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US Markets Halt Slide After Data But Still Losing Wall Street continued to endure a grilling as investors followed Asian and European investors on their flight to safety amid a deteriorating economic outlook and low oil prices on Tuesday.
The Standard & Poor's 500 index fell 0.75% to 2,050.60 points.
Among other indices, the Dow Jones gained 0.49% to 17,6500.20 points, while the Nasdaq Composite fell 0.66% to 4,859.30 points.
Tuesday's gains in healthcare were offset by commodity and industrial company losses, hurt by the lower oil prices as stock markets pulled back from the bull rally which lead to the 2016 highs enjoyed last Friday.
Coming into the first quarter profit reporting season, investors hunkered down for poor performances from a majority of companies hit by the financial market turmoil in the early part of the year and the continued global economic and geopolitical uncertainty.
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Weak U.S. earnings expectations set stage for stock gains When Wall Street's quarterly earnings season kicks in to high gear next week, hundreds of companies will vie for the bragging rights that come from "beating the Street" - showing revenues and profits that are higher than analysts expected.
That hurdle may be unusually easy to clear this quarter, as analysts, who saw oil prices and stocks collapse at the start of the year, went really negative on the first quarter of 2016.
While the majority of companies typically beat forecasts, the bar for positive surprises may be even lower this time around, with analysts expecting profits of S&P 500 companies to be down 7.4 percent from a year ago, according to Thomson Reuters data.
With a handful of early reports coming in well above expectations and some evidence of stability in two company-hurting trends - falling oil prices and a rising dollar - some strategists are predicting enough positive news in an otherwise negative earnings season to boost stocks at least in the short term. In order words: First quarter earnings will be bad, but maybe not that bad.
"For right now there's more of a chance of a positive surprise than a negative surprise in earnings, and to the extent that positive surprises are generated, that creates buying," said Bucky Hellwig, senior vice president at BB&T (NYSE:BBT) Wealth Management in Birmingham, Alabama.
To be sure, the first-quarter reports are not expected to be pretty. A decline would mark the third quarterly profit fall in a row, Thomson Reuters data shows. The energy sector, expected to have its first quarterly loss in at least 10 years, will be the biggest drag.
But by the end of the quarter some of the biggest negatives on company performance seemed to have abated.
U.S. oil prices, which had fallen to a low of about $26 a barrel by mid-February, had stabilized near $40 in March, providing some hope to investors in energy companies. [O/R]
At the same time, the dollar, which had hit U.S. corporations hard as it rose sharply in both 2014 and 2015, eased in the first quarter, with the U.S. dollar index (DXY) down 4.1 percent in that period.
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USD/JPY: Yen Hits Fresh 18-Month High as Investors Snatch Long Positions The Japanese yen's unwavering strength against the buck endured on Monday, in another knock to policymakers' confidence as they try to grapple with the potential fall-out of the yen's recent strength.
The USD/JPY pair traded 0.27% lower at 107.76 on Monday morning in Tokyo, the weakest since October 2014, having closed in New York on Friday just above the 108.00 handle.
Over the last month alone the yen has gained more than 5% against the greenback, and is up around 10% since the start of the year.
"The conventional explanation is that the yen has been boosted by another surge in safe-haven demand, but the latest economic data have generally been good and recent volatility in overseas equity markets has been unexceptional," economist Julian Jessop of Capital Economics said in a note on Friday.
"Another increasingly popular explanation is simply that the Japanese currency had previously fallen too far. As others have observed, the yen is now back close to estimates of “fair value” based on purchasing power parity (PPP) or fundamental equilibrium exchange rates (FEERs) measures, and still looks cheap on a real effective exchange rate basis."
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German CPI Ticks Higher in March, Still Way Off ECB Target Consumer prices in the euro zone's largest economy grew in March, final data from Destatis confirmed on Tuesday.
Calculated on an annual basis, the gauge saw a 0.3% increase, in line with the preliminary number, and above last month's zero growth.
On a monthly basis, the CPI grew 0.8%, faster than February's figure of 0.4% and in line with the estimates.
