Equity Markets Bounce as November Begins, Energy Prices Pull Back

November arrives with a bounce for equity markets following last week’s tech sector selloff, helped by news of a big merger in the AI space. Energy prices are backing off today on reports of conversations between the US and Iran aimed at avoiding an escalation of their conflict.

It is a big week for business news, with the US midterm elections tomorrow, PMI and employment data through the week, and another round of earnings reports headlined by Apple*. With several major catalysts ahead, sentiment could potentially remain volatile through the week.

China Manufacturing PMI came in at 49.3 versus Street expectations of 50.0, while Non-Manufacturing PMI was 49.7 versus Street expectations of 50.5. Both readings were below expectations and below 50, putting them in contraction territory. Manufacturing PMI reports elsewhere have been mixed, with Australia disappointing, the EU exceeding expectations and the UK in line.

Marvell Technology has agreed to purchase Lumentum, a producer of optical components, in a $115 Billion deal. Estee Lauder and Marriott International handily beat earnings expectations today, a sign consumer spending is holding up in some areas.

US futures are higher, with NASDAQ futures up 0.6% and Dow futures up 0.4%. In Asia, the Nikkei declined 0.3%, while the Hang Seng gained 0.4% and the KOSPI rallied 2.2%. In Europe, the DAX is down 0.2% while the FTSE is up 0.2%.

Commodities are mixed, with Crude Oil down 4.3% and trading below $100.00/bbl, while Brent Crude is down 4.2% and trading below $110.00/bbl. Gasoline has fallen 5.1% to below $3.00/gallon. Gold is up 0.2% near $3,900/oz, Copper is up 0.4% and testing $6.50/lb support, and Silver has gained 1.5%.

In Rates, the US 10-year treasury note yield is falling toward 4.90%, while the US 30-year treasury note yield remains below 5.30%. The US Dollar Index is down 0.3%, the Euro is up 0.5% and the Loonie is steady.

Looking ahead, US ISM Manufacturing PMI, with a Street estimate of 54.6, and US construction spending, with a Street estimate of 0.4%, are due at 10:00 am EST. Canada Manufacturing PMI, with a previous reading of 51.5, is due at 9:30 am EST.

Palantir Technologies* and Apple Inc.* report earnings after the close today. Results over the rest of the week are dominated by the Energy, Insurance and Technology sectors, and it is peak week for Canadian large caps. Tuesday’s headliners include Shopify*, DuPont, Pfizer, Thomson Reuters*, Suncor Energy* and Super Micro Computer. McDonalds, Cenovus Energy*, Manulife, MetLife, Great West Life, Nutrien, Qualcomm and Sun Life report Wednesday. Canadian Natural Resources, TC Energy, ConocoPhillips*, Bombardier and AirBnB follow Thursday, with Brookfield, Telus, Enbridge and Constellation Software finishing the week on Friday.

The Reserve Bank of Australia is expected to raise its benchmark interest rate by 0.25% to 4.85% when it meets Tuesday morning. The Bank of England is expected to raise its benchmark rate when it meets Thursday. Economic reports continue through the week, headlined by ADP Payrolls, US and Canada trade balances, and Service PMI numbers on Wednesday, followed by US nonfarm payrolls and Canada employment.

*Shares of Apple, Palantir Technologies, Shopify, Thomson Reuters, Suncor Energy, Cenovus Energy, and ConocoPhillips are held in some portfolios managed by SIA Wealth Management

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