Equities
Global markets were subdued on Thursday as worries about the U.S. debt outlook and President Donald Trump’s tax-cut bill stayed top of mind.
Wall Street and TSX futures looked set for a lower open.
In Canada, investors are getting results from Lightspeed Commerce Inc. and Toronto-Dominion Bank.
On Wall Street, markets are watching earnings from Intuit Inc., Analog Devices Inc. and Autodesk Inc.
Attention is on Trump’s tax-cut bill that passed a vote in the House of Representatives on Thursday. It’s not cleared to move ahead to a Senate vote, which might take weeks. Investors are worried the bill could add about US$3.8-trillion to the US$36-trillion U.S. debt pile.
The somber mood among investors after Moody’s downgraded the U.S. credit rating last week has left markets slightly listless as a “Sell America” narrative gains traction.
All three main stock indexes saw their biggest single-day percentage drops in a month on Wednesday and Treasury yields spiked on U.S. debt concerns.
“The growing mountain of U.S. debt is causing ripples of worry across financial markets, with signs investors are balking at financing the Trump administration,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The modest progress to date on trade deals has also kept investors jittery.
Overseas, the pan-European STOXX 600 was down 0.94 per cent in afternoon trading. Britain’s FTSE 100 was down 0.79 per cent, Germany’s DAX lost 0.8 per cent and France’s CAC 40 was down 1.07 per cent.
In Asia, Japan’s Nikkei closed 0.84 per cent lower, while Hong Kong’s Hang Seng closed down 1.19 per cent.
Commodities
Oil prices fell more than 1 per cent on Thursday as a report that OPEC+ is discussing a production increase for July stoked concerns that global supply could exceed demand growth.
Brent futures lost US$1.08, or 1.7 per cent, to US$63.83 a barrel. West Texas Intermediate crude was down US$1.02, or 1.7 per cent, at US$60.55.
The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, are discussing whether to make another large output increase at their meeting on June 1, Bloomberg News reported.
An increase of 411,000 barrels per day (bpd) for July is among the options under discussion, though no final agreement has been reached, the report said, citing delegates.
“We’re seeing the market reacting to evidence that OPEC is letting go of a strategy to defend price in favor of market share,” said Harry Tchiliguirian at Onyx Capital Group. “It’s a bit like taking off a Band-Aid; you do it in one fell swoop.”
Prices were already lower after the Energy Information Administration reported that a U.S. crude and fuel inventories posted surprise stock builds last week, prompting demand concerns.
In other commodities, spot gold was down 0.3 per cent at US$3,303.82 an ounce.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 72.02 US cents to 72.34 US cents in early trading. The Canadian dollar was down about 0.13 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.17 per cent to 99.73.
The euro was down 0.22 per cent to US$1.1306. The British pound was flat at US$1.3424.
In bonds, the yield on the U.S. 10-year note was last down at 4.595 per cent ahead of the North American opening bell.
Long-term 20- and 30-year U.S. Treasury yields were shuffling higher again as were those in Europe, where benchmark German 20-year yields reached their highest in two months as global yield curves steepened.
The bond market in Japan has also been in focus given it has the highest debt-to-GDP ratio of any major economy. The 30-year JGB yield hovered at 3.155 per cent, not far from the record high of 3.185 per cent it hit in the previous session.
Economic news
Japan and Euro zone manufacturing PMI
(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for April. Estimates are month-over-month declines of 0.5 per cent and 3.0 per cent, respectively.
(8:30 a.m. ET) U.S. initial jobless claims for week of May 17. Estimate is 233,000, up 4,000 from the previous week.
(9:45 a.m. ET) U.S. S&P Global PMIs for May.
(10 a.m. ET) U.S. existing home sales for April. Consensus is an annualized rate rise of 2.7 per cent.
With Reuters and The Canadian Press