- Asian stocks flat-to-red, profit-taking hits Japan financials
- NZD dips following dovish RBNZ guidance: Hardy
- Wells Fargo 'a well-run bank' despite fraud case: Garnry
- Oil traders look to Saudi/Iran, Opec/non-Opec deals
By Michael McKenna
As we noted in yesterday's mid-session update
, there are perhaps firmer foundations for a global risk rally than the Federal Reserve's lack of faith in the US economy, and the dollar's rebound from its post-Federal Open Market Committee lows is hitting sentiment where it hurts.
Reporting live from Saxo's Singapore offices on today's morning call
, trader Edmund Liu notes that Asian stocks were flat-to-negative with a pronounced downturn visible in Japanese financials where post-Bank of Japan profit-taking is starting to make its presence known.
Ultimately, however, "the theme right now remains markets going back to celebrating the central bank punchbowl," says Saxo Bank head of forex strategy John Hardy, adding that the issue of post-FOMC follow-through remains an open question and the market's main focus.
"Today's data calendar began with the Eurozone flash PMIs," says Hardy, "and we have the same firm out with their US version at 1345 GMT." According to Saxo's FX head, the US flash PMI reading is not ordinarily given an enormous amount of weight, but the current shaky celebration might lead investors to take a more intensive view of the print.
(The EU prints saw France at 49.5 versus 48.4 forecasted, Germany at 54.3 versus 53.1, and the Eurozone at 52.6 versus 51.5.)
In currencies, Hardy adds, the USD continues to rebound on a mildly strong unemployment print released late yesterday (252,000 jobless claims versus 260,000 expected) and the greenback's strength is taking USDJPY higher, with the pair trading north of the 101.00 handle again.
One currency that is notably weaker versus the USD is the kiwi where a combination of poor dairy prices and the Reserve Bank of New Zealand's easing bias has NZDUSD sliding lower towards 0.7650.
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Source: Saxo Bank
Beyond the central bank machinations and the market reactions, we have crude oil prices acting as a further drag on risk sentiment as crude traders develop what Saxo commodities head Ole Hansen calls a case of the "jitters" ahead of next week's oil summit in Algiers.
"The focus here is on speculation concerning a deal between Saudi Arabia and Iran," says Hansen, adding that representatives from the two major producer nations have met but no agreement has been announced.
The main issue surrounding the Algiers summit, of course, remains the ongoing talk of a production freeze deal between Opec and non-Opec producers, but according to Hansen production increases in Russia, Nigeria, and Libya (to the tune of 800,000 barrels/day) mean that a cut and not a freeze is now likely required for prices to tick notably higher on the deal.
In stocks, Saxo Bank head of equity strategy Peter Garnry reports that a short position in Siemens and a long one in emerging market stocks hit their respective stops yesterday while he has added shorts in the S&P 500 and Dax indices on likely profit-taking and a long in Wells Fargo.
Concerning the latter, Garnry says that despite the messy and high-profile fraud case surrounding embattled CEO John Stumpf, Wells Fargo still remains "a very well-run bank".
"[If you look at the recent earnings reports]," says Garnry, "the bank is coming in ahead of estimates".
It might seem counter-intuitive to term the likes of Wells Fargo a well-run bank, but the numbers come before the narrative. In fact, it might seem counter-intuitive to term, say, the United States a well-run economy, but such concerns will reliably fade into the background if the country's main equity indices continue to outperform.
To the punchbowl!
Watch out, though – this stuff will go to your head. Photo: iStock
Michael McKenna is an editor at TradingFloor.com
From the Floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios.