Equities
Global markets were mostly higher as investors stayed focused on the U.S. Federal Reserve policy decision tomorrow, when it is expected to begin an easing cycle that could see an outsized interest rate cut.
In Canada, the inflation rate fell to the Bank of Canada’s target of 2 per cent in August, compared with analysts’ estimates of 2.1 per cent. The softer-than-expected figure has money markets maintaining their bets of another Bank of Canada rate cut on Oct. 23 - but there’s uncertainty as to how much.
The Toronto Stock Exchange’s S&P/TSX composite index rose 0.17 per cent to 23,741.97 at the open, hitting a fresh record high.
Wall Street’s main indexes opened higher after U.S. retail sales data signaling a healthy consumer allayed worries of a sharp slowdown in the U.S. economy.
The Dow Jones Industrial Average rose 0.24 per cent to 41,723.78, the S&P 500 advanced 0.40 per cent to 5,655.51, and the Nasdaq Composite gained 0.65 per cent to 17,707.019 at the bell.
“It’s back to the Fed put,” said Eddie Kennedy, head of bespoke discretionary fund management at Marlborough Investment Management.
“Everyone’s pricing in the soft landing and it feels like the Fed have been quite transparent that we’re in a rate cutting environment. Generally stocks have done well post those sort of environments,” Kennedy added.
Overseas, the pan-European STOXX 600 was up 0.74 per cent in morning trading. Britain’s FTSE 100 rose 0.58 per cent, Germany’s DAX advanced 0.72 per cent and France’s CAC 40 climbed 0.79 per cent.
In Asia, Japan’s Nikkei closed 1.03 per cent lower, while Hong Kong’s Hang Seng gained 1.37 per cent.
Commodities
Oil prices held stead in choppy trade as focus turned to the U.S. Federal Reserve’s policy meeting that concludes on Wednesday, while fears of weaker demand in China curbed gains.
Brent crude futures for November were up 0.1 per cent at US$72.84, and West Texas Intermediate (WTI) crude futures rose 0.3 per cent to US$70.32 a barrel.
“Oil prices have been in recovery mode since Wednesday, perhaps on supply concerns after Hurricane Francine in the U.S. Gulf of Mexico, as well as expectations of lower U.S. crude stockpiles,” said Charalampos Pissouros, senior investment analyst at brokerage XM.
“That said, prices are pulling back today, perhaps as participants considered the aforementioned developments as temporary variables in the oil equation, remaining worried about weakening global demand, especially in China.”
In other commodities, spot gold fell 0.3 per cent to US$2,574.88 an ounce, while U.S. gold futures eased 0.2 per cent to US$2,602.70.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 73.42 US cents to 73.64 US cents in early trading. The Canadian dollar was up about 0.18 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, was flat at 100.77.
The euro declined 0.13 per cent to US$1.1121. The British pound slid 0.1 per cent to US$1.3203.
In bonds, the yield on the U.S. 10-year note was last up at 3.636 per cent.
Economic news
(8:15 a.m. ET) Canadian housing starts for August.
(8:30 a.m. ET) Canadian CPI for August, which came in an an annual rate of 2 per cent, right on the Bank of Canada’s target.
(8:30 a.m. ET) U.S. retail sales for August, which unexpectedly rose 0.1 per cent, suggesting that the economy remained on a solid footing through much of the third quarter. Consensus is a decline of 0.2 per cent from July.
(9:15 a.m. ET) U.S. industrial production for August. The Street is projecting a rise of 0.1 per cent month-over-month with capacity utilization up 0.1 per cent to 77.9 per cent.
(10 a.m. ET) U.S. NAHB Housing Market Index for September.
(10 a.m. ET) U.S. business inventories for July.
(6 p.m. ET) Bank of Canada deputy governor Carolyn Rogers speaks in Toronto.
Also: U.S. Fed meeting begins in Washington
With Reuters and The Canadian Press