US index futures are flat this morning as investors consider the implications of Monday’s market selloff which saw major indices retreat 1.4% to 1.9% with the NASDAQ leading the way downward. The selloff was sparked by stronger than expected US Service PMI and factory orders report which investors interpreted as adding to the case for interest rates remaining higher for longer even if the pace of rate hikes slows.
While the Fed meets next week, other central banks are meeting this week. The Reserve Bank of Australia raised its benchmark rate by 0.25% overnight to 3.10% as had been widely expected. Tomorrow, the Bank of Canada is widely expected to raise its overnight rate by 0.50% to 4.25%. The Australian Dollar is up by 0.3%, The Canadian Dollar is down 0.3% this morning while the Canadian Dollar is down 0.3%. Canada reported a $1.2B trade surplus for October, slightly better than the $1.0B surplus the street had expected. Canadian Ivey PMI is due at 10:00 am EDT (street 61.3 vs previous 50.1).
Commodities are mixed this morning following Monday’s declines. Energy contracts remain under pressure with WTI crude oil and natural gas both down 1.5%. Metals, on the other hand, are bouncing back with Copper up 0.4% and Gold up 0.6%.