Before the bell: What every Canadian investor needs to know today

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Wall Street futures stalled Tuesday morning after last week’s Nasdaq and S&P 500 record highs, with investors awaiting the midweek release of the minutes of the last Federal Reserve meeting. Major European markets were largely stable in morning trading. Futures on the TSX were put on hold even as crude prices surged following the collapse of OPEC production talks.

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Futures contracts on Dow, S&P and Nasdaq were all close to breaking even before dawn before the first trading day of the week after the Monday break. The S&P, which has posted seven days of gains in the market, finished last week at a record high, as did the Nasdaq. The S & P / TSX Composite Index ended Monday’s session up 0.27 percent.

Investors are now awaiting the publication on Wednesday afternoon of the Fed’s minutes of its last meeting, looking for clues about the central bank’s plans to unwind its quantitative easing program.

In that country, a quarterly Bank of Canada survey showed Canadian business and consumer confidence continued to improve during the latest round of COVID-19 pandemic restrictions, paving the way for a wave of hiring and spending over the summer that could fuel the economic rebound.

The Globe’s Mark Rendell reports that a quarterly Bank of Canada survey conducted in May found that most businesses in all regions and industries plan to hire additional workers to meet an expected increase in demand. of products and services. A separate consumer survey found fears of losing a job fell sharply in the second quarter, while expectations to find one recovered to near pre-pandemic levels.

The Bank of Canada will make its next policy announcement on July 14.

Energy stocks will also be in the spotlight as crude prices rise after talks by OPEC + members over production hikes fail.

The group was due to resume talks on Monday, but called off the meeting after the United Arab Emirates rejected a planned eight-month extension of production restrictions. The move cast doubt on the group’s next move, with some analysts suggesting there would be no production increase in August, while others suggested that a rescheduled meeting to try to resolve the issue. dead end was likely.

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West Texas Intermediate was trading above US $ 76 a barrel early Tuesday morning.

Overseas, the pan-European STOXX 600 was down 0.04% in morning trading. Britain’s FTSE 100 slipped 0.11%. The German DAX and the French CAC 40 fell by 0.44% and 0.35% respectively. A surprise drop in German industrial orders in May weighed on sentiment in European markets.

In Asia, the Japanese Nikkei ended up 0.16%. Hong Kong’s Hang Seng slipped 0.25%.

Merchandise

Crude prices hit multi-year highs early on as traders await the next decision from OPEC and its allies after the group’s latest production negotiations failed.

The day range on Brent is US $ 77.02 to US $ 77.84. The range on West Texas Intermediate is US $ 74.75 to US $ 76.98. Brent hit its best level since 2018, while WTI hit its highest level since 2014. Both benchmarks are up around 50% this year.

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On Monday, the OPEC + group talks collapsed after the UAE announced it would agree to the increase in production, but rejected a separate proposal to extend restrictions until the end of 2022.

“With large drawdowns on stocks expected, whether production remains unchanged or increases by 400,000 barrels per day per month (from August), oil prices are expected to remain well supported in the short term,” said analysts from ING bank.

Analysts are divided on the likely next step, with some suggesting there will be no production increase in August while others saying a rescheduled meeting is likely.

In other commodities, gold prices topped US $ 1,800 an ounce early on and hit their best in three weeks.

Spot gold climbed 0.7% to US $ 1,804.50 an ounce, after hitting its highest level since June 17. US gold futures jumped 1.3% to US $ 1,806.30 an ounce.

“It is mainly the weakening US dollar that drives up gold prices. Gold sold heavily after the June FOMC meeting and now that expectations have been built in, buyers are back in the market, ”said Margaret Yang, strategist at DailyFX.

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Currencies

The Canadian dollar was trading around the 81 US cent mark early Tuesday as its US counterpart retreated as investors awaited the midweek release of the Fed’s final minutes.

The daily range for the loonie is 80.91 US cents to 81.28 US cents.

“The USD continued to decline, but movements were limited,” Adam Cole, RBC’s chief currency strategist, said in a note.

“After three days of exchanges, the OPEC meeting ended without a deal and without a new meeting date announced, the group will default to the original reduction schedule. Our commodities strategists say behind-the-scenes discussions will continue, but questions about the UAE’s commitment to stay in OPEC will likely increase in the coming days. “

There were no major economic releases in Canada on Tuesday.

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In global markets, the US dollar index lost 0.05% to 92.08.

The New Zealand dollar rose following a strong survey of economic conditions that sparked speculation that a rate hike could come later in the year. The New Zealand dollar rose about 0.77% to US $ 0.7080 after hitting its highest since mid-June, according to Reuters figures.

The Aussie rose as much as 1.2 percent at one point to US $ 0.7599, after the Reserve Bank of Australia cut its bond purchases and changed its rate outlook.

The euro was stable at US $ 1.1865.

The pound sterling rose 0.3% to a one-week high of US $ 1.3888 after UK Prime Minister Boris Johnson announced COVID-19 restrictions would be dropped later this month.

Economic news

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(9:45 a.m.ET) US Markit Services and Composite PMI for June.

(10 a.m.ET) US ISM Services PMI for June.

With Reuters and The Canadian Press


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