Equities
Global markets lost momentum on Tuesday as euphoria over thawing U.S.-China trade tensions gave way to investor concern about the standoff’s long-term economic impact.
The announcement that the world’s two-largest economies agreed to reduce reciprocal tariffs for 90 days reignited investor appetite on Monday, including a 3.3-per-cent gain on Wall Street – but by Tuesday some of the enthusiasm had ebbed.
Wall Street’s main indexes were on track for a mixed open as investors assessed the latest U.S. inflation numbers and their impact on monetary policy.
TSX futures were on track to open lower.
In Canada, investors are getting results from CAE Inc.; miners Endeavour Silver Corp. and Wesdome Gold Mines Ltd.; energy companies Northland Power Inc. and Peyto Exploration & Development Corp; and Power Corp. of Canada.
Investors in the U.S. were digesting April CPI data that could shape monetary policy outlook. The consumer price index CPI increased 0.2 per cent last month after dipping 0.1 per cent in March. In the 12 months through April, the CPI climbed 2.3 per cent after advancing by 2.4 per cent in the 12 months through March.
“In terms of inflation expectations and monetary policy, we’re very much in the same place that we were before the report came out,” said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners.
“We expect the Fed to continue to be in a wait-and-see mode until we see some further materialization of pricing pressures that may come from the new trade policies.”
Overseas, the pan-European STOXX 600 was up 0.17 per cent in midday trading. Britain’s FTSE 100 was up 0.059 per cent, Germany’s DAX gained 0.091 per cent and France’s CAC 40 increased by 0.23 per cent.
In Asia, Japan’s Nikkei closed 1.43 per cent higher, while Hong Kong’s Hang Seng was down 1.87 per cent.
Commodities
Oil prices edged higher with gains capped by rising supply and caution about prospects for a long-term resolution to the U.S.-China trade war.
Brent crude futures rose 65 US cents to US$65.61 a barrel. West Texas Intermediate crude was up 72 US cents at US$62.67.
Both benchmarks had risen on Monday on news of the U.S. and China slashing tariffs on each other’s goods. The market is now evaluating the impact of the trade truce, said PVM analyst Tamas Varga.
“Coupled with the scheduled steep increase in OPEC+ supply in May and June, the upside might prove limited.”
In other commodities, spot gold was up 0.6 per cent at US$3,254.39 an ounce, as bargain-hunters stepped in after the previous session’s one-week low.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 71.45 US cents to 71.65 US cents in early trading. The Canadian dollar was down about 0.2 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, lost 0.35 per cent to 101.44.
The euro gained 0.48 per cent to US$1.1141. The British pound rose 0.52 per cent to US$1.3243.
In bonds, the yield on the U.S. 10-year note was last down at 4.448 per cent ahead of the North American opening bell.
Economic news
Germany releases business conditions survey. UK releases payrolls data
Canadian federal cabinet announced
6 a.m. ET: U.S. NFIB small business economic trends survey
8:30 a.m. ET: U.S. consumer prices for April. Consensus is for a 0.3-per-cent monthly increase, or 2.4 per cent year over year. Excluding food and energy, a monthly increase of 0.3 per cent is also expected
With Reuters and The Canadian Press