Wall St. is rallying on earnings reports this morning, but also taking disappointing industrial activity in the Northeast as a factor that will force the Fed to delay in raising benchmark interest rates from near zero.
The huge miss in the Empire State Manufacturing Index wiped out an overnight dollar rally, giving gold the space to pull into positive territory. Crude oil prices are higher for the fifth day, up over 3% in morning trading.
Slowdowns in industrial production and retail sales in China have traders expecting more stimulus measures from the central bank in Beijing.
Yesterday in the Markets
Wall St was mixed yesterday, with the Dow and S&P 500 erasing morning losses on the strength of banking and energy stocks to finish with slight gains, while the Nasdaq never came up for air. Expectations that Intel would miss earnings forecasts kept the tech index in the red all day.
The U.S. dollar fell over 0.5% in early morning trading, and remained in negative territory all day.
Despite the Energy Information Agency forecasting U.S. oil production would rise more than previously expected for 2015, West Texas Intermediate crude was up 3% yesterday. Brent crude was up over 1.5%, and both have moved above their 100 DMA (100-Day Moving Average.) Today is options expiry for May crude contracts, as well as the day for the weekly U.S. petroleum stockpiles report.
Factors Affecting Gold Today
The European Central Bank kept benchmark interest rates at record lows at its policy meeting today, as expected, and ECB president Mario Draghi stated that the ECB's quantitative easing program started last month to buy €60 billion of government bonds is already bearing fruit. The ECB's intent to continue "money printing" has pushed European stocks to 14-year highs.
There was a bit of excitement at the press conference when a young woman protesting "the ECB Dictatorship" rushed the speaking platform, jumped up on a table in front of Draghi, and dumped confetti over his head. Had it been a real assassination attempt, the European Central Bank would be looking for a new leader, as security agents were nowhere near her.
The German Finance Minister has apparently lost patience with the leftist government in Greece, calling the country "a bottomless pit" that "no one" expects to be able to put a plan together by next Friday to prevent it running out of money. The government in Athens has basically reneged on almost everything the previous administration had promised in return for being bailed out, such as pension reforms, budget cuts, and privatizing state-owned businesses.
Petroleum stockpiles in the U.S. barely increased this week, as refineries are operating at full capacity to clear the backlog. Crude stockpiles still stand at 80-year highs, however. The news gave a boost to crude oil futures in morning trading, and the increased refinery production may mean gas prices at the pump in the U.S. may trend closer to $2/gallon.
The UN has announced an arms embargo against rebel-controlled areas of Yemen, ordering the forces loyal to former President Ali Abdullah Saleh (who was forced out of power in 2012) and Houthi rebels to give up territory conquered in the civil war. The rebel forces control the majority of the country, including the capital, and have chased the current President into exile in Saudi Arabia. They been subjected to air strikes by Saudi Arabia and its Gulf allies, who back the present Sunni administration. Iran is supposedly supporting the Houthi, who are Shiite. Counting Iraq and Syria, Saudi Arabia is now pretty much surrounded by civil wars where Iran is supporting one side or the other, threatening to bring sectarian conflict to the entire region. To make it even more "fun," both ISIS and Al Queda have large presences in the region, hoping to step into the vacuum and seize control, and have been attacking both sides. A BBC article on Yemen tries to explain who is who.
Western officials worry that a hostile government in Yemen could block the straights at the southern end of the Red Sea, preventing oil tankers and freighters from using the Suez Canal.
Tomorrow is first-time jobless claims and housing starts in the U.S., as first quarter earnings reports continue to move the stock market.