Equities
World markets are in positive territory after the Bank of Canada cut its key lending rate by 25 basis points to 4.75 per cent, as expected. Traders are also eyeing a 25-basis-point cut from European Central Bank tomorrow.
Canada’s main stock index opened higher on rate-cut anticipation, while most commodities recovered as a softer U.S. jobs report raised hopes of rate cuts by the U.S. Federal Reserve. The S&P/TSX composite index was up 0.38 per cent at 22,062.46 at the bell.
Wall Street’s main indexes rose at the open as investors ramped up bets for an earlier than expected start to Fed rate cuts in the wake of economic reports signaling a weakening labour market and slowing economic growth.
The Dow Jones Industrial Average opened 0.16 per cent higher at 38,774.82, before trending down later in the morning. The S&P 500 rose 0.44 per cent to 5,314.48, while the Nasdaq Composite gained 0.7 per cent to 16,974.48 at the bell.
Investors will be watching for earnings from Vancouver-based Lululemon Athletica Inc. and U.S. companies Dollar Tree Inc. and North West Co. Inc.
“A 25 [basis point] cut from the BoC could throw a floor under the recent pullback in Canadian stocks, while the ECB’s 25bp cut may not suffice to cheer up investors depending on what the chief Christine Lagarde says at her press conference regarding the bank’s position concerning further cuts,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, wrote in a note.
Overseas, the pan-European STOXX 600 was 0.84 per cent higher in morning trading. Britain’s FTSE 100 advanced 0.36 per cent, Germany’s DAX rose 1.04 per cent and France’s CAC 40 added 0.97 per cent.
In Asia, Japan’s Nikkei fell 0.9 per cent to 38,490.17, while Hong Kong’s Hang Seng slid 0.1 per cent to close at 18,424.96.
Commodities
In commodities, oil prices were near four-month lows as traders weighed an OPEC+ decision to boost supply later this year and an increase in U.S. crude and fuel stocks.
Brent crude futures were last at US$77.71 per barrel, up 0.25 per cent, while U.S. West Texas Intermediate crude futures traded at US$73.41 a barrel, up 0.2 per cent.
Gold prices edged higher, with spot gold up 0.1 per cent at US$2,330.07 an ounce, after a 1-per-cent fall in the previous session. U.S. gold futures rose 0.1 per cent to US$2,350.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart, with the greenback inched higher after nearing a two-month low.
The day range on the loonie was 73.04 US cents to 73.18 US cents in the early premarket period. The Canadian dollar was up about 0.28 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.16 per cent to 104.27.
The euro was flat at US$1.0876 and the British pound was up 0.1 per cent at US$1.2783.
In bonds, the yield on the U.S. 10-year note edged lower to 4.33 per cent ahead of the North American opening bell.
Other corporate news
Dollar Tree says it is exploring options, including a potential sale or spinoff of its Family Dollar banner, as the retailer looks to restructure its business amid stiff competition and strained consumer spending.
Economic news
Japan and Euro zone services and composite PMI
(8:15 a.m. ET) U.S. ADP National Employment Report for May.
(8:30 a.m. ET) Canada’s labour productivity for Q1.
(9:30 a.m. ET) Canada’s global services PMI for May.
(9:45 a.m. ET) Bank of Canada policy announcement with press conference to follow.
(9:45 a.m. ET) U.S. S&P Global Services/Composite PMI for May.
(10 a.m. ET) U.S. ISM Services PMI for May.
With Reuters and The Canadian Press