US Gains And China Losses Indicate Indecision As Earnings Season Looms Ahead

The start of the new trading week finds global markets heading in different directions. This morning, US index futures are up 0.25% to 0.65%, with NASDAQ futures leading the charge. Over in Europe, the Dax is up 0.4% but the FTSE is flat.

Overnight the Nikkei rallied 1.6% to its highest level in over 30 years, which may be partly due to a flight of capital away from China-sensitive markets. The Hang Seng fell 2.25%, while Shanghai lost 3.7%. Commodities are also struggling with concerns about the impact of a weak Chinese economy on resource demand. Copper is down 0.6%, but US Crude Oil is up 0.3%. Natural Gas, meanwhile, is down 5.2% as the recent deep freeze starts to subside in some areas.

Treasury yields are holding steady today, consolidating recent gains, while currency action is soft. Cryptocurrencies are sliding this morning with Bitcoin falling 2.0% and Ethereum down 3.8%. Gold is down 0.1%, and Silver is down 1.6%.

Having begun with the banks last week, Earnings season resumes tomorrow and broadens out to more sectors including Industrials, Consumer Products, Communications, Transportation and Technology. Headliners include: Netflix*, General Electric*, 3M, Johnson & Johnson, Texas Instruments, DR Horton* and others. Headliners reporting later in the week include Tesla, IBM, Visa and Intel*. Canadian National Railway also reports later this week.

The Bank of Japan meets tonight with investors looking for confirmation that its ultra dovish stance has not changed heading into 2024. The Bank of Canada meets Wednesday with investors looking for insights into the state of the Canadian economy and hints on when interest rate cuts may be coming. The economic calendar is otherwise dominated by housing market news with US GDP coming Thursday, US Core PCE inflation on Friday and Flash PMI reports on Wednesday. *Shares of Netflix, General Electric, DR Horton and Intel are held in portfolios managed by SIA Wealth Management

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