Home Sales, which are expected to rise to a 5.00 million annual rate in March after falling
9.6% in February. The supply of homes for sale has dipped in recent months as sales improved, but the reverse was true in February. US data rounds off with the weekly Crude Oil Stocks data at 1430GMT.
EUR/GBP sets stable a bit lower session highs on stg0.8877, holding around stg0.8865/70. Traders note that the stg0.8900 level holds the strike of a decent sized option expiry for today's NY cut and could provide some attraction. Resistance remains between stg0.8877/85, with further offers seen placed toward the strike level.
USD/CAD challenges option barrier at C$0.9500 and printed session lows at C$0.9498 with rate holding heavy. Next support seen at C$0.9485/80, a break to expose C$0.9430.
AUD/USD refreshed highs on $1.0688 amid aussie-yen rising to Y88.46. Reports earlier of cross aussie buying from a major German name on behalf of hedge funds. Aussie dollar trades $1.0674/76.
GBP/USD extends recovery off post BOE MPC minute react lows of $1.6309 to a new highs on $1.6389 after failing to trigger the reported stops palced above $1.6390. Rate trades back around $1.6380. A break of $1.6390 to open a move toward $1.6400/05 ahead of $1.6420/30.
The euro and commodity currencies such as the Australian dollar rebounded on Wednesday.
Gains in U.S. and European shares on upbeat corporate results helped soothe market sentiment after nerves were rattled on Monday by S&P's warning on U.S. credit ratings and on fears that Greece will have to restructure its debt.
While those problems remain unresolved, the moves showed investors continue to favour higher-yielding currencies.
The yen got no help from data showing that Japan logged a smaller-than-expected trade surplus in March and that exports fell more than expected year-on-year, in a sign of the disruptions caused by a massive earthquake and tsunami that struck Japan's northeast on March 11.
Pound recovery from Monday's low has been capped, weighed by BoE minutes, which have failed to show any intention to "normalize" monetary policy in the short -term.
The BoE Monetary Policy Committee voted 6 to 3 to leave the Bank Rate at 0.5% all time low, which makes no change from the previous meeting, despite admitting the risk of inflation accelerating at an annual pace beyond 5% in the near-term.
Gold remains bullish and rose again to a new all time high of $1505.60 amid a plummeting dollar, soaring equities and Crude oil. Resistance seen towards $1510 and $1525.
EUR/GBP extends recovery to stg0.8875 and retreats a bit. Next resistance noted between stg0.8880/85, a break to open a move toward stg0.8900 ahead of stronger interest at stg0.8920/25. Dovish MPC Minutes push UK rate hike expectations back to November and continues to drag the pound.
EUR/USD breaks above minor resistance at $1.4480 and currently challenges $1.4500/05 ahead of stronger interest placed between $1.4520/30 ($1.4521 2011 high posted Apr 13).
Hang Seng +1.6% 23,896.10
The euro advanced against the dollar and yen on speculation the European Central Bank will raise interest rates further even as nations such as Greece struggle to contain sovereign-debt turmoil.
The ECB governing council member Nout Wellink said in Toronto the central bank’s April 7 interest-rate increase sent to investors an “extremely important” signal aimed at preventing expectations of higher inflation.
Germany’s purchasing managers’ index for manufacturing unexpectedly climbed to 61.7 this month from 60.9 in March, according to Markit Economics. The median forecast of economists was for a decrease to 60.
Europe’s shared currency has dropped 1.6% over the past week. Citigroup Inc. said it has established a bet the euro will decline against the dollar.
The Canadian dollar rallied against the greenback as a government report showed the annual inflation rate accelerated to a two-year high, exceeding all economists’ forecasts.
The consumer price index advanced 3.3% in March from a year earlier, compared with 2.2% pace of increase in the previous month, Statistics Canada reported. The median forecast of economists was for a 2.8% annual rate.
The Bank of Canada will hold the target rate for overnight loans between commercial banks at 1% during the second quarter and boost it to 1.5% during the third quarter, according to a survey.
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