Equities
Global markets were subdued ahead of a data-packed week, with the focus on the U.S. Federal Reserve policy decision on Wednesday, when it is widely expected to start cutting interest rates.
As The Globe’s Mark Rendell writes: “The key question is whether the world’s most important central bank will deliver a normal quarter-point rate cut, or opt for a larger move as inflation retreats and the United States’ remarkably resilient economy loses steam.”
The S&P 500 and the Nasdaq opened lower on Monday, as caution set in on Wall Street ahead of the Fed’s policy decision, with a majority of traders pricing in a steep cut in borrowing costs.
The Dow Jones Industrial Average rose 0.10 per cent at the open to 41,435.17. The S&P 500 fell 0.19 per cent to 5,615.21, and the Nasdaq Composite dropped 0.62 per cent to 17,573.702 at the bell.
The Toronto Stock Exchange’s S&P/TSX composite index opened 0.38 per cent higher at 23,657.24, lifted by healthcare and energy stocks.
“Whether or not the Fed cuts rates by 25 bps or 50 bps the market reaction will depend on two things: how they communicate the cut and their reasons for cutting by 50 bps, and also the Dot Plot and what it tells us about Fed members’ current expectations for the terminal rate,” XTB research director Kathleen Brooks said.
Overseas, the pan-European STOXX 600 was down 0.15 per cent in morning trading. Britain’s FTSE 100 was little changed, Germany’s DAX slid 0.32 per cent and France’s CAC 40 declined 0.23 per cent.
In Asia, Japan’s Nikkei was closed for a holiday, while Hong Kong’s Hang Seng closed 0.31 per cent higher.
Commodities
Oil prices rose as continuing disruption to U.S. Gulf oil infrastructure balanced persistent demand concerns after a fresh round of Chinese data while investors await a likely cut to U.S. interest rates this week.
Brent crude futures were up1.96 per cent to US$73.01 a barrel, while West Texas Intermediate crude futures for October gained 2.33 per cent to US$70.25 a barrel.
“Markets are focused on upcoming [Fed] policy decisions and traders are likely to stay cautious,” said Phillip Nova senior market analyst Priyanka Sachdeva, adding that prices are still supported by some supply worries given some capacity remains offline in the Gulf of Mexico.
In other commodities, spot gold rose 0.3 per cent to US$2,582.87 an ounce, and U.S. gold futures were steady atUS$2,610.50.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 73.52 US cents to 73.71 US cents in early trading. The Canadian dollar was up about 0.41 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, dropped 0.38 per cent to 100.73.
The euro rose 0.45 per cent to US$1.1125. The British pound added 0.56 per cent to trade at US$1.3197.
In bonds, the yield on the U.S. 10-year note was last down at 3.648 per cent.
Economic news
China industrial production, retail sales and fixed asset investment
Euro zone trade surplus and labour costs
(8:30 a.m. ET) Canada’s manufacturing sales and new orders for July. Manufacturing sales rose 1.4 per cent from June, compared with forecasts of a 1-per-cent increase.
(8:30 a.m. ET) Canadian new motor vehicle sales for July. Estimate is a year-over-year rise of 11.0 per cent.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for September.
(9 a.m. ET) Canada’s home sales and average prices for August. Home sales rose 1.3 per cent from July, but fell 2.1 per cent on an annual basis. The home price index was unchanged on the month and was down 3.9 per cent annually.
(9 a.m. ET) Canada’s MLS Home Price Index for August. Estimate is a drop of 4.0 per cent year-over-year.
With Reuters and The Canadian Press