Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Investors Prepare for Thursday's ECB Decision


Today's financial recap and tomorrow's financial outlook.

Trading activity was very volatile today as investors continued to get their portfolios ready for the ECB's monetary policy decision on Thursday. It is widely expected, and continued to be discussed during today's session, that the central bank will widen the scope of its asset purchase program.

The price action was generally noisy across most assets. The S&P 500 (SPX) opened 10 points higher, only to decline 25 points in the next 90 minutes, and finally close up by 0.11%. The back and forth left a technical "Doji candle" which usually indicates market participants are indecisive about where prices may trend next. The early selloff was led by weakness in the financial sector following earnings from Morgan Stanley (MS) that below expectations. The afternoon rally was led by industrials, which appeared to be shaking off the pronounced weakness in crude oil and growth forecast reductions by the IMF early this morning.

West-Texas intermediate (WTi) crude oil was very weak today, dropping 5%, although Brent crude did not react as negatively. Today's expiration of the February NYMEX futures contract was cited as a reason for the weakness. In energy news, Baker Hughes (BHI) announced in its earnings conference call that it will cut 7,000 jobs and 20% of capex spending (about $400 million) in the first quarter. Additionally, Nigeria said that it is balancing its 2015 budget with the expectation that oil remains at or below $50 a barrel.

January home builder and realtor confidence fell slightly for the month of January. The NAHB's index dropped to a reading of 57 from 58 in December, which was below the 58 expected. The decline was due to lower expected sales of single family homes in the future.

Tomorrow's Financial Outlook

Tomorrow will more than likely be another set up day for the ECB's decision on Thursday. On the US economic front, December housing starts and permits will be reported in the morning. Starts are expected to expand to a 1.040 million annual pace, up from 1.028 million in the month prior. Permits are forecast to rise by a similar amount and shake off any weather-induced project halts.

Overnight, New Zealand will report its fourth quarter consumer price index. Today's milk auction saw a substantial increase, although the Kiwi (NZD) fell versus other major currencies. Scheduled for release tomorrow morning is various UK employment data and the minutes of the Bank of England's latest monetary policy meeting. Recently, the central bank has become decidedly less hawkish as economic activity has slowed. However, two of its members have continued to dissent and call for an imminent increase in its policy rate. The UK interest rate market now expects that first hike to come well into 2016, and a few short months ago it was already expected to have happened.

The pace of earnings reports accelerates tomorrow. UnitedHealth (UNH), Fifth Third Bancorp (FITB), US Bancorp (USB), F5 Networks (FFIV), American Express (AXP), Xilinx (XLNX), Sandisk (SNDK), United Rentals (URI), eBay (EBAY), Discover Financial (DFS).

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos