Equity futures are roughly flat this morning, holding the gains made since the bounce off of Monday's lows.
It was a quiet overnight session with tight ranges and small net changes in most of the major global equity indices.
As expected, the UK invoked article 50 of the Lisbon Treaty today, marking the official start to the 18-month process to withdraw from the EU. Markets are taking this well-known procedural step in stride, as there is a long road of negotiations ahead and the impact on the UK and broader EU economies is largely unknown. The UK's FTSE is lower by 0.2% while Germany's DAX is higher by 0.4%. The euro has actually seen the biggest response, falling around 0.5% vs. the dollar.
News flow is relatively light but there have been a few notable earnings reports since yesterday's close:
- Home furnishings retailer Restoration Hardware (RH) is trading higher by 16% at a 10-month high after it reported Q4 results and strong revenue guidance. RH is a heavily-shorted stock, so short-covering may be playing a part in the strong response to the quarterly report.
- Discount retailer Ollie's Bargain Outlet (OLLI) is ticking higher and poised to open at post-IPO highs after it reported better than expected earnings on in-line sales. OLLI also gave upside earnings guidance.
- Dave & Busters (PLAY) is pulling back from its all time high by around 4% this morning, despite reporting better-than-expected earnings along with in-line revenue and guidance.
After the close tonight look for earnings reports from lululemon athletica (LULU), Worthington (WOR) and H.B. Fuller (FUL), among a few others.
There was also some M&A news in the semiconductor space this morning, with Exar (EXAR) being acquired by MaxLinear (MXL) for $13.00/share in cash, representing a total value of approximately $700 million.
The only economic release scheduled for today is the February Pending Home Sales report at 10:00 ET, which could impact the housing sector. Tomorrow we get weekly initial jobless claims data along with the second revision to the Q4 GDP reading. Q4 growth is expected to be edged up to 2.0% from the prior estimate of 1.9%. Despite the headlines it will make, a slight revision as anticipated shouldn't have much market impact.
Commodities are also relatively tame this morning. Crude oil is trading higher by 0.2% at $48.47/barrel, after seeing a muted reaction to API inventory data that was released after the close. The API data showed a build of 1.909 million barrels vs. last week's build of 4.5 million barrels. EIA crude oil inventory data is due this morning at 10:30 ET, which could add some volatility to the energy space. Another factor influencing crude oil today is a 250K barrel per day reduction in Libyan output after armed gunmen shut down pipelines there due to a wage dispute.
Now that the market has digested the health care failure, traders are focused on the end of the quarter later this week. The Dow Jones Industrial Average and S&P 500 managed to attract buyers at Monday's lows, which represented the first test of a key support level -- their 50-day moving averages -- since November. The S&P 500 is higher by 13% since that November test took place, which was around the time of the election.
Now we're approaching the end of Q1 on Friday and the S&P 500 and Dow are each up around 5% during the quarter. At current levels, 2017 is shaping up to be the best quarterly start to the year since 2013, with the past three years each finishing Q1 higher by around 1%.