Daily Market Update 14 January 2014 - Stocks slip as earnings season ramps up

Daily Market Update 14 January 2014 - Stocks slip as earnings season ramps up

The US Federal government deficit widened more-than-expected in December with an increase to -$53.2b recorded. The figure was higher than the -$1.2b deficit recorded in December 2012 and expectations for an increase to -$44b and left the year-to-date deficit at -$173.6b, down on the -$293.3b figure of the previous corresponding period.


Dennis Lockhart, Atlanta Fed President, was in action overnight, telling an audience in his home town that he had ‘growing confidence’ in the 2014 economic outlook. While not a voting FOMC member this year, he backed a continued winding back of asset purchases and noted that markets should not overreact to December’s disappointing NFP report. 


Italian industrial production continued to expand in November with an increase of 0.3% reported. The figure was in line with market expectations and came on the back of an upwardly-revised 0.7% increase in October. After work day adjustments, the result left annualised growth at +1.4%, well above both the -0.4% contraction of October and flat reading expected by economists.


Greek consumer price deflation slowed in December with an annualised decline of -1.7% reported. The figure was ‘better’ than the all-time record low of -2.9% struck in November and expectations for a reading of -2.1%. Using EU-harmonised criteria, the rate came in at -1.8%, an improvement on the -2.9% decline seen previously.


Indian consumer price inflation eased in the year to December with an increase of 9.87% recorded. The reading was below both the downwardly-revised 11.24% pace seen in the year to November and expectations for a decrease to 10.06% and was the lowest level seen since September 2013.


The Day Ahead (All times AEDT)

The ASX 200 looks set to follow Wall St into the red today with SPI futures pointing to a decline of 48pts on the open. As was the case offshore, losses should be broad-based with the worst falls likely to come from the financial, energy and consumer discretionary sectors. If there is to be an area of outperformance, it’ll likely be delivered by the gold, healthcare and potentially the materials sector.


The AUDUSD has continued to grind higher overnight as positioning and higher base and precious metals prices helped underpin the currency. With nothing on the economic data calendar to upset the apple cart we expect a day of consolidation as traders await more important data releases later in the week. Support is located at .9042 and above .9000 with resistance kicking in at .9085 and again at .9153.


A quiet Asian data calendar today with the NZIER business and QV house price survey’s released in New Zealand while in South Korea we’ll also receive import/export prices for December.


The data calendar goes up a cog this evening with US retail sales the undisputed headline act. Elsewhere markets will also receive import prices and business inventories from the States, Eurozone industrial production, CPI figures from the UK, Italy and France, German wholesale price inflation, French current account figures along with housing transaction data from Spain. On the Fed front Charles Plosser and Richard Fisher will be in action early tomorrow morning. 


Financial heavyweights JP Morgan Chase and Wells Fargo report Q4 earnings this evening.


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