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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 14 January 2015 at 7:33 GMT

Market Open: Negative sentiment prevails amid oil concerns

Saxo Capital Markets UK
United Kingdom
  • FTSE 100 likely to open 38 to 63 points in the red
  • Asian markets are trading mixed this morning
  • S&P 500 futures trading 8.5 points weaker

Forex Overnight: USD trading mostly lower

Currencies Intraday
 








Source: Bloomberg

The USD is trading weaker against most of its major counterparts this morning. Later today, traders will focus on the US Federal Reserve's Beige Book business survey for cues on the impact of falling gasoline prices. 


In addition, market participants look forward to US retail sales data, which is expected to show a decline in December. Mortgage applications and export and import prices in the US will also attract market attention. 


Moreover, industrial production in the Eurozone along with French and Italian consumer price inflation data will be keenly eyed. 


Yesterday, the EUR weakened against major currencies as officials fuelled speculation that the European Central Bank might start buying government bonds as early as next week to avert deflation. At 06:00 GMT, the EUR and the GBP have risen 0.2% and 0.1% against the USD to trade at $1.1793 and $1.5168, respectively.


The JPY has climbed 0.7% and 0.5% against the USD and the EUR, respectively.

 

UK Stocks: Expected to open in negative territory

FTSE 100
 








Source: Bloomberg

The FTSE 100 is likely to open 38 to 63 points in the red.


The Conference Board Leading Economic Index is the key economic indicator scheduled for release today.


Tungsten (TUNG), Games Workshop Group (GAW) and Shoe Zone (SHOE) are scheduled to release their results.


Sky News reported that the Royal Bank of Scotland Group’s (RBS) decision to scrap annual bonuses for top executives is a part of a “permanent” change to its pay policy.


According to the Financial Times, the US Federal Reserve has exempted RBS from onerous new rules for foreign banks with more than $50 billion of assets in the US.

 

Asia: Trading mixed

Nikkei 225
 








Source: Bloomberg

Asian markets are trading mixed this morning.


In Japan, a media report indicated that the Bank of Japan is considering cutting its inflation forecast to the lower half of the 1% range. Exporters, Mitsubishi Electric (6503), Advantest (6857) and Fast Retailing (9983) tumbled as the yen strengthened against major currencies. A drop in commodity prices led Sumitomo Metal Mining (5713) and Mitsui Mining & Smelting (5706) to decline. Among automakers, Toyota Motor (7203) and Suzuki Motor (7269) lost value, while Honda Motor (7267) paced gains. At 06:00 GMT, the Nikkei 225 index fell 1.4% to trade at 16,845.0.


In South Korea, Hyundai Mobis (012330) and Hyundai Steel (004020) plummeted despite speculation that both companies would benefit from the ownership structure reforms at Hyundai Group. Hyundai Glovis (086280) declined, extending yesterday’s losses. In China, Agricultural Bank of China (601288), Bank of China (601988) and China CITIC Bank (601998) paced gains. In Hong Kong, Yashili International Holdings (1230) rose even though the company issued a profit warning for 2014. On the other hand, Cheung Kong Holdings (1) and Sun Hung Kai Properties (16) edged down.

 

US Stocks: Futures trading lower

S&P 500
 








Source: Bloomberg

At 06:00 GMT, S&P 500 futures were trading 8.5 points weaker.


Key economic indicators are scheduled for release today include Advance Retail Sales, Export and Import Price Indices, Mortgage Bankers’ Association Mortgage Applications and Business Inventories. Additionally, traders await the release of the Fed’s Beige Book.


Wells Fargo & Company (WFC), JPMorgan Chase & Company (JPM), CLARCOR (CLC), Greif (GEF) and HB Fuller (FUL) are scheduled to release their results.


