Before the Bell: Aug 30

Before the Bell: Aug 30

Equities

Wall Street futures were higher early Tuesday after two negative sessions in a row. European markets were also positive. TSX futures were up with the last of bank earnings due.

In the early premarket period, futures tied to the three key U.S. indexes advanced with Nasdaq futures up more than 1 per cent at one point. On Monday, all three marked another day of declines with the S&P 500 losing 0.67 per cent while the Dow ended down 0.57 per cent and the Nasdaq fell 1.02 per cent. The S&P/TSX Composite Index finished the session 0.19-per-cent lower.

“If the market price action of the last few days is any guide the penny finally appears to have dropped that the Federal Reserve is willing to risk a recession to get inflation under control,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“[Fed chair Jerome] Powell’s message from last week’s speech at Jackson Hole on Friday, couldn’t have been any clearer, that the Fed would keep going until the job is done, the pity being it took so long for investors to take notice, as stock markets dropped, and bond yields spiked higher.”

In Canada, bank earnings are back at the forefront with results from Bank of Montreal. The country’s other big banks reported results last week.

BMO reported net income, excluding one-off items, of $2.13-billion, or $3.09 a share, in the three months ended July 31, from $2.29-billion, or $3.44 a share, a year earlier.

Quebec-based convenience store giant Alimentation Couche-Tard reports after the close of trading. In the U.S., electronics retailer Best Buy releases its latest quarterly results Tuesday morning.

Overseas, the pan-European STOXX 600 gained 0.80 per cent. Germany’s DAX and France’s CAC 40 were up 1.32 per cent and 1.01 per cent, respectively. Britain’s FTSE 100 gained 0.44 per cent.

In Asia, Japan’s Nikkei closed up 1.14 per cent. Hong Kong’s Hang Seng slid 0.37 per cent.

Commodities

Crude prices pulled back somewhat after the previous session’s sharp gains with recession concerns offsetting worries about supply.

The day range on Brent is US$104.09 to US$105.45. The range on West Texas Intermediate is US$96.48 to US$97.66. Both benchmarks added more than 4 per cent on Monday.

“The one trade that everyone can agree upon is that the oil market will likely remain tight,” OANDA senior analyst Ed Moya said.

“Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production.”

Traders are now awaiting next week’s OPEC+ meeting after some members have suggested that the group could cut output to shore up prices. The meeting is set for Sept. 5.

Later Tuesday, markets will get the first of two weekly U.S. inventory reports with new numbers due from the American Petroleum Institute. Official government figures follow on Wednesday morning.

Analysts are expecting to see a decline in crude stocks by about 600,000 barrels last week.

In other commodities, gold prices were lower, weighed down by a still-high U.S. dollar.

Spot gold was down 0.3 per cent at US$1,732.10 per ounce by early Tuesday morning, having hit a one-month low of US$1,719.56 in the previous session.

U.S. gold futures were also down 0.3 per cent at US$1,744.10.

Currencies

The Canadian dollar was higher, trading around 77 US cents early Tuesday morning, as risk sentiment steadied on global markets.

The day range on the loonie is 76.77 US cents to 77.10 US cents.

There were no major Canadian economics releases due Tuesday. Traders will get June and second-quarter GDP figures from Statistics Canada on Wednesday morning.

On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, stood at 108.46, after dropping back from 109.48 overnight, a high not seen since September 2002, according to figures from Reuters.

The U.S. dollar was down 0.27 per cent against the Japanese yen while Britain’s pound gained 0.32 per cent to US$1.1743.

The Australian dollar, often seen as a proxy for risk sentiment, rallied 0.5 per cent, Reuters reports.

In bonds, the yield on the U.S. 10-year note was lower at 3.063 per cent in the predawn period.

Economic news

(9 am ET) U.S. FHFA House Price Index for June.

(9 am ET) U.S. S&P CoreLogic Case-Shiller Home Price Index for June.

(10 am ET) U.S. Conference Board Consumer Confidence Index for August.

(10 am ET) U.S. Job Openings & Labor Turnover Survey for July.

With Reuters and The Canadian Press


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