Equities
World stocks extended gains as cooler-than-expected U.S. inflation numbers boosted hopes for the Federal Reserve to start cutting interest rates as early as September.
The consumer price index for June came in at 3.0 per cent year over year, compared with the 3.1 per cent forecast. Excluding food and energy, core inflation came in at 3.3 per cent, compared with the 3.4 per cent consensus.
The S&P 500 and Nasdaq hit record highs on the inflation news. The S&P 500 opened 0.02 per cent higher at 5,635.21, while the Nasdaq Composite gained 0.06 per cent to 18,659.25 at the bell. The Dow Jones Industrial Average fell 0.07 per cent to 39,695.18.
The Toronto Stock Exchange’s S&P/TSX composite index followed sentiment higher, opening up 0.34 per cent at 22,425.53.
In Canada, investors are getting results from MTY Food Group Inc., Cogeco and Cogeco Communications, OrganiGram Holdings Inc. and Richelieu Hardware Ltd.
On Wall Street, markets are watching earnings reports from Delta Air Lines and PepsiCo ahead of big bank results starting tomorrow.
“Today’s [consumer price index] update from the U.S. will be very closely watched and determine the market mood, but investors will likely be less upset if they see any bump or blip in inflation as long as other economic data including growth and jobs continue to show further weakness,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Overseas, the pan-European STOXX 600 was up 0.53 per cent in morning trading. Britain’s FTSE 100 rose 0.23 per cent, Germany’s DAX added 0.57 per cent and France’s CAC 40 rose 0.59 per cent.
In Asia, Japan’s Nikkei closed almost 1 per cent higher, while Hong Kong’s Hang Seng jumped a little more than 2 per cent.
Commodities
Oil prices steadied as investors balanced a bleaker demand growth view from the International Energy Agency (IEA) with a indications of growing U.S. consumption.
Brent futures rose 0.1 per cent to US$85.09 a barrel and West Texas Intermediate (WTI) crude slipped 0.11 per cent to US$82.01 a barrel.
“The bounce back is largely due to the continued drawdowns in U.S. inventories as reported by the EIA,” DBS bank energy sector team lead Suvro Sarkar said.
In other commodities, spot gold gained 0.4 per cent to US$2,381.13 an ounce. U.S. gold futures rose 0.3 per cent to US$2,386.20.
Currencies and bonds
The Canadian dollar strengthened against the greenback as traders reacted to U.S. inflation data.
The day range on the loonie was 73.31 US cents to 73.60 US cents in the early premarket period. The Canadian dollar was up about 1.04 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, fell 0.66 per cent to 104.35.
The euro advanced 0.59 per cent to US$1.0887. The British pound gained 0.6 per cent to US$1.2926.
In bonds, the yield on the U.S. 10-year note dropped to 4.184 per cent.
Other corporate news
Royal Bank of Canada has named insider Doug Guzman as the deputy chair of the bank, among other executive changes. RBC also said its personal and commercial banking arm would be two standalone business segments, effective from the fourth quarter of 2024.
MTY Food Group has reported its second-quarter profit fell 10 per cent compared with a year ago as sales edged lower.
Economic news
China trade surplus.
Germany June inflation; UK GDP, industrial production, trade deficit and services index.
8:30 am ET: U.S. consumer prices for June.
8:30 am ET: U.S. initial jobless claims.
2 pm ET: U.S. budget balance.
With Reuters and The Canadian Press