US markets fall on bearish earnings

Wednesday, May 21, 2014

US markets pared recent gains yesterday after retailers including Staples and Urban Outfitters posted results that missed estimates while Caterpillar, the world’s leading manufacturer of yellow goods led the sell-off in industrials after reporting weaker global sales. The mining and excavation equipment manufacturer announced that trailing three month retail sales during the month ending March fell 12% year-on-year. Both the S&P 500 and DJIA slid lower on the pessimistic outlook, shedding 0.65% and 0.83% respectively.

A mixed session for Asian equities as Japanese benchmark indices headed lower after the BOJ held off on further easing measures while Chinese stocks rallied on the hopes of central bank support. Industrial stocks and carmakers led the decline in Japan as optimism that the BOJ would act soon to support the markets slowly diminished. The central bank opted to leave the target for the monetary base unchanged 270tn yen in 2014, expanding at 60-70tn yen per year, a move widely expected by market participants.

The yen strengthened for the sixth straight session, moving below 101.00 against the dollar for the first time since early February as trade data showed the deficit narrowing from -1446.0bn yen in March to -808.9bn yen in April. Investors remain concerned that the sales tax hike implemented earlier this year could potentially derail the recovery, although for now economic data is siding with the BOJ’s decision to hold off from further stimulus. Chinese stocks pushed higher as speculation that Beijing would soon intervene to support equity markets and on renewed optimism ahead of tomorrow’s release of HSBC’s preliminary manufacturing PMI reading, which is expected to show a slight improvement month-on-month from the prior reading of 48.1 to 48.3 in May.

Three month LME nickel prices headed lower in early morning trade today as the metal continued to swing wildly as it attempts to find near term support levels. After topping out towards $21,625/tonne a week ago prices dipped back towards $18,000 before rebounding back above $20,000. Levels this morning have seen nickel drop below $19,500 as investors assess the fundamental outlook as LME warehouse inventories remain stable around 280K tonnes. 

Yen strength continues as BOJ hold off from more stimulus

JPY Curncy Japanese Yen Spot 2014 05 21 07 44 54

LME nickel prices swing wildly as investors focus on fundamentals 

LMNIDS03 Comdty LME NICKEL 3 2014 05 21 07 54 41

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Topics: Equities, JPY, LME, Nickel
More from: Kash Kamal