Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about before markets open on Wednesday.
Morning. Markets starting today angry it seems, with S&P Futures off over 1.5% and QQQs breaking downside 200dma as AAPL nears a $100 test. While China closed well in the green, the PBOC surprised with a weaker fixing, setting the Yuan at a 5Y low — and sparking fears of devaluation in the region. Bears are also focused on Brent dropping almost 4% in the early go, coupled with North Korea headlines adding to the global risk-aversion. Over in Europe, the DAX is off 1.4% in heavy trade, led by a sharp drop in Discretionary shares. European energy stocks were last down 1.9%, while the basic materials sector was down 2.7% – hitting the FTSE for 1.6% as miners and retailers retreat in London. Over in Asia, Shanghai closed a volatile session by closing up 2.2%, with Chinese resources and energy surging more than 5%. Stronger Yen and fears of China devaluation weighed on Tokyo, where the Nikkei lost 1%, while The KOSPI shrugged off the North’s ‘successful’ test of first hydrogen bomb — with defence and Military stocks rallying strongly — while Chinese devaluation angst also weighed in Aussie, where their $ hit 3 week lows and stocks lost 1.2%
Move into Haven assets early, with Treasuries, Gold and the Yen all stronger – Ahead of a Fed Vice-Chair interview and FOMC minutes later today, the US 10YY is nearing a 200dma test at 2.175%. Strength in the Yen is offsetting weakness in Euro as their PPI comes in light — pushing the DXY basket from yesterday’s 99.6 peak. A Weaker $ is a tailwind for commodities, and we see Gold climbing again, adding 60bp — but Copper is finally retreating after a solid run this week, losing nearly 1% in the early hours as China’s Services Sector PMI comes in lighter than anticipated. The Oil complex is getting hit as Investors shrugged off the huge draw in API Inventories last night (-5.6M, expectations were for a build of 500k), instead focusing on the builds in Cushing (+1.4M) and Refined Products (+11M) – Brent crude has slumped nearly 4% to a fresh 11-year low and WTI struggles to hold $35. Gasoline is off 4% as massive stockpile builds in NY Harbour weigh on the complex of refined products.
Ahead of us today, we get the ADP Employment Change at 8:15, followed at 8:30 by the US Trade Balance and a CNBC interview of Federal Reserve Vice Chairman Stanley Fischer. At 9 we get crude-export data for Nov. 2015, while at 10 the ISM Non-Manf. Composite and Durable Goods Orders hit, right when the World Bank holds a media briefing on its 2016 Global Economic Prospects report on growth trends in emerging markets. Energy complex will be focused on the 10:30 release of the DOE data for Crude, Gasoline and Distillates — and the day’s “Main Event” hits at 2pm when the Fed Releases Minutes from Dec. 15-16 FOMC Meeting. Down in Washington, at high noon the House votes on H.R. 3762, a reconciliation bill that would repeal parts of 2010 health-care law and block funding to Planned Parenthood, and Navy Sec. Ray Mabus speaks on future of Navy and Marine Corps