US Market Update: March Comes In Like a Lion with Volatile Trading

***Economic Data***
– (BR) Brazil Q4 GDP Q/Q: 0.6% v 0.7%e; Y/Y: 1.4% v 1.6%e; GDP 4Qtrs Accumulated: 0.9% v 0.9% prior
– (BR) Brazil Feb PMI Manufacturing: 52.5 v 53.2 prior
– (CA) Canada Dec Gross Domestic Product M/M: -0.2% v -0.2%e; Y/Y: 0.8% v 1.0%e; Q4 Quarterly GDP Annualized: 0.6% v 0.6%e
(US) Jan Personal Income: -3.6% v -2.4%e; Personal Spending: 0.2% v 0.2%e
– (US) Jan PCE Deflator M/M: 0.0% v 0.1%e; Y/Y: 1.2% v 1.2%e
– (US) Jan PCE Core M/M: 0.1% v 0.2%e; Y/Y: 1.3% v 1.3%e
– (US) Feb Final Markit US PMI Manufacturing: 54.3 v 55.2 prelim
(US) Feb Final University of Michigan Confidence: 77.6 v 76.3e
– (US) Jan Construction Spending M/M: -2.1% v 0.4%e
(US) Feb ISM Manufacturing: 54.2 v 52.5e v 53.1 prior; Prices Paid: 61.5 v 57.3e
– (MX) Mexico Jan Remittances: $1.47B v $1.47Be

Trading has been volatile on the first day of March as the market absorbs a broad variety of catalysts. In Europe, weak Feb PMI data knocked down equities and punished EUR and GBP. In Italy, the horse trading continues as left and right try to form a government. In the US, President Obama meets with Congressional leaders as the sequester cuts are all but certain to happen. Meanwhile, US data out today has been very strong. After tanking by nearly 1% a piece through the premarket and the first few minutes of cash trading, all three leading US indices have returned to positive territory.

– The European February manufacturing PMI data out overnight are one of the big catalysts this morning, especially the UK reading. PMI numbers from France, Germany and Spain were in fact a hair better than expected, although they remain in contraction. However Italy’s data hit a three-month low and the UK number remained in contraction (47.9) against expectations for growth (51e).

– Contrasting sharply with the European PMI data, the US February ISM manufacturing index rose to 54.2, its highest level since June 2011, beating expectations. The new orders sub-index was even stronger, at 57.8., a nearly two-year high. Meanwhile, the final reading of the U of Michigan confidence index was even higher than the preliminary.

– EUR/USD briefly touched 1.3100 overnight before plummeting lower. There was some momentary resistance around the 1.30 level just before the US open, but that level gave way and the pair tested 1.2970. Note that the January low in the pair was 1.2994. Sterling hit a fresh 2.5 year low against the dollar on fears the UK could actually see a triple-dip recession. The UK PMI data give the Bank of England one more reason to further increase asset purchases at next week’s MPC meeting.

– The day after its terrible Q4 report, Groupon fired founder and CEO Andrew Mason. Mason took responsibility for many of the companies failings and investors seem happy with the development. Shares of GRPN are up nearly 9% this morning.

– Best Buy beat expectations in its Q4 report this morning. The company refrained from providing FY guidance, although it warned that the business would be under significant pressure in Q1. The company also confirmed that founder Richard Schulze has given up on his attempt to take the retailer private. Shares of BBY were up nearly 5% in the premarket, although they are back to unchanged in mid morning trading.

– is up 7% or so after beating earnings expectations and providing good guidance. Multiple firms upgraded ratings on the name overnight.

Shares of Ford and GM were both down sharply in line with markets this morning, although both have shot back to +1.0% a piece on decent February vehicle sales numbers.

***Looking Ahead***
– 12:00 (IT) Feb New Car Registrations Y/Y: No est v -17.6% prior
– 13:00 (BR) Brazil Feb Trade Balance: -$0.9Be v -$4.0B prior; Exports: $15.6Be v $16.0B prior; Imports: $16.4Be v $20.0B pror
– 15:30 (MX) Mexico Jan YTD Budget Balance (MXN): No est v -403.6B prior
– 17:00 (US) Feb Total Vehicle Sales: 15.10Me v 15.2M prior; Domestic Vehicle Sales: 12.00Me v 12.08M prior


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