Central Bank Speculation, Trade Numbers and Retailer Earnings Move Markets

Building on yesterday’s bounces of 0.2%-0.6% for US indices, US index futures are up another 0.2% to 0.6% this morning. The US 10-year treasury note yield has stabilized near 4.09% heading into Day Two of Fed Chair Powell’s testimony to Congress.

Overseas market action has been more mixed. Asia Pacific trading saw the Nikkei lose 1.25% and fall back under 40,000 as speculation the Bank of Japan may be getting ready to finally start raising interest rates pushed the Yen up 1.0%. The Euro is down slightly today after the European Central Bank maintained its benchmark interest rate as expected. The ECB lowered its GDP and inflation forecasts for this year but indicated it wants to look more at wage inflation data in the coming months before deciding on when to start cutting interest rates.

Copper has jumped 1.3% after China released better than expected export and import numbers, suggestive of a reviving economy, but that did not carry through to US Crude Oil, which is down 0.4%, or Chinese equities as Hong Kong dropped 1.25% and Shanghai fell 0.4%. Alternative currency action is mixed with Gold up 0.3% and Bitcoin down 0.6%.

Earnings from retailers around the world continue to generate strong, decisive responses in both directions from traders. Yesterday Foot Locker plunged 29.3% and Nordstrom lost 16.1% following earnings reports. In Europe the morning, Hugo Boss is down 11.8% due to weak guidance, while in the US, American Eagle outfitters is up 11.6% premarket after announcing a new growth plan and restructuring. After the close today, results are due from Broadcom*, Costco and Gap Stores.

Canada posted a stronger than expected trade surplus ($0.5B vs street $0.1B). US weekly initial jobless claims were slightly worse than expected (217K vs street 215K). A big week for economic news wraps up tomorrow with US Nonfarm Payrolls (street 200K), Canada jobs (street 20K), plus wage inflation numbers for the US and Canada.  

*Shares of Broadcom are held in some portfolios managed by SIA Wealth Management.

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