SIA Wealth Morning Minutes: Surprise Macro News Drives Bigger Market Swings

Canada Earnings

Investors have become used to stocks making big moves around earnings reports, guidance and surprises. This week, we are seeing big swings at the macro level on surprise news. Earlier this week, for example, the Brazilian market fell 19.6% on a surprise election result. This morning, Israel is down 4.7% premarket following an indecisive election result, while the New Zealand Dollar is down 1.1% after a surprisingly dovish RBNZ interest rate decision.

North American equity markets have been quiet so far this morning, with the potential for volatility as the Bank of Canada and the Federal Reserve Board are scheduled to announce interest rate decisions today. A 0.25% increase is expected from the Bank of Canada, while no change is expected from the Fed. After the close, Alphabet and Microsoft report earnings, which may influence sentiment toward technology stocks.

In Israel, election results saw PM Netanyahu’s coalition drop from 68 seats to 50 seats, while the opposition coalition won about 52 seats. Both sides fell short of the 61 seats needed for a majority. The Reserve Bank of New Zealand held its overnight rate at 2.75% in a surprise 4-3 decision, while a 0.25% rate hike had been expected.

NASDAQ futures are up 0.3%, while Dow futures are steady. In Asia, the Nikkei gained 1.1% and the Hang Seng gained 0.2%. In Europe, the DAX is up 0.3%, while the FTSE is down 0.1%.

Crude Oil is up 1.2%, trading above $100.00/bbl, while Brent Crude is up 1.3%, trading above $115.00/bbl. Gasoline is up 0.2%, trading near $3.15/gallon. Gold is down 0.2%, holding above $4,050/oz, Silver is down 0.5%, and Copper is up 0.3%, climbing above $6.65/lb. The US 10-year treasury note yield is steady near 5.00%, while the US 30-year treasury note yield is steady near 5.30%. The USD Index is steady ahead of the Fed, while the Euro and Loonie are also steady.

Looking ahead, the first reading of US Q3 GDP and Core PCE inflation are due on Thursday, followed by Chicago PMI on Friday, which is also month-end. Earnings season continues this week, with Visa reporting after the close today; Alphabet, Microsoft, FedEx, Canadian Pacific and Ford Motor on Wednesday; Amazon.com, Intel, Starbucks, Teck Resources, Restaurant Brands and MasterCard on Thursday; and ExxonMobil, Chevron, Magna International and Canadian National Railway finishing the week. The Bank of Japan is expected to maintain its benchmark interest rate at 1.25% when it meets on Friday.

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