Equities
Global markets were mixed with investors cautious ahead of U.S. and European inflation readings tomorrow that could signal when and by how much central banks may cut interest rates.
Wall Street’s main indexes opened lower as investors considered data that showed the economy grew less than previously expected in the first quarter, stoking hopes for an earlier start to the Federal Reserve’s rate cuts.
The Dow Jones Industrial Average fell 73.2 points or 0.19 per cent at the open to 38,368.35. The S&P 500 slid 7.2 points or 0.14 per cent to 5,259.77, while the Nasdaq Composite dropped 42.0 points or 0.25 per cent to 16,878.628.
The S&P/TSX composite index opened higher on the as investors cheered the U.S. economic data, while the financials sector led gains on support from upbeat second-quarter results from Royal Bank of Canada. The index was up 84.07 points or 0.38 per cent at the open at 21,982.05.
In Canada, investors are looking over RBC results as well as Canadian Imperial Bank of Commerce’s earnings.
RBC has reported higher second-quarter profit that beat analysts’ estimates on a boost from its capital markets business as the lender set aside lower-than-expected provisions for potentially sour loans.. RBC raised its quarterly dividend 4 cents.
CIBC has reported a rise in second-quarter profit, driven by robust performance in its capital markets and direct financial services segment. Its provision for credit losses was $514-million in the quarter, up $76-million from last year.
On Wall Street, markets will be watching earnings from Vancouver-based Lululemon Athletica Inc. as well as Costco Wholesale Corp. and Dell Technologies Inc.
“There are two forces colliding here,” said Ben Laidler, global markets strategist at eToro, of the clouds overhanging the markets. “It’s being driven by the very heavy government bond issuance and markets that are still afraid of interest rates staying higher for longer and sticky inflation.”
European markets, however, were rebounding after early losses. The pan-European STOXX 600 was up 0.32 per cent in morning trading. Britain’s FTSE 100 gained 0.34 per cent, Germany’s DAX advanced 0.06 per cent and France’s CAC 40 added 0.15 per cent.
But in Asia, Japan’s Nikkei closed 1.3 per cent lower at 38,054.13, while Hong Kong’s Hang Seng sank 1.34 per cent to 18,230.19.
Commodities
Oil prices were broadly steady as pressure from U.S. data pointing to higher-for-longer rates was offset by inventory numbers showing strong demand for crude in the United States.
Ahead of U.S. crude oil stockpiles data due later in the day, Brent futures dipped 0.2 per cent to $83.43 a barrel, while West Texas Intermediate (WTI) crude fell 0.15 per cent to US$79.11 a barrel.
“The broader risk-off environment has translated to some downward pressures on oil prices,” said Yeap Jun Rong, market strategist at IG.
In other commodities, gold prices were muted, with spot gold easing 0.14 per cent to US$2,335.43 an ounce and U.S. gold futures at US $2,323.40, down 0.8 per cent.
Currencies and bonds
The U.S. dollar fell slightly Treasury yields stabilized, while the loonie strengthened modestly against the greenback.
The day range on the loonie was 72.80 US cents to 72.98 US cents in the early premarket period. The Canadian dollar was down about 0.23 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, was down modestly to 104.87 after a 0.5-per-cent jump the day before.
The euro advanced 0.2 per cent to US$1.082. The British pound rose 0.1 per cent to US$1.2714 after hitting a more than one-month high earlier this week
In bonds, the yield on the U.S. 10-year note was modestly lower at 4.596 per cent ahead of the North American opening bell.
Other corporate news
Brookfield says that it, together with Brookfield Renewable Partners and Singapore’s Temasek Holdings, has entered into exclusive discussions to buy majority stake in French renewable power producer Neoen valuing it at about €6.1-billion (US$6.6-billion).
Economic news
(8:30 a.m. ET) Canada’s current account balance for Q1.
(8:30 a.m. ET) Canada’s payroll survey: job vacancy rate for March.
(8:30 a.m. ET) U.S. initial jobless claims for week of May 25. Estimate is 219,000, up 4,000 from the previous week.
(8:30 a.m. ET) U.S. GDP for the first quarter. An annualized rate increases of 1.3 per cent matched the Street’s estimate.
(8:30 a.m. ET) U.S. goods trade deficit for April.
(8:30 a.m. ET) U.S. wholesale and retail inventories for April.
(10 a.m. ET) U.S. pending home sales for April. Consensus is a month-over-month decline of 0.6 per cent.
With Reuters and The Canadian Press