US equities consolidate recent gains on weaker earnings

Friday, January 17, 2014

US stocks pulled back from recent record highs after a string of disappointing earnings releases from banks left investors struggling to find justification for the current equity market valuation. Despite a slight improvement in weekly initial jobless claims and an improving Philly Fed index both the S&P 500 and DJIA slipped lower as markets consolidated, closing down 0.13% and 0.39% respectively on weaker than expected 4th quarter earnings from Citigroup and a decline in trading revenues at Goldman Sachs, as financials were dragged lower.

Asian stock markets broadly followed US markets into negative territory as Japanese indices struggled with direction despite recent economic data releases indicating a broadly bullish outlook. Sentiment remains positive, but capital outflows remain a threat to the region as investors encouraged by the positive outlook in the US and eurozone pull funds from emerging markets. Chinese stocks retreated sharply with the Shanghai Composite losing 0.93% in overnight trade, testing support around 2,000 which has held firm in recent sessions. The CSI 300 closed 1.51% lower as investors opted to sit on the side-lines ahead of Monday’s release of Chinese industrial production, retails sales and 4Q GDP data.

Spot gold prices have pulled back from the rally which materialised at the start of the year as yesterday’s long legged doji signalled at the current indecision in the market, possibly outlining a reversal of the trend if today’s session posts a close below $1,240 which could pave the way for further downside moves below the 50 day MA, currently at $1,237.17.

3-month LME nickel rallied for a fifth consecutive session yesterday as market participants continued to assess the impact of Indonesia’s export ban on unrefined mineral ores. Prices have rallied almost 10% since last Friday as buying activity remains firm with levels looking to target resistance around the $14,850-$15,000 area. A Bloomberg survey estimates China’s nickel ore stockpiles will last for six months with inventory levels at warehouses and ports currently standing at 29m tonnes according to the survey of China based producers, traders and analysts with the export ban expected to tighten the nickel surplus this year.

Gold price rally halts despite stronger physical demand

XAU Curncy Gold Spot Oz 2014 01 17 07 52 42

3-month LME nickel prices rally higher on export ban

LMNIDS03 Comdty LME NICKEL 3 2014 01 17 07 27 33

 

Events for today: Friday, 17 January 2014

0930

UK

Dec

Retail Sales

1330

US

Dec

Housing starts & Building Permits

1415

US

Dec

Industrial Output

1415

US

Dec

Capacity Utilization

1455

US

Jan

University of Michigan survey

OE: 

Jan  FTSE 100 Index & Equity (LIFFE) 

View Economic Market Calendar

More from: Kash Kamal