"The decrease in energy prices (–8.9% on March 2015) had a considerable downward effect on the overall inflation rate again. Among energy products, especially the prices of heating oil (–28.3%) and motor fuels (–13.5%) were down in March 2016 on a year earlier. The prices of other energy products, too, were below the level of a year earlier (for example, charges for central and district heating: –9.3%; gas: –2.6%). Consumers had to pay slightly more only for electricity (+0.2%). Excluding energy prices, the inflation rate in March 2016 would have been markedly higher (+1.4%)," Destatis wrote in the report on Tuesday.
Inflation is now closer but still far from the numbers predicted by the European Commission in its Winter Forecast, which predict German inflation at 0.5% on a yearly basis in 2016.
The gauge measures price changes seen in consumer goods and services, including transportation, food and medical care. CPI data are one of the main economic indicators on which central banks base their decisions.
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EURUSD breaks lower. Extends to new session lows Moving away from the 100 bar MA on the 4-hour chart The EURUSD has extended lower - making new session lows. The battle raged for a little between the 100 bar MA on the 4 hour chart at the 1.1310 level and the 1.1326 level above (see prior post). The sellers won.
Euroland Surprisingly Escapes Deflation in March: CPI Above F'cast The euro area unexpectedly escaped technical deflation March, Eurostat confirmed on Thursday, but prices didn't grow at all annually, highlighting the ongoing struggle faced by the European Central Bank (ECB) to lift price growth in the bloc. Yet, core figures, which strip out volatile food and energy prices, gained traction.
Consumer Price Index (CPI) in the 19-nation bloc was the same as a year ago during the third month of the year, up from a 0.2% downturn seen in February.
A preliminary print had shown the figure unchanged from the previous month.
The rise came on the back of a stark price growth in services sector (1.4% upshot), while food, alcohol and tobacco also accelerated growth (to 0.8%). Energy, however, continued to be a drag as it deepened its downturn to an 8.7% plunge.
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China economy posts weakest growth since 2009 but recovery signs emerge China's economy grew at its slowest pace in seven years in the first quarter, however, indicators from the country's consumer, investment and factory sectors point to nascent signs the slowdown in the world's second largest economy may be bottoming out.
Official data on Friday showed gross domestic product (GDP) grew 6.7 percent in the first quarter from the previous year, in line with analyst forecasts and easing slightly from 6.8 percent in the fourth quarter.
While it marks the weakest pace of expansion since the first quarter of 2009, when growth tumbled to 6.2 percent, other activity data reinforced previous signs that the economy may be finding traction with better-than-expected growth seen in retail sales, industrial output and fixed asset investment.
"The tentative economic recovery is the result of the relatively easy financing environment during the previous period," said Yang Weixiao, economist at Founder Securities in Beijing.
"The trend could be sustained until the end of the third quarter, when downward pressure will likely resurface."
Analysts who spoke to Reuters this week predicted growth would cool to 6.5 percent due to planned cuts to industrial overcapacity and weak demand at home and abroad. China's economy grew 6.9 percent in 2015, its slowest rate in a quarter of a century.
However, fresh activity indicators released Friday provide a more upbeat view on the economy.
Chinese banks extended 1,370 billion yuan ($211.23 billion) in net new yuan loans in March, exceeding analyst expectations and nearly double the previous month's lending of 726.6 billion yuan, suggesting renewed appetite for investment among wary Chinese corporates.
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Doha oil talks conclude without an agreement - RTRS source No deal
OPEC and non-OPEC ministers finish talks in Doha without an agreement, according to Reuters. They cite an unnamed source. Too bad the market wasn't open for all this drama. In any case, it's going to be a wild day in oil trading and most likely a very ugly one.
Central bank wafflers top the bill during the US session t's a dud for data so we'll have to put up with some talking heads
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Germany's Gabriel says it's wrong to blame ECB for root cause of Eurozone problems German vice-chancellor and economy minister out on Reuters
Another German defending Draghi & Co but for political gain in essence. Interesting sub plots running here though with BUBA chief Weidmann also recently siding with the ECB
Meanwhile EURUSD higher at 1.1371 as EURJPY rallies further but tempered by EURGBP falling back to 0.7895 pushing cable up through 1.4400