Equities
Global markets took a breather after major rallies yesterday on the U.S. Federal Reserve’s outsized interest rate cut and its dovish guidance on further reductions.
Wall Street’s main indexes opened slightly lower as investors held back after yesterday’s jump. The Dow Jones Industrial Average fell 0.16 per cent to 41,959.43, the S&P 500 slid 0.07 per cent to 5,709.64, and the Nasdaq Composite dropped 0.08 per cent to 17,999.345 at the bell.
The Toronto Stock Exchange’s S&P/TSX composite index opened 0.09 per cent lower at 23,845.64.
Markets “are now applauding [Fed chair] Jerome Powell’s savvy move – taking out a 50 [basis point] ‘insurance cut’ against a softening labour market,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note.
“But let’s be clear: The rate cut pipeline is far from dry, and some investors are betting that the speed and size of future cuts will be the deciding factor for equity returns in the months ahead.”
Overseas, the pan-European STOXX 600 was down 0.94 per cent in morning trading. Britain’s FTSE 100 declined 1.06 per cent, Germany’s DAX dropped 0.85 per cent and France’s CAC 40 gave back 0.82 per cent.
In Asia, Japan’s Nikkei closed 1.53 per cent higher, while Hong Kong’s Hang Seng rose 1.36 per cent.
Go big or go home: World market themes for the week ahead
Commodities
Oil prices eased but were on track to register gains for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.
Brent crude futures were down 0.43 per cent at US$74.56 a barrel, while West Texas Intermediate (WTI) crude futures slid 0.42 per cent to US$71.65. Both were up more than 4 per cent on the week
“U.S. interest cuts have supported risk sentiment, weakened the [U.S.] dollar and supported crude this week,” UBS analyst Giovanni Staunovo said.
“However, it takes time until rate cuts support economic activity and oil demand growth,” he added.
In other commodities, spot gold hit a record high, advancing 1.2 per cent to US$2,617.60 an ounce, and U.S. gold futures rose 1.1 per cent to US$2,643.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 73.65 US cents to 73.85 US cents in early trading. The Canadian dollar was down about 0.48 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, gained 0.05 per cent to 100.67.
The euro advanced 0.12 per cent to US$1.1174. The British pound gained 0.28 per cent to US$1.3321.
In bonds, the yield on the U.S. 10-year note was last up at 3.735 per cent.
Economic news
Japan CPI, which showed Japan’s core inflation accelerated for a fourth consecutive month, reinforcing the case for further policy tightening.
In a policy statement today, the Bank of Japan has kept its short-term rate steady at 0.25 per cent as widely expected, but upgraded its view on consumption.
Euro zone consumer confidence
(8:15 a.m. ET) Bank of Canada governor Tiff Macklem speaks at the NBER “Economics of AI” conference in Toronto.
(8:30 a.m. ET) Canadian retail sales for July, which rose 0.9 per cent, helped by stronger new car sales. The Street projected a rise of 0.4 per cent.
(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for August. Estimates are month-over-month declines of 0.1 per cent and 1.0 per cent, respectively.
With Reuters and The Canadian Press