


Oil rally boosts stocks with RBA minutes and inflation reports on the way

Stock markets are off to a strong start for the week. with US and Canadian indices gaining over 1% on Monday. Initial gains for stocks were led by the energy and materials sectors but gains broadened through the day with technology, health care and industrials also up over 1% and all S&P sectors in the green except utilities, which usually lag in risk-on days. Oil broke out to the upside again, after Goldman Sachs upgraded its price outlook and moved up its forecast for when the oil market could come back into balance. This improvement comes on a combination of stronger demand and supply disruptions where the biggest issues have moved from Canada and Libya (which appear to be heading toward coming back on line) to Nigeria where a group called the Niger Delta Avengers has been attacking pipelines, knocking production, exports and refineries off line and threatening further attacks. With copper also on the rise and gold slipping back a bit, Australian stocks could be active again today with the potential to build on yesterday’s rally. The ASX and AUD may also be active around today’s RBA minutes with the street looking for more colour on the central bank’s surprise interest rate cut two weeks ago and indications of whether any more could be on the way. Singapore stocks and SGD could be active around today’s export figures. US market action today appears particularly strong considering that Empire Manufacturing came in surprisingly negative which means that we may be seeing follow through from Friday’s strong retail sales report. Tomorrow, US stocks and USD could be active around the US inflation report. Over the weekend two regional Fed presidents expressed concern that the Fed may be falling behind the curve on inflation and indicated that the central bank may need to raise interest rates again soon or risk having to act more aggressively next year. UK inflation figures may also attract attention as we head into three big days for UK data with employment Wednesday and retail sales on Thursday. Rising inflation could put pressure on the Bank of England to raise interest rates or at least not deliver on the rate cut that some dreamers have been asking for. This week’s UK data may give some indication of how much impact the Brexit debate is having on the UK economy. This could impact sentiment toward domestically focused UK stocks and GBP although generally, all the dire threats of what could happen on a Brexit vote have been having less and less of an impact on sterling as the debate rages on. Corporate News There have been no major announcements after the US close so far. Economic News Significant announcements released overnight include: US Empire Manufacturing (9.0) vs street 6.50 vs previous 9.56 Canada existing home sales 3.1% vs previous 1.5% UK Rightmove house prices 7.8% vs street 7.3% Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) 7:00 pm EDT FOMC Kashkari speaking 10:30 am AEST Singapore non-oil exports street (8.4%) 10:30 am AEST Singapore electronic exports street (5.8%) 11:30 am AEST Australia RBA minutes 2:30 pm AEST Japan industrial production previous 3.6% 9:30 am BST UK consumer prices street 0.5% 9:30 am BST UK core CPI street 1.4% 9:30 am BST UK retail prices street 1.5% 9:30 am BST UK producer input prices street (6.7%) 9:30 am BST UK producer output prices street 0.8% 9:30 am BST UK ONS house prices previous 7.6% 8:30 am EDT Canada manufacturing sales street (1.9%) 8:30 am EDT US consumer prices street 1.1% 8:30 am EDT US core CPI street 2.1% 8:30 am EDT US real average weekly earnings previous 1.1% 9:15 am EDT US industrial production street 0.3% 9:15 am EDT US manufacturing production street 0.3% 12:00 pm EDT US Williams and Lockhart speaking

