Building in yesterday’s moderate gains of about 0.3% for US large-cap indices (although the small cap Russell 2000 finished down 0.8%), world equity markets have been climbing overnight and into this morning. In Asia Pacific trading, the Nikkei gained 1.5% while the Hang Seng rose 0.3%. Europe has seen larger gains this morning with the Dax up 1.7% and the FTSE up 1.2%.
There have been a number of notable developments overnight. UK Prime Minister Johnson has announced his intention to step down in what could be a move to clear the air following a series of scandals and a crisis in the UK Conservative Party that saw several cabinet members resign in recent days. Second, in what could be an interesting sign with earnings season approaching, Samsung rallied overnight after its earnings report turned out to not be as bad as the street had feared.
Commodities are also on the rebound this morning, led by a 4.5% jump in the copper price. WTI crude oil is up 0.25% but still trading below $100.00/bbl. In currency trading, the US Dollar’s advance has levelled off this morning. The British Pound is up 0.4% this morning on the Johnson news, while resource currencies like the Canadian Dollar, up 0.3% and the Australian Dollar, up 0.7% are also on the rebound today.
The Canadian Dollar may be benefitting today from a very strong May trade surplus, which was likely boosted by higher commodity prices ($5.3B vs street $2.4B). In other news, US weekly initial jobless claims were slightly worse than expected (235K vs street 230K). Employment remains in focus ahead of tomorrow’s US nonfarm payrolls (street 270K vs previous 390K) and Canadian labour force (street 22K) reports for June. Wage inflation numbers for the US (street 5.2%) and Canada (previous 4.4%) may also attract attention as in indication of broader inflation pressures on the economy and central banks.