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May 10, 2022

May 10 AM

Equities

Wall Street futures edged higher early Tuesday in the wake of the previous session’s broad selloff as traders await fresh U.S. inflation data later in the week. Major European markets also recouped some lost ground in morning trading. TSX futures were positive.

In the early premarket period, futures tied to the three main U.S. indexes were all up, with Nasdaq and S&P futures advancing more than 1 per cent. On Monday, the Nasdaq fell more than 4 per cent while the S&P 500 The S&P 500 fell below 4,000 for the first time since March 2021. The S&P/TSX Composite Index lost 3.07 per cent to close below 20,000 for the first time since last summer.

Markets are now awaiting the release Wednesday of new inflation figures from the United States, hoping for signs that price pressures are cresting and giving the Federal Reserve reason to be less hawkish on rates. Sentiment has been under pressure amid concerns that a slowing economy in China on the back of strict COVID-19 restrictions could send ripples through the global economy at the same time that central banks are hiking rates to head off spiking inflationary pressures.

“There is one potential catalyzer this week, that could eventually slow down the market selloff: U.S. inflation data due Wednesday,” Swissquote senior analyst Ipek Ozkardeskaya said.

“The consumer price index is expected to have eased to 8.1 per cent in April from 8.5 per cent printed a month earlier. A softer inflation is the only thing that could give hope to investors.”

In this country, Suncor Energy holds its annual meeting on Tuesday after releasing its latest results after yesterday’s closing bell.

In releasing its earnings, Suncor Energy Inc. reported the highest quarterly dividend in the company’s history on Monday. That move came as the energy giant faces pressure from a U.S.-based activist investor for significant structural change. Suncor declared a quarterly dividend of 47 cents per common share payable June 24 to shareholders of record as of June 3.

On Tuesday morning, George Weston Ltd. reports results. Intact Financial will release its latest earnings after the close of trading.

On Wall Street, Peloton Interactive will report ahead of the start of trading.

Overseas, the pan-European STOXX 600 rose 1.10 per cent. Britain’s FTSE 100 gained 0.74 per cent. Germany’s DAX and France’s CAC 40 were up 1.57 per cent and 1.09 per cent, respectively.

In Asia, Hong Kong’s Hang Seng closed down 1.84 per cent after a weak handoff from Wall Street. Japan’s Nikkei fell 0.58 per cent.

Commodities

Crude prices remained choppy with the combination of concern over COVID-19 lockdowns in China and broader economic risks tempering sentiment.

The day range on Brent is US$103.19 to US$106.96. The range on West Texas Intermediate is US$100.44 to US$104.16. Both benchmarks lost more than 5 per cent on Monday, marking the biggest daily declines since March.

“Oil prices were more spooked by the broader commodity meltdown than expected,” Stephen Innes, managing partner with SPI Investments, said.

Crude prices got a lift last week after the European Commission proposed a phased embargo on Russian crude. However, Reuters reports that a new version is now being drafted after pressure from several members for requests for exemptions and concessions.

Later Tuesday, markets will get the first of two weekly U.S. inventory reports with new numbers from the American Petroleum Institute. More official figures follow from the U.S. Energy Information Administration on Wednesday. Analysts are expecting to see a decline in crude stocks.

In other commodities, gold prices bounced in early going as the U.S. dollar pulls back from recent two-decade highs.

Spot gold was up 0.3 per cent at US$1,859.00 per ounce early Tuesday morning. U.S. gold futures were little changed at US$1,859.00.

“The rally is anemic though and if the U.S. dollar regains its mojo later today, gold could make a decisive test of the bottom of its recent range,” OANDA senior analyst Jeffrey Halley said.

Currencies

The Canadian dollar was slightly firmer, helped by improved risk sentiment in the broader markets, after hitting its lowest level in 17 months against the U.S. dollar during the previous session.

The day range on the loonie is 76.70 US cents to 77.01 US cents.

There were no major Canadian economic releases on Tuesday’s calendar.

On world markets, the U.S. dollar index, which measures the greenback against six peers dropped nearly 0.2 per cent to 103.57, having risen as high as 104.19 overnight, a fresh 20-year peak, according to figures from Reuters.

“USD has drifted lower overnight as equity futures are rebounding from yesterday’s sharp losses and bond yields are well below yesterday’s high,” RBC chief currency strategist Adam Cole said.

Other commodities currencies also saw early gains after hitting two-year lows this week. The Australian dollar edged higher in the early morning period, after falling to its weakest since 2020. The Norwegian krone rose 0.26 per cent to 9.6345 krones per U.S. dollar, after falling to its lowest since June 2020.

Elsewhere, the euro was flat against the greenback at US$1.0563. Britain’s pound rose 0.1 per cent to US$1.2340.

In bonds, the yield on the benchmark U.S. 10-year note was lower at 3.024 per cent in the predawn period.

The Globe’s Alexandra Posadzki reports that Canada’s competition watchdog says the proposed takeover of Shaw Communications by cable giant Rogers has already reduced competition in the wireless market. In an application to stop the merger of the country’s two largest cable networks, the Competition Bureau said Shaw Communications Inc. has stopped competing for mobile phone business ahead of the planned $26-billion takeover by Rogers Communications Inc.

Economic news

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.

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