– A very interesting night with some very good trade data in the US. A big fall in energy imports helped the US trade deficit print $34.25 billion, more than $5 billion under the $39.5 billion expected and the $39.33 billion print in October.
– The real positive, and why stocks have moved strongly higher, is that it suggests that GDP will be stronger both for the 4th quarter and into 2014. The transmission mechanism is that the lower the deficit, the less net exports subtracts from growth, which means growth should be higher.
– Also positive last night was data out of Germany which showed retail sales tripling expectations with a print of 1.5% month-on-month for November. At the same time, unemployment was favourable, falling 15,000 for a much better result than expected. Also positive was the return of Ireland to the bond market with the sale of $3.75 billion of 10-year bonds.
– All of which has contributed to a fairly positive night on stock markets. In Europe, the FTSE was the underperformer, rising just 0.36% but the German DAX was 0.83% higher. In Paris, the CAC rose 0.84% while in Milan and Madrid stocks rose 1.22% and a stunning 2.94% respectively as sentiment toward the periphery was buoyed by the German data and Irish bond sale.
– The US market took this lead and the positive data and ran with it. With 20 minutes of trade left, the Dow is up 121 points or 0.72%, the Nasdaq has risen 1.03% and the S&P 500 is up 12 points or 0.67% to 1,839.
– On the ASX, the March SPI 200 Futures contract in overnight trade is up 26 at 5321 bid.
– On FX markets, given the improved economic outlook it seems weird that the Aussie dollar lost 0.56% on the day and sits at 0.8917 this morning. The big selling came just after the trade data yesterday. On the other major FX markets, euro is largely unchanged at 1.3618 as the data from both jurisdictions balanced each other out. GBP is likewise unchanged at 1.6407 while the USD rose 0.26% against the yen with USDJPY sitting at 104.47.
– On Commodity markets, Gold came under selling pressure again, losing $8.50 oz or 0.69% to $1229. Oil rallied a little off support to $93.72 Bbl for a gain of 0.31%. Copper is unchanged at $3.41 lb while the Ags saw Corn and Wheat down 0.41% and 0.54% respectively. Soybeans rose 0.21%.
On the data front this morning we see the release of the AiG Performance of Construction index and ANZ Job Ads before some really important Chinese data including trade, industrial production and retail sales. Tonight in Europe we get German trade and factory orders data, Italian unemployment, as well as the EU-wide unemployment and retail sales reports.
In the US, the ADP employment report is important as a lead-up to non-farm payrolls on Friday night, as well as the minutes from the most recent FOMC meeting, which might give some more colour on the path of the Fed’s taper.