Europe lower as markets gear up for data

Weaker earnings, lower oil and a poor Asian session has seen Europe fall on the open this morning with the Dax falling the most out of the major European markets. The falls came despite news from the Bank of Japan hinting that there could be yet more stimulus added to the economy. Kuroda stated on Wednesday that the central bank had ample room to expand stimulus further.
The news last week of the BOJ rate cut to negative rates pushed markets higher wiping out a lot of the losses from the previous couple of weeks, however yesterday’s news has not done much to lift markets across Asia or Europe. The comments did help to Drive the Yen higher with USDJPY wiping out some of yesterday’s gains to trade below 120 at 119.90.

Oil price have to be a focus yet again for the rest of the week and an initial move lower overnight has been met with a raft of buyers driving prices higher and back above the $30 a barrel level. It’s a relief to see the markets seeming to find a bit of support at the $30 mark, with any move below being met with sharp move higher. If the markets does find some longer term support at $30 then we could well see the panic around the price start to die away. Potential discussions between OPEC members and Russia now do not seem to be on the table and with output increasing it seems that the hold up around this level could well be technical and psychological. A range is starting to appear between the lower $30 level and $34.40 on the upside, and although its early days this sort of stability in the oil price is desperately needed by the markets, investors and the global economy.

The economic calendar is looking pretty healthy today with the with most of the US data due out after the opening bell on Wall Street with ISM non-manufacturing numbers as well as crude oil inventories at 3.30pm, however we will get the ADP payroll numbers before the opening bell. The pre cursor to Friday’s job report will of course be closely watched, however we must be cautious when using the ADP payroll as an indication for the non-farm payrolls. We may start to see markets quieten down over the course of the session as we gear up to Fridays jobs report, and any weaker numbers until then will put more pressure on the Fed over the decision to raise rates in December and ask more questions about just whether we will get any more rate hikes this year.
Currently the Fed Funds rate is showing a less than 50% probability that we will see any more rate hikes in 2016.