Morning Minutes

Central Bank Week Kicks Off With Mixed Trading




Investors appear divided as the new trading week begins amid a number of weekend developments. A new wave of COVID that has sparked new lockdowns in China send Hong Kong plunging 5.0% and Shanghai sliding 2.6% overnight. Reports of progress in Ukraine peace talks, meanwhile, have Frankfurt up 1.8%, Paris up 1.1%, Milan up 1.5% and London up 0.2%. US early trading is mixed with Dow futures up 0.7% but NASDAQ futures down 0.2% coming off a Friday where once again early gains were erased, and US indices finished down 0.7% to 2.1% with the NASDAQ leading the way lower.

Despite reports of Iranian missiles hitting a US consulate in Iraq over the weekend dimming hopes for a new nuclear deal, the potential for peace in Ukraine has crude oil selling off today with WTI down 5.0% and trading between $100.00/bbl and $105.00/bbl. Metal prices are also falling today with silver down 2.4%, copper down 2.1% (which may also be feeling the impact of the new China lockdowns), platinum down 3.0% and gold down 1.0%.   

It’s a big week for central bank meetings headlined by the Fed on Wednesday where the US central bank is widely expected to start raising interest rates based on recent statements and hints from Chair Powell and others. While some mention may be made of current geopolitical risks, the Ukraine war did not stop the European Central Bank, the Bank of Canada and the Reserve Bank of New Zealand from tightening monetary policy at their recent meetings. Later in the week, the Bank of England and the Bank of Japan are also holding meetings. The US 10-year treasury note yield has climbed back up above 2.0% today, indicating that investor focus has shifted back to monetary policy from concerns about current or potential political and economic upheavals.

Inflation remains a big topic of conversation with more reports this week including US producer prices on Tuesday and Canadian consumer prices on Wednesday. It’s also a big week for retail sales numbers including reports from China tonight, the US on Wednesday, and Canada on Friday.

In corporate news, it’s a Merger Monday north of the border this week. Turquoise Hill Resources has received a US$26.60, US$2.3B takeover offer from its partner, mining giant Rio Tinto. Looking to expand the health side of its business, Loblaws announced an agreement to purchase Lifemark Health Group a chain of physiotherapy clinics, for $845 million.  

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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