Equities
Global markets advanced amid debate on how big of a rate cut the U.S. Federal Reserve might make next week.
Traders raised bets to about 41 per cent for a 50-basis-point cut on Sept. 18 from closer to 14 per cent before articles in the Financial Times and Wall Street Journal each labelled the decision “a close call.”
Wall Street opened slightly higher. The Dow Jones Industrial Average rose 0.14 per cent to 41,153.7, the S&P 500 gained 0.14 per cent to 5,603.34, and the Nasdaq Composite advanced 0.03 per cent to 17,575.258 at the bell.
The Toronto Stock Exchange’s S&P/TSX composite index opened 0.41 per cent higher at 23,572.53, driven by gains in mining shares.
In Canada, investors are getting results from Roots Corp. The retailer has reported a second-quarter loss of $5.2-million compared with a loss of $5.3-million in the same quarter last year.
Commonwealth Bank of Australia strategist Carol Kong says current pricing for Fed easing is too high. “We continue to favor a 25 bp cut over a 50 bp cut, because the labour market and the broader economy remains resilient,” she wrote in a note.
Overseas, the pan-European STOXX 600 was up 0.49 per cent in morning trading. Britain’s FTSE 100 gained 0.27 per cent, Germany’s DAX advanced 0.54 per cent and France’s CAC 40 rose 0.24 per cent.
In Asia, Japan’s Nikkei closed 0.68 per cent lower, while Hong Kong’s Hang Seng climbed 0.75 per cent.
Fed, ready, steady, cut: World market themes for the week ahead
Commodities
Oil prices extended their rally and were on course for a weekly gain, sparked by output disruption in the U.S. Gulf of Mexico after Hurricane Francine forced the evacuation of production platforms.
Brent crude futures rose 1 per cent to $72.71 a barrel, while West Texas Intermediate (WTI) crude futures gained 1.02 per cent to US$69.99.
“Ongoing supply disruptions in Libya and larger than expected disruption in the Gulf of Mexico due to Hurricane Francine keep the oil market tight,” said UBS analyst Giovanni Staunovo.
“Further support is likely coming from short-covering activity as result of rebounding prices.”
In other commodities, gold headed for its strongest weekly gain since mid-August, up 0.82 per cent to a record high of US$2,579.61 an ounce, driven by dollar weakness and looming rate cuts.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 73.54 US cents to 73.73 US cents in early trading. The Canadian dollar was up about 0.67 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, dropped 0.27 per cent to 101.09.
The euro increased 0.11 per cent to US$1.1089. The British pound slid 0.02 per cent to US$1.3121.
In bonds, the yield on the U.S. 10-year note was last down at 3.661 per cent.
Other corporate news
Japanese retail giant Seven & i Holdings has been classified as “core” to national security, according to an updated finance ministry list released today. The classification has raised questions as to whether it is a defensive manoeuvre by the owner of 7-Eleven convenience stores which last week rejected a $38.5-billion buyout offer from Canada’s Alimentation Couche-Tard.
Boeing’s U.S. West Coast factory workers walked off the job early today after 96 per cent voted in favor of a strike, halting production of the plane maker’s strongest-selling jet as it wrestles with chronic output delays and mounting debt.
Economic news
China industrial production, retail sales and fixed asset investment
Japan and Euro zone industrial production
(8:30 a.m. ET) Canada’s capacity utilization for Q2.
(8:30 a.m. ET) Canadian wholesale trade for July.
(8:30 a.m. ET) U.S. import prices for August, which dropped by the most in eight months amid lower costs for a broad range of goods, suggesting that domestic inflation will continue to subside in the months ahead. They declined 0.3 per cent from July, as expected, but were up 0.8 per cent year-over-year.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for September.
With Reuters and The Canadian Press