Morning Minutes

Stocks Backtrack as Investors Await Central Bank Decisions

Bank of Canada



Yesterday’s rally in North American equity markets that saw the three main US indices gain 1.0% to 2.2% came to an abrupt just after the close yesterday. Upward momentum reversed following Alphabet’s earnings disappointment ($1.06 vs street $1.26, down 6.5% premarket) and index futures have remained in the red overnight and into this morning. Currently Dow futures are down 0.1%, while NASDAQ futures are down 1.5%. In Europe this morning, the Dax is up 0.25%, while the FTSE is down 0.5%.

It seems investors have been looking for reasons to move out of technology stocks this morning since Microsoft and Texas Instruments are down 6.3% and 5.5% premarket despite beating the street on earnings. Investors appear to be focusing more on soft sales and/or earnings guidance so far today rather the past results.

There have also been some positive reports including Visa ($1.93 vs street $1.87), Kraft Heinz ($0.63 vs street $0.56), Thermo Fisher ($5.08 vs street $4.81), and Chipotle ($9.51 vs street $9.19). Canadian earnings season kicked off last night with a positive report from railroad Canadian National ($2.13 vs street $2.01) who attributed positive results to its ability to pass along cost increases to customers.  Later today, earnings are due from Canadian Pacific Railway and Meta Platforms.

The Bank of Canada’s latest interest rate decision is due at 10:00 am with the street widely expecting a 0.75% interest rate increase to 4.00%. The European Central Bank is widely expected to raise its benchmark rate by 0.75% tomorrow morning to 2.00%. The Canadian Dollar and the Euro have been climbing ahead of these decisions, gaining 0.4%-0.5% against the US Dollar.

In metals action today, Copper is up 2.9%, while Gold is up 0.9%. Energy trading has been more mixed with WTI crude oil up 1.3% and natural gas down 4.2%.   

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Colin Cieszynski, Chief Market Strategist

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

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