Equities
Global markets looked for direction as investors gave a cautious welcome to the likely resumption of U.S. interest rate cuts, while hoping AI-superstar Nvidia’s results this week will help justify the sector’s stratospheric valuations.
Wall Street futures were in negative territory after Friday’s surge following U.S. Federal Reserve chairman Jerome Powell hinted at a near-term interest-rate cut during his Jackson Hole Symposium speech.
TSX futures followed sentiment lower after Canada’s main stock markete closed at another all-time high the previous session.
Powell’s dovish change of course has seen futures price in an 84-per-cent chance of a quarter-point rate cut next month, and at least 100 basis points of easing to 3.25-3.5 per cent by the middle of next year.
The shift “reinforces our view that the Fed will ease in response to softening labour demand and that risk to our forecast for a material downshift in global growth this quarter is skewed to the upside,” said Bruce Kasman, global head of economic research at JPMorgan.
Overseas, the pan-European STOXX 600 was down 0.17 per cent in morning trading. Germany’s DAX declined 0.16 per cent and France’s CAC 40 fell 0.56 per cent. Markets in Britain are closed.
In Asia, Japan’s Nikkei closed 0.41 per cent higher, while Hong Kong’s Hang Seng jumped 1.94 per cent.
Commodities
Oil prices climbed as traders weighed concerns that Russian supply could be disrupted by more U.S. sanctions and Ukrainian attacks targeting energy infrastructure in Russia.
Brent crude futures gained 0.6 per cent to US$68.13, and West Texas Intermediate (WTI) crude futures were up 0.7 per cent to US$64.10.
“The market is somewhat concerned that these peace negotiations are going nowhere,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“The market is looking for supply to exceed demand in the autumn months, but in the short term that’s being challenged by a potential geopolitical disruption.”
In other commodities, spot gold inched down 0.1 per cent to US$3,367.51 an ounce. U.S. gold futures for December delivery eased 0.2 per cent to US$3,412.30.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 72.22 US cents to 72.38 US cents in early trading. The Canadian dollar was down about 0.6 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.2 per cent to 97.91.
The euro slid 0.15 per cent to US$1.1702. The British pound dropped 0.16 per cent to US$1.3504.
In bonds, the yield on the U.S. 10-year note was last up at 4.282 per cent.
Economic news
Germany business sentiment improved unexpectedly in August to its highest level in 15 months, a survey showed, although analysts warned the economic outlook remained weak.
(10 a.m. ET) U.S. new home sales for July. The Street expects an annualized rate rise of 1.3 per cent.
With Reuters and The Canadian Press