Morning Minutes

Stocks Slide as Investors Respond to Inflation and Earnings Reports




US index futures are down 0.4% to 0.8%, giving back yesterday’s US major index gains of 0.1% to 0.9%. European markets are up this morning, led by 1.0% gains for Paris and Milan, while Frankfurt is up 0.4% and London is up 0.2%. The CAC reached a new all-time high earlier today.

The US 10-year treasury note yield is holding steady near 3.80%, but the US Dollar has backed off a bit, enabling commodities and some currencies to rebound. WTI Crude Oil is up 0.3%, Natural Gas is up 2.4% and Copper is up 1.6%. Meanwhile, Bitcoin is up 2.3% and Gold is up 0.3%.

US economic news heading toward the long weekend has been disappointing with US producer prices (6.0% vs street 5.4% and previous 6.2%) confirming the sense from Tuesday’s consumer price numbers that while the trend in price growth remains downward, it has not fallen as fast as some had hoped, indicating that inflation has not been fully tamed yet. The Philadelphia Fed Manufacturing Survey also disappointed (-24.3 vs street -7.4), along with US housing starts (1.31M vs street 1.36M).

It’s a busy day for central bank talk with Bank of Canada Governor Macklem, FOMC members Bullard and Mester, and RBA Governor Lowe scheduled to speak today and tonight. Tomorrow brings Canadian producer prices and UK retail sales.

Overnight earnings reports have been mostly positive, headlined by Cisco Systems ($0.88 vs street $0.85, up 3.2% premarket), Canadian Tire ($9.33 vs street $7.46), and Manulife Financial ($0.88 vs street $0.81). Two notable disappointments have been Nutrien ($2.71 vs street $3.44), and Cenovus Energy ($0.39 vs street $0.63). Shopify (+$0.07 vs street -$0.01, down 13.0%) beat on earnings but investors have responded more to soft guidance. Companies still to report results this week include Agnico-Eagle, Applied Materials and DoorDash tonight, followed by Air Canada and Deere tomorrow morning.  

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Colin Cieszynski, Chief Market Strategist

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

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