Before the Bell: Oct 14

Before the Bell: Oct 14

Equities

Wall Street futures turned higher early Friday after the previous session’s rally as traders await results from some of the biggest U.S. banks. Major European markets were positive in early trading. TSX futures were steady.

In the early premarket period, futures tied to the three key U.S. indexes traded above break even. On Thursday, markets saw a volatile session with stocks initially selling off in the wake of a hotter-than-expected reading on U.S. inflation, only to later turn sharply higher. The Nasdaq, Dow and S&P 500 all ended the session up more than 2 per cent. Canada’s S&P/TSX Composite Index, which fell as much as 1.8 per cent in early trading, finished the day up 2.2 per cent.

“[Thursday’s] market reversal was a head-scratcher,” OANDA senior analyst Ed Moya said. “Despite a hot inflation report, U.S. equities turned positive as some investors are convinced core inflation will soon start trending lower.”

“[The] rally probably got a boost from short covering as well, but given the path for rates is higher, this market reversal won’t last long,” Mr. Moya said.

Friday’s analyst upgrades and downgrades

Friday morning, traders will get results from some of the biggest U.S. lenders, including JPMorgan, Citigroup and Morgan Stanley. All are slated to report before the start of trading.

U.S. investors will also get September retail sales. Expectations are for a modest rise of 0.2 per cent.

In this country, Canada’s housing market will be in focus with the release September home sales from the Canadian Real Estate Association. Sales are seen falling 32 per cent from year-earlier levels with prices down an average 6 per cent.

Canadian markets also get August factory sales figures. Early estimates from Statistics Canada suggest a 1.8-per-cent decline is likely, largely the result of a drop in prices led by petroleum products, RBC chief currency strategist Adam Cole said.

Overseas, the pan-European STOXX 600 was up 1.01 per cent in morning trading. Britain’s FTSE 100 rained 0.89 per cent. The Associated Press reports that Britain’s Treasury chief is dashing back to London for urgent talks with Prime Minister Liz Truss amid growing expectation that they will scale back unfunded tax cuts to calm financial markets.

Germany’s DAX and France’s CAC 40 advanced 0.76 per cent and 0.79 per cent, respectively.

In Asia, Japan’s Nikkei jumped 3.25 per cent. Hong Kong’s Hang Seng closed up 1.21 per cent.

Commodities

Crude prices were relatively steady but looked set for a weekly decline as tighter supply helps offset global recession concerns.

The day range on Brent was US$93.75 to US$95.11 in the premarket period. The range on West Texas Intermediate was US$88.39 to US$89.73.

Both benchmarks were down about 4 per cent for the week, following two weeks of gains.

“The output cut from OPEC+ last week triggered a surge in prices but that has partially been offset by the increasingly dire forecasts for the economy which will naturally weigh on demand,” OANDA senior analyst Craig Erlam said.

“The alliance will no doubt be pleased with oil trading back in the $90-$100 range, the question is whether the U.S. will. Or if another coordinated SPR [strategic petroleum release] release could be on the cards.”

Crude prices were also supported by a steep drawdown in U.S. distillate stocks, though there has been a larger than expected surge in U.S. crude oil in storage, Reuters reported.

Gold prices edged higher, helped by a pullback in the U.S. dollar.

Spot gold rose 0.3 per cent to US$1,670.00 by early Friday morning. Prices were down more than 1 per cent so far in the week.

U.S. gold futures were flat at US$1,676.60.

Currencies

The Canadian dollar was slightly weaker while its U.S. counterpart held steady against a basket of world currencies.

The day range on the loonie was 72.50 US cents to 72.97 US cents.

Canadian investors get August wholesale and manufacturing sales early Friday.

On world markets, the U.S. dollar index was last up very slightly at 112.62, having fallen 0.6 per cent during the previous session despite expectations the Federal Reserve will deliver another outsized rate hike at its next meeting.

After making steep gains on Thursday, the pound was last down 0.27 per cent at US$1.1301, according to figures from Reuters.

The Australian dollar was up 0.42 per cent against the U.S. dollar at US$0.6322, coming off a two-and-a-half year low seen a day earlier.

In bonds, the yield on the 10-year note was slightly lower at 3.92 per cent in the predawn period.

Economic news

(830 am ET) Canada manufacturing sales for August.

(830 am ET) Canada wholesale trade for August.

(9 am ET) Canada existing home sales for September.

(9am ET) MLS Home Price Index for September.

(830 am ET) U.S. retail sales for September.

(830 am ET) U.S. import prices.

(10 am ET) U.S. business inventories for August.

(10 am ET) U.S. University of Michigan Consumer Sentiment for October.

With Reuters and The Canadian Press


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