World markets have started the week on their back foot. An orderly retreat that started Friday afternoon in North America has continued overnight and into this morning. Us index futures are trading down 0.3% while the Dax
is down 0.5% and the FTSE down 0.8% along with the Hang Seng. Currency markets are mixed with the major pairs trading close to even while WTI crude is down 0.2% but still essentially holding at $50.00.
This week focus turns to corporate earnings. The heart of earnings season starts today and runs for the next four weeks. After Alcoa started things off with a big miss, US bank earnings turned things around on Friday and that trend has continued today with a positive report from Bank of America. Traders may continue to look to both results and guidance to any indication of whether the hotly contested US election is having any impact on business or consumer spending decisions. Speaking of which, the final US Presidential Election debate is Wednesday night with the big vote just over three weeks away. Empire manufacturing this morning may also attract some interest but only if there’s a big surprise. Netflix is scheduled to report after the close.
The UK and Europe may attract more attention as the week progresses. UK inflation, employment and retail sales reports due over the next few days may indicate whether Brexit and the lower Pound are still having a positive impact on the UK economy. EUR may also see some activity around Thursday’s ECB meeting. The recent breakdown of EUR relative to USD suggests traders are expecting taper talk to die down and the central bank to take a neutral to dovish tone.
Canadian markets may start to see some positioning on anticipation of Wednesday’s Bank of Canada meeting. Governor Poloz is expected to hold interest rates steady with the Canadian economy having shown signs of a summer recovery, particularly in recent monthly GDP and employment reports. Last meeting, the bank had been cautious on the economy, warnings about July. The tone of this week’s statement could give an indication to traders of whether a Canadian rate cut this year is still a possibility or not, and if the central bank still prefers the loonie to do the heavy lifting.
Bank of America $0.41 vs street $0.34
UK Rightmove house prices 4.2% vs previous 4.0%
Japan industrial production 4.5% vs previous 4.6%
NZ Service PMI 54.1 vs previous 57.9
Singapore electronic exports (6.6%) vs street (9.0%)
Upcoming significant economic announcements include:
8:30 am EDT US Empire Manufacturing street 1.0 vs previous (2.0)
9:15 am EDT US industrial production street 0.2%
9:15 am EDT US manufacturing production street 0.1%
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