Morning Minutes

Stocks Slide With Flash PMI Reports and Canadian Bank Earnings In Focus




Yesterday’s market selloff that saw US indices drop 1.9% to 2.5% has continued through overseas trading overnight and into this morning. Asia Pacific trading saw Tokyo and Sydney retreat 1.2% while Hong Kong fell 0.8%. In Europe today, the Dax is down 0.1% and the FTSE is down 0.6%.

US indices remain flat on the mat this morning, holding steady but unable to mount a rebound from yesterday’s retreat. Meanwhile, continuing anticipation that the Fed could take a hawkish stance at its Jackson Hole symposium later this week has two notable breakouts extending. The US 10-year treasury note yield is holding above 3.00% after clearing that big psychological hurdle yesterday. The US also remains strong with EURUSD trading below par again this morning after breaking that key level yesterday. A big round number test continues in energy trading today with natural gas bumping up against $10.00/mmbtu for a second straight day, while WTI crude oil is up 1.8%.

On the other hand, signs of a struggling global economy continue to grow. Flash PMI reports from several countries around the world are out today. Asia Pacific countries like Australia and Japan reported flash Service PMI numbers below 50 in contraction territory, while in Europe, countries like Germany, France and the UK reported Manufacturing PMI numbers below 50 in contraction territory. US flash Manufacturing PMI (street 49.2) and Service PMI (street 52.0) numbers are due at 9:45 am EDT today. US new home sales are due at 10:00 am EDT.   

Canadian bank earnings week starts today. Results from Bank of Nova Scotia came in a bit soft ($2.10 vs street $2.11) impacted by a 30% decline in revenues from capital markets, and an increase in loan loss provisions to $412M from $219M last quarter.

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Colin Cieszynski, Chief Market Strategist

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

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