In the after-hours trading session yesterday, Progress Software (PRGS) tumbled 9.1% after the company issued a tepid earnings outlook for 2015. On the other hand, GameStop (GME) climbed 6.5% after posting an increase in its same-store sales for December. Additionally, the company announced that it expects a narrower decline in its fourth-quarter same-store sales than it had previously forecast. CSX Corporation (CSX) edged up 0.6% after reporting a rise in its fourth-quarter revenue.


Yesterday, the S&P 500 Index fell 0.3% in the regular trading session, extending its losses for a third consecutive trading day, led by weakness in material and energy sector stocks. Freeport-McMoRan (FCX) and Newmont Mining (NEM) plummeted 8.8% and 3.9%, respectively, hurt by a decline in copper prices. 


Marathon Petroleum (MPC), Tesoro (TSO) and Phillips 66 (PSX) plunged 5.3%, 4.8% and 4.3%, respectively as oil prices continued to decline after the OPEC decided to keep its production unchanged. Goodyear Tire & Rubber (GT) tumbled 7.1% after the company lowered its full-year guidance for segment operating income growth. 


D.R. Horton (DHI) and Lennar (LEN) declined 4.8% and 1.7%, respectively, after peer KB Home (KBH) announced that it would not attain its housing gross profit margin goal in 2015. Alcoa (AA) shed 2.3% despite reporting upbeat fourth-quarter results. Bank of America (BAC) fell 1.4% following reports that the bank severed ties with around 150 hedge funds last year in its prime brokerage group. 


On the flipside, Amazon.com (AMZN) advanced 1.1% following a broker upgrade. McGraw Hill Financial (MHFI) surged 6%. Reports indicated that the company’s unit, Standard & Poor's Financial Services, is close to a settlement of about $1bn with the US Department of Justice over the inflated ratings it gave to questionable mortgage-backed securities before the subprime crisis.


Europe Stocks: Likely to open in the red

EU Stoxx 50
 








Source: Bloomberg

The DAX and the CAC are expected to open 109 to 131 points and 55 to 60 points lower, respectively.


Key economic indicators scheduled for release today include Eurozone Industrial Production, French and Italian Consumer Price Index and French Current Account.


No corporate results are scheduled for release.


Banco Santander SA (SAN) has hired Pedro Struck, a vice president with HSBC's debt capital markets business in Mexico, to its DCM team.


Bloomberg reported that Deutsche Bank AG (DBK) was sued in Singapore by Stanley Pan Fang-Jen, a co-founder of TPV Technology, in relation to a $32 million trading loss due to alleged false representations.


Societe Generale Cross Asset Research, a unit of Societe Generale SA (GLE), announced that it has appointed Florent Cespedes as senior equity analyst who would be responsible for large and mid-cap European pharmaceutical companies.

 

Macro Update


US posts a budget surplus


The US has posted a budget surplus of $1.9bn in December compared with a budget deficit of $56.8 bn recorded in the previous month.


Fed's Kocherlakota demands more stimulus measures


Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, indicated that he is in favour of additional monetary stimulus measures and said that the US Federal Reserve should adopt a goal oriented approach to boost employment and achieve its inflation target of 2%.


Japan’s M3 money supply rises less than expected


On an annual basis, M3 money supply in Japan has climbed 2.9% in December, less than market expectations and compared with a similar rise posted in the previous month.


New Zealand’s card spending declines


On a monthly basis, card spending in New Zealand has fallen 0.3% in December compared with a revised decline of 0.4% posted in the preceding month.

 

Economic Calendar


Country

GMT

Economic Indicator

Relevance

Consensus/*Actual

Previous/ **Previous Est.

