Equities
Global markets were mixed in nervous trading ahead of the U.S. Federal Reserve’s policy announcement this afternoon, with some investors betting on an outsized interest rate cut.
Wall Street’s main indexes opened slightly higher amid Fed rate jitters.. The Dow Jones Industrial Average rose 0.05 per cent to 41,628.91, the S&P 500 gained 0.13 per cent to 5,641.68, and the Nasdaq Composite advanced 0.2 per cent to 17,663.383 at the bell.
The Toronto Stock Exchange’s S&P/TSX composite index was down 0.02 per cent at 23,673.51 at the open.
In corporate news, Rogers Communications is buying out BCE’s 37.5-per-cent share of Maple Leaf Sports & Entertainment for $4.7-billion, giving it 75-per-cent ownership of the sports conglomerate.
On Wall Street, markets are watching earnings from General Mills Inc. The Cheerios maker has posted a smaller-than-expected drop in quarterly sales, helped by its higher priced products including snacks and pet foods.
“The Fed’s guidance is still shrouded in uncertainty, and traders are bracing for what comes next. The potential for multiple outcomes has everyone’s nerves jangling,” Stephen Innes, managing partner of SPI Asset Management, wrote in a note.
“The question is: Are we overextended on rate cut bets setting up for the head-over-heels tumble? If [Fed chief Jerome] Powell’s comments or the Fed’s projections hint that these lofty expectations won’t materialize, we could see a quick retrace in stocks, bonds, and non-dollar currencies.”
Overseas, the pan-European STOXX 600 was down 0.37 per cent in morning trading. Britain’s FTSE 100 declined 0.61 per cent, Germany’s DAX was flat and France’s CAC 40 gave back 0.37 per cent.
In Asia, Japan’s Nikkei closed 0.49 per cent higher, while Hong Kong’s Hang Seng rose 1.37 per cent.
Commodities
Oil prices fell after two sessions of gains after an industry report showed increasing U.S. crude and fuel inventories, offsetting rising tension in the Middle East and the potentially bullish impact of a U.S. interest rate cut.
Brent crude futures for November were down 0.91 per cent at US$73.03. West Texas Intermediate (WTI) crude futures slid 1 per cent to US$70.41.
“Crude traded softer after a weekly build in U.S. crude and fuel stocks ... helped offset sustained tensions in the Middle East,” said Ole Hansen of Saxo Bank.
In other commodities, spot gold was up 0.3 per cent at US$2,575.89 an ounce, while U.S. gold futures rose 0.4 per cent to US$2,602.40.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 73.52 US cents to 73.66 US cents in early trading. The Canadian dollar was up about 0.07 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, slid 0.16 per cent to 100.74.
The euro advanced 0.16 per cent to US$1.1133. The British pound gained 0.56 per cent to US$1.3235.
In bonds, the yield on the U.S. 10-year note was up at 3.69 per cent.
Economic news
Japan trade deficit and core machine orders
Euro zone and U.K. CPI. Inflation in Britain held steady at an annual rate of 2.2 per cent in August.
(8:30 a.m. ET) Canadian construction spending for July.
(8:30 a.m. ET) Canada’s international securities transactions for July.
(8:30 a.m. ET) U.S. housing starts for August. Consensus is an annualized rate rise of 5.9 per cent.
(8:30 a.m. ET) U.S. building permits for August. Consensus is a rise of 0.3 per cent on an annualized rate basis.
(1:30 p.m. ET) Bank of Canada’s summary of deliberation for Sept. 4 decision is released.
(2 p.m. ET) U.S. Fed announcement and summary of economic projections (with chair Jerome Powell’s press conference to follow).
With Reuters and The Canadian Press