Morning Minutes

Retailer Earnings Drag on Stocks, Flash PMIs Help Commodities and Currencies




Bulls and bears are battling it out across world markets this morning as investors try to decide what to do in the wake of Friday’s broad-based selloff that saw stocks, commodities and currencies get knocked down by a combination of rising US treasury yields, option expiry, a US Dollar rally and pre-holiday weekend selling.  

US index futures are down 0.8%-1.0% with Dow Futures giving back Friday’s gain and NASDAQ futures adding to Friday’s loss. In Europe today, London, Paris and Frankfurt are all down about 0.25%. Earnings from two of the biggest US retailers appear to be dragging on sentiment so far today. Home Depot beat the street on earnings ($3.30 vs street $3.28) but missed on sales and is down 3.8% in premarket action. Walmart’s earnings came in well above expectations ($1.71 vs street $1.51), but it is down 3.3% premarket with investors focusing more on soft same store sales guidance.

Commodities, however, are on the rebound today, led by a 2.1% gain for Copper and a 0.5% gain for WTI Crude Oil. With the US 10-year treasury note yield creeping up toward 3.90%, currency action is mixed. Gold is down 0.4% today against the US Dollar but the Pound is up 0.6% and the Loonie is flat.

Flash Manufacturing and Flash Service PMI reports from around the world are out this morning. The UK reports were particularly positive with both measures decisively climbing back up above 50 into expansion territory and both beating street expectations. Results from Australia, Japan, France and Germany were also better than expected for the most part. US Flash Manufacturing (street 47.3 vs previous 46.9) and Flash Service (street 47.2 vs previous 46.8) reports are due at 9:45 am EST, followed by US existing home sales at 10:00 am.

Canadian consumer prices (5.9% vs street 6.1% and previous 6.3%) indicate inflation pressures have eased more than expected, while Canadian retail sales numbers were mixed. Headline retail sales beat expectations (0.5% vs street 0.2%), but retail sales excluding autos declined more than feared (-0.6% vs street -0.1%).

Economic news for the rest of the week is dominated by housing and inflation numbers from North America and the UK. Earnings reports continue to roll in highlighted by crypto exchange Coinbase after the close today, Nvidia tomorrow, Loblaws on Thursday.

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Colin Cieszynski, Chief Market Strategist

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

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