Equities
Global markets were trading cautiously following recent rallies as the latest economic data have investors pinning hopes on interest rate reductions soon.
Wall Street tumbled at the open with the Nasdaq slumping more than 1 per cent as declines in major chip and tech stocks led broad-based losses amid a bevy of corporate results and the prospect of fresh U.S. trade curbs on Chinese chips.
The Dow Jones Industrial Average fell 0.22 per cent to 40,862.57, the S&P 500 slid 1.01 per cent to 5,610.07, and the Nasdaq Composite dropped 1.74 per cent at the open to 18,188.19.
The Toronto Stock Exchange’s S&P/TSX composite index open 0.35 per cent lower at 22,914.84, dragged down by a technology sector rout on Wall Street, though gains in gold and oil shares helped limit overall market losses.
On Wall Street, markets are watching earnings from Alcoa Corp., US Bancorp and Johnson & Johnson.
US Bancorp’s adjusted profit fell about 10 per cent in the second quarter, hurt by a decline in interest income due to higher deposit costs and muted loan demand.
Johnson & Johnson beat estimates for second-quarter profit and revenue, driven by strong sales of its drugs, including cancer treatment Darzalex and blockbuster psoriasis drug Stelara.
“Activity on Fed funds futures suggests that the market is now pricing in a 100-per-cent chance for a September rate cut from the Fed ... Yesterday’s retail sales data and the first few hours of Amazon Prime day sales – which climbed by almost 12 per cent compared to last year – are not necessarily supportive of dovish Fed expectations. But the dovish Fed expectations are gaining momentum, the machine is running and it’s difficult to stop it,” writes Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Overseas, the pan-European STOXX 600 was down 0.66 per cent in morning trading. Britain’s FTSE 100 climbed 0.02 per cent, Germany’s DAX fell 0.7 per cent and France’s CAC 40 gave back 0.62 per cent.
In Asia, Japan’s Nikkei closed down 0.43 per cent, while Hong Kong’s Hang Seng inched 0.06 per cent higher.
Commodities
Oil prices were steady a day after benchmark Brent hit a one-month low, as a decline in U.S. oil stockpiles helped offset signs of weakening demand in China.
Brent crude oil futures were up 0.39 per cent to US$84.06 a barrel, while West Texas Intermediate (WTI) crude futures gained 0.63 per cent to US$81.27.
The U.S. Energy Information Administration will release its official storage report later today.
“The government data .. is where the real story is, but the precursor of U.S. oil stocks in the API data does not exactly show much of an effect of Hurricane Beryl and the shutting down of some the infrastructure that stood in its path,” PVM Oil analyst John Evans said.
In other commodities, gold hit a record high as comments from Federal Reserve officials boosted expectations of a September interest rate cut in the U.S.
Spot gold was up 0.2 at US$2,473.89 an ounce, after hitting a record peak of US$2,482.29. U.S. gold futures gained 0.4 per cent to US$2,478.50.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 73.06 US cents to 73.22 US cents in early trading. 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, declined 0.47 per cent to 103.78.
The euro advanced 0.32 per cent to US$1.0935. The British pound gained 0.42 per cent to US$1.3029.
In bonds, the yield on the U.S. 10-year note was last up at 4.183 per cent.
Economic news
Japan trade balance
U.K. inflation for June, which defied forecasts for a slight fall and held at 2 per cent, prompting investors to reduce bets that the Bank of England will cut interest rates in August.
8:30 am ET: Canada international securities inflows and outflows
8:30 am ET: U.S. housing starts for June. Consensus is for a 1.3 million annualized rate, which is up 1.8%
8:30 am ET: U.S. building permits
9:15 am ET: U.S. industrial production. Consensus is for a rise of 0.4%
2 pm ET: U.S. Beige Book
With Reuters and The Canadian Press