Morning Minutes

Mixed Trading, Political Uncertainty, and Durable Goods Orders




The start of the last trading week for this month and quarter finds investors indecisive amid continuing uncertainties. US index futures are mixed with Dow futures up 0.1%, S&P futures down 0.3% and NASDAQ futures down 0.7%. Commodities are mixed today with WTI crude oil up 1.7% but copper down 0.3%.

Although the end of the long-running standoff between China and the US and Canada over the detention of Huawei’s CFO and two Canadians was positive news, it’s still unclear about what is going to happen with the interest payment that Evergrande was supposed to pay international creditors last week. Shanghai fell 0.8% overnight while the Hang Seng was steady.  

It’s a light week for scheduled economic and corporate news with the main events being monthly Manufacturing PMI reports due over Thursday and Friday. Although Friday is the first day of the month, the usual North American reports aren’t coming out until Friday the 8th. Today’s headliner is US durable goods orders (1.8% vs street 0.7% and previous -0.1%), which came in a lot stronger than expected. Canada’s latest GDP update and producer prices are due on Thursday. There are no significant earnings reports due this week although we could get see pre-announcements, noting the fewer the profit warnings, the better for sentiment.

In the absence of other news for investors to react to, political developments in the US and Europe could have a larger than usual impact. Yesterday’s German federal election ended with the socialist SPD winning 25.9% of the vote, beating former Chancellor Merkel’s CDU/CSU coalition which received 24.1% of the vote. This close result sends both parties off to try and build a coalition with other parties, a process which could take several weeks. The Dax us up 0.4% this morning while the FTSE is flat.  

In the US this week, Congress continues to debate infrastructure and other budget related bills ahead of Thursday’s deadline to raise the debt ceiling and avoid a government shutdown. Investors should note, however, that historically us budget talks have blown through the first deadline, as lawmakers can pass short term bills to keep things running for a few weeks.

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Colin Cieszynski, Chief Market Strategist

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

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