US equity futures tick higher on Republican Senate majority

Wednesday, November 05, 2014

US markets paused for breath yesterday with both the DJIA and S&P 500 fluctuated around opening levels for much of the session as investors struggled to find motivation for further moves higher. US macroeconomic data released yesterday left investors unimpressed as September’s trade balance slipped further into a deficit, coming in at -$43bn against expectations of -$40.2bn as market participants expected a marginal increase from the previous month’s figure of -$40.1bn. This morning US stock futures climbed higher on the news that the Republicans have won control of the Senate, offering up the possibility of more business friendly policies.

The dollar index resumed its upward charge overnight and early on this morning, recovering much of yesterday’s losses as investors exercised some caution ahead of the voting outcome. The greenback seems well supported around 87.00 against a basket of major currencies, with significant ground gained against the yen in recent sessions, extending gains throughout the second half of October and the first few sessions of this month as investor optimism improves fuelled by stronger corporate earnings and solid economic fundamentals. With the release of Markit’s composite and services PMI data as well as ADP employment change statistics and the ISM non-manufacturing composite, investors will have plenty to keep them busy.

Three month LME aluminium prices snapped a six day bull run yesterday after resistance forming around $2,077/tonne proved too difficult to breach. After consolidating sideways throughout the first half of October prices attempted to breakout on the upside above $2,000/tonne with the recent rally adding over 5.0%, however, yesterday’s release of HSBC’s composite PMI for China indicated a material slowdown from 52.3 in September to 51.7 in October. Prices saw intraday dips briefly test levels towards $2,040/tonne yesterday before partially recovering to a close just above $2,060/tonne. Activity early on this morning has seen selling pressure resume with aluminium prices testing support towards $2,035/tonne at one stage. Investors will be keeping a keen eye on the weekend’s release of Chinese trade data which will offer further insight into the demand outlook.  

US trade balance slips further into deficit

USTBTOT Index US Trade Balance 2014 11 05 07 17 09

Dollar index gains early on after Republicans secure Senate majority

DXY Curncy DOLLAR INDEX SPOT 2014 11 05 07 31 55

3-M LME aluminium prices snap six session bull run

LMAHDS03 Comdty LME ALUMINUM 3 2014 11 05 07 36 59

Events for today

0200

CN

Oct

HSBC Services PMI

0855

DE

Oct

Markit Services PMI

0900

EZ

Oct

Markit Services PMI

0930

UK

Oct

Markit/CIPS Services

1000

EZ

Sep

Retail Sales

1315

US

Oct

ADP National Employment

1445

US

Oct

Markit Services PMI

1500

US

Oct

ISM Non-Manufacturing

1530

US

w/e

EIA Energy Stocks

Topics: Aluminium, PMI, DXY, LME
More from: Kash Kamal