Frequency

Japan

6:00

Machine Tool Orders (YoY) (Dec) (P)

Medium

33.80%*

36.60%

Monthly

France

7:45

Consumer Price Index (Dec)

Low

-

127.62

Monthly

France

7:45

Inflation ex-tobacco (MoM) (Dec)

Low

-

-0.10%

Monthly

France

7:45

Current Account (Nov)

Low

-

-EUR0.90 bn

Monthly

France

7:45

Consumer Price Index (EU norm) (YoY) (Dec)

Low

0.00%

0.40%

Monthly

Eurozone

8:30

EU Top Court Gives Non-Binding Advice on ECB's OMT Mechanism

Medium

-

-

-

Italy

9:00

Consumer Price Index (EU Norm) (YoY) (Dec) (F)

Low

-0.10%

-0.10%**

Monthly

Italy

9:00

Consumer Price Index (YoY) (Dec) (F)

Low

0.00%

0.00%**

Monthly

UK

10:00

CB Leading Economic Index (Nov)

Low

-

-0.30%

Monthly

Eurozone

10:00

Industrial Production s.a. (MoM) (Nov)

Low

0.00%

0.10%

Monthly

Eurozone

10:00

Industrial Production w.d.a. (YoY) (Nov)

Medium

-0.70%

0.70%

Monthly

US

12:00

MBA Mortgage Applications (09-Jan)

Low

-

11.10%

Weekly

US

13:00

Fed's Plosser Speaks on the Economy in Philadelphia

Low

-

-

-

US

13:30

Export Price Index (YoY) (Dec)

Low

-

-1.90%

Monthly

Canada

13:30

Teranet/National Bank HP Index (Dec)

Low

-

167.51

Monthly

Canada

13:30

Teranet/National Bank HPI (YoY) (Dec)

Low

-

5.20%

Monthly

US

13:30

Advance Retail Sales (MoM) (Dec)

High

-0.10%

0.70%

Monthly

US

13:30

Retail Sales ex Autos (MoM) (Dec)

Medium

0.00%

0.50%

Monthly

US

13:30

Import Price Index (YoY) (Dec)

Low

-4.90%

-2.30%

Monthly

US

13:30

Retail Sales Ex Auto & Gas (Dec)

Low

0.50%

0.60%

Monthly

US

13:30

Retail Sales "Control Group" (MoM) (Dec)

Medium

0.40%

0.60%

Monthly

UK

14:15

BoE Governor Carney Policy Makers Testify to Lawmakers

Low

-

-

-

US

15:00

Business Inventories (Nov)

Low

0.30%

0.20%

Monthly

US

19:00

Fed's Beige Book

High

-

-

-

Japan

23:50

Domestic Corporate Goods Price Index (YoY) (Dec)

Low

2.10%

2.70%

Monthly

Japan

23:50

Machinery Orders (YoY) (Nov)

Medium

-6.30%

-4.90%

Monthly

China

-

M2 Money Supply (YoY) (Dec)

Low

12.50%

12.30%

Monthly

China

-

New Yuan Loans (Dec)

High

CNY880.00 bn

CNY852.70 bn

Monthly

China

-

Actual FDI (YoY) (Dec)

Medium

22.10%

22.20%

Monthly

China

-

FDI - Foreign Direct Investment (YTD) (YoY) (Dec)

Low

-

0.70%

Monthly

China

-

Aggregate Financing (Dec)

Low

CNY1200.00 bn

CNY1150.00 bn

Monthly




See today's events updated in real-time in our Financial Calendar on TradingFloor.com



 

Corporate Calendar


Country

Company Name

Index

Announcement

UK

Barratt Developments Plc

FTSE All Share

Trading

UK

Burberry Group Plc

FTSE All Share

Trading

UK

Cineworld Group Plc

FTSE All Share

Trading

UK

Connect Group Plc

FTSE All Share

Trading

UK

Fenner Plc

FTSE All Share

Trading

UK

Games Workshop Group Plc

FTSE All Share

Interim

UK

Jupiter Fund Management Plc

FTSE All Share

Trading

UK

Ocado Group Plc

FTSE All Share

Trading

UK

Premier Oil Plc

FTSE All Share

Trading

US

JPMorgan Chase & Co.

S&P 500

Q4 Earnings Release

US

Wells Fargo & Co.

S&P 500

Q4 Earnings Release


– Edited by Oliver Morrison


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