Markets are set to end the week on a more negative note Friday, consolidating the week's gains after weak economic data from the US yesterday brings about a pause for breath.
The earnings calendar sees the first of the major banks releasing results today, with JP Morgan kicking off what is sure to be a highly looked at, and controversial set of numbers over the next few weeks. The North American economic calendar, meanwhile, sees a fairly busy end to the week, starting with US Retail and CPI data at 0830 EST. This is shortly followed by Canadian New Motor Vehicle Sales data at 0830 EST, US Industrial Production and Capacity Utilisation figures at 0915 EST, US Consumer Sentiment data at 0955 EST and US Business Inventories at 1000 EST.
US stock futures are pointing to a flat open for Wall St Friday, although weaker performance in the European bourses does bring about the possibility that this will quickly shift into the red. This comes as weaker than expected initial jobless claims data yesterday set the markets on a negative bias, although the tech sector may bring about some reprieve today following strong results from Intel after the bell yesterday.
Intel reported profits per share of $0.59, compared with analyst estimates of $0.53, while total revenue hit $11.46 billion, compared with estimates of $11.36 billion. The company did say that the consumer market softness that began mid-year is looking set to continue, but this is being more than offset by record revenues from its business customers.
In the FX market, the euro is seeing the most attention today, following hawkish comments from ECB President Jean Claude Trichet after the rate announcement yesterday, in which he warned of inflationary pressure in the Eurozone and suggested the ECB was willing to raise interest rates to keep prices stable. This is the first of such comments coming from President Trichet since cutting the central rate to 1%. Accordingly, the single currency shot higher following his words and remains on a strong footing today, up around 10 pips against the dollar and near month highs against the Swiss franc.
In the bond market, safe haven plays are making some headway today, although for US Treasuries much of this is recovery following a slightly weak auction of the 30-year yesterday. The hawkish comments from Trichet have European sovereign bonds under pressure generally on Friday, particularly for short to medium term bonds, flattening the curves for most benchmark paper from the trade bloc.