Global markets have been mixed overnight following yesterday’s mixed US session that saw the Dow finish down 0.4% and the NASDAQ gain 1.75%. Asia Pacific markets sold off with the Nikkei and the Hang Seng both losing 1.2%. European markets are bouncing back this morning with the Dax up 1.1% and the FTSE up 1.5%. Bullish follow through in US index futures has faded over the course of the morning and currently the three main contracts are down 0.3%-0.5%.
There are several big round number tests underway this morning in currency and commodity markets. The Euro has slipped to another 20 year low against the US Dollar, but is clinging to par so far. Bitcoin, meanwhile, is sitting just above $20.000 after falling 1.1%. WTI crude oil has bounced back 0.8% and is trading slightly back up above $100.00/bbl. Copper is up 0.3% as it tries to claw back some of yesterday’s losses.
Minutes from the last Fed meeting are due this afternoon but this morning’s economic numbers may provide more insight into current business conditions. Rising interest rates continue to impact the housing market. US mortgage applications fell by 5.4% last week, while in Canada, the Toronto Regional Real Estate Board announced that June home sales fell 41% from June of 2021.
US ISM Service PMI reports are due at 10:00 am EDT today which investors may look for signs of stagflation. In addition to the headline number (street 54.5 vs previous 55.9), investors may consider the prices paid component (street 83.9 vs previous 82.2) for signs of whether inflation is slowing or not and whether the employment number drops below 50 into contraction territory or not (street 49.8 vs previous 50.2).
