US equities continue their rebound this morning. US index futures are up 0.1%-0.2%, with S&P futures back up above 5000, building on yesterday’s 0.4%-1.3% rebounds. In Europe today, the Dax is up 0.7% and the FTSE is up 0.1%.
The Nikkei rallied 1.2% overnight and traded above 38,000 for the first time in over 30 years. This happened despite the country reporting a surprise decline in GDP and a downward revision to last quarter’s GDP tipping the country into a recession of two consecutive quarters of negative growth (-0.4% vs street +1.4%, previous revised down to -3.3% from -2.9%). This suggests that investors are more focused at this time on the dovish implications for monetary policy, rather than the bearish implications for corporate earnings. UK GDP appears to be bouncing around zero. (-0.2% vs street +0.1% and previous 0.2%)
A busy day for US economic news is off to a mixed start. US retail sales plunged even more than expected (-0.8% vs street -0.1%, previous revised down to 0.4% from 0.6%). The Empire State Manufacturing Index ( -2.4 vs street -15.0), the Philadelphia Fed Manufacturing Survey (5.2 vs street -8.0) both came in better than expected. US industrial production (street 0.3%) is due at 9:15 am EST.
Monthly North American housing data gets underway today. Canada housing starts slowed more than feared (223K vs street 235K and previous 249K). The US NAHB Housing Market Index (street 46) is due at 10:00 am EST.
A number of large companies on both sides of the border have announced earnings overnight and this morning. Cisco Systems ($0.87 vs street $0.84, 4,000 layoffs, down 4.2% premarket), Manulife Financial ($0.92 vs street $0.85, up 3.1% premarket), Great West Lifeco ($1.04 vs street $1.00) beat street expectations. Canadian Tire ($3.38 vs street $4.86) and West Fraser Timber (-$2.48 vs street -$0.38) were disappointments. After the close today, results are due from Applied Materials, Doordash and Coinbase.
Tomorrow, the last trading day before a long weekend in North America, is also monthly options expiry day. Because of this we could see some volatility and positioning today ahead of these events. Friday is quiet for earnings, but busy for economic data headlined by US producer prices, housing starts, and consumer sentiment reports.