Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about on Tuesday morning:
Good Morning! US Futures are shrugging off a nasty session in China and gaining 35bp, as the main driver of market sentiment remains Oil, and WTI is bouncing sharply from overnight lows on more headers OPEC nations want to cooperate to reduce output – Iraq saying they, the Russians and Saudis are all “more flexible”. European markets are all following Oil and bouncing toward green, with the DAX unchanged as Industrials rip higher on the back of Siemen’s #s yesterday. Oil Majors have reversed sharp losses early (GS and HSBC slash #s), while Airlines remain weaker in Europe on EasyJet #s. The FTSE is bouncing as Miners jump and Financials get a reprieve from the bloodletting in 2016. Volumes are elevated in Europe, with most exchanges trading 25% heavier than their 2016 averages. Sea o’ red over in Asia, as Shanghai loses 6.5% to a 13M low despite the largest cash injection from PBOC in 3years. Our desk in Hawaii notes “Reports of PBOC assistant Gov. Zhang Xiaohui prioritising FX stability over broad easing is not helping sentiment as capital outflow concerns grow.” The Nikkei was whacked for 2.3% as $/Y smashed under 118 — while Markets in Australia were shut for a national public holiday.
Haven trades were en fuego early, with Gold hitting 3M highs — but Treasuries have fallen under pressure with Yields following the spike from lows in the Oil complex — and German 2-year yields bouncing from a new record low. The DXY is bid up against the basket, gaining against Euro as the common currency is shorted for leverage, and recent strength in the Yen reverses hard. All the major commodity currencies are making gains against the $ tho, as we have a bid across the board in Metals and Energy. Zinc, Copper and Silver are all gaining ~1%+, while WTI was under sharp pressure early ahead of heavy builds anticipated in US Inventories, but has staged a reversal off lows on headlines suggesting more OPEC cooperation. Natty gas is popping 1.5% as Cold Weather persists in the Northeast. Only the heavily shorted Grain complex remains under pressure.
The day kicks off with FHFA House Price and S&P/Case-Shiller at 9am, followed at 9:45 with the Markit US PMI reads. 10am brings US Consumer Confidence and Richmond Fed Index. At 1pm the US Treasury is selling $26B in 2Y notes, and after the close we get API data for Crude, Gasoline and Distillates at 4:30. Down in Washington, the Senate/House are out of session, but watch for the “FOMC Drift” causing outsized equity returns in the 24hours preceding tomorrow’s 2pmannouncement. The only “scheduled” meeting still occurring is at 9:45 when the CFTC Technology Advisory Cmte meets to discuss proposed rules for automated trading, swap data standardization. We do heavy heavy earnings after the close today, with AAPL, T, VMW, COF and X among the names reporting.
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