The equity markets consolidated today even though earnings continued to impress. Apple Inc, reported earnings after the bell yesterday, and beat expectation by a wide margin. The major US exchanges were mixed, as the Dow Industrials and the Nasdaq finished in the green, while the S&P 500 was slightly negative.
Most reports seem to agree that Greece’s tax increases, spending cuts, and other reforms, have placed them on track. At the same time, reluctance in Germany, signified by the parliamentary floor leader for the government coalition quoted as opposing “rushed approval” creates uncertainty. What seems to be the focus of the EU/ IMF talks are the conditions that Greece needs to get funding beyond the first year. Additionally, with problems beginning to hit Portugal, the need for preemptive and bold action, larger than just the Greece situation appears to be lost. Investors absorbing this information are keeping the Euro on the defensive.
The UK reported a better than expected employment report. The unemployment claims shrank by 33 thousand. This is three times more than the market had expected. The decline in claims in February, increased by a 25% to 40 thousand from 32 thousand. Additionally, average week earnings (3-month year-over-year) rose to 2.3% from 0.8% in January (reported with a one month lag).
Japan’s Ministry of Finance has raised its outlook for the first time in six months. The improved assessment by Japans MOF follows an upgrade of the BOJ’s assessment earlier this month. The real problem of deflation, however, continues to vex policy makers. The MOF would like additional quantitative easing measures to reduce the Yen’s strength and increase domestic demand.
Crude oil edged lower by 22 cents despite very bearish inventory numbers. The opening of numerous Airports in Europe counteracted the inventory report. According to the Department of Energy, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.9 million barrels from the previous week. At 355.9 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 3.6 million barrels last week, and are above the upper limit of the average range. Distillate fuel inventories increased by 2.1 million barrels, and are above the upper boundary of the average range for this time of year. With all three products building (compare to a draw that was expected in gasoline) more than the market expected, it was a surprise that gasoline actually increased today.