US markets reopen tonight with eleven companies coming to market to announce quarterly earnings. Four of these are Dow components; with IBM, Verizon, Johnson and Johnson and Travellers on the docket. Importantly, these four stocks carry a 16.4% weighting on the market, so if results deviate from consensus we could see volatility increase in the Dow.
At 21:00 AEDT we get the latest ZEW confidence report from Germany and the Eurozone as a whole. In terms of the German numbers, the market expects a slight increase in both the current situation and expectations sub-survey. The DAX hit an all-time high last week and good data here tonight could see the index print a higher high.
At 08:45 AEDT today we get Q4 CPI out of New Zealand and the market expects inflation to increase 1.5% on the year. On the quarter a slight fall of 0.1% is expected. A number nicely above 1.5% will see interest rate expectations increase markedly for this month’s RBNZ meeting and the pair should fall back below 1.0600. In the other side of the coin, a weak number could send the fall above 1.0700and onto the overnight highs of 1.0706.
Iron ore fell 2% yesterday to $124.80, with the bulk commodity pulling back fairly aggressively of late as we approach Chinese New Year. FMG found solid buying off the lows yesterday, however traders are pointing not just too falling iron ore prices, but coal, steel and rubber prices are also falling. We are seeing weaker electricity usage rates and this should have negative implications for future industrial production.
GUD report 1H14 earnings today and the market expects NPAT (pre NRI’s) of $14.3 million. Traders will be looking out for lower margins and reduced sales for its Dexion business, with market share of its Sunbeam business also in focus. There is also some thought we could see a lower dividend.