Colin Cieszynski
The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.
Stock markets around the world have been declining overnight, mainly on concerns about economic turmoil in Europe. U.S. index futures are trading down 0.4 per cent. Futures for the TSE 60 are down nearly 0.2 per cent. Falling resource prices along with global market maiaise could cut into Monday's Canadian market gains.
Across the Atlantic, falling sterling continues to reflect economic and political uncertainty, but it also keeps supporting London's FTSE, which is flat today and outperforming its peers. A U.K. Service Purchasing Managers' Index was below expectations, showing weakness along with Monday's construction PMI report.
Bank of England Governor Mark Carney made his first easing move today since the Brexit Referendum, cutting the countercyclical buffer for banks to 0 per cent from 0.5 per cent in a bid to unlock £150 billion in lending capacity after investment slowed. Today features the first round of voting in the Conservative leadership contest.
Italy's ongoing banking crisis and other uncertainties have more than offset positive service PMI reports from across the continent, sending the Dax down 1.4 per cent and the CAC down 1.2 per cent. Interestingly, Italy's FTSE MIB is only down 0.4 per cent, suggesting that the market may be getting close to washed out.
Capital flowing into defensive havens like bonds have sent treasury yields lower and the Japanese yen higher, sending the Nikkei down 0.7 per cent. In China, however, better-than-expected Caixin service PMI data sent the Shanghai index to a 0.6 per cent gain.
Commodities are trading lower today, with West Texas intermediate crude oil down 2.2 per cent and wheat down 3.4 per cent. In metals, silver is down 2.6 per cent while gold is steady.
The uncertainty following the U.K. vote has led to increasing expectations of further global central bank easing and continues to put a bid under bonds. This morning the yield on U.S. 10-year Treasuries fell to another record low of 1.38 per cent, while the 30-year yield dropped as low as 2.1436 per cent. Yields on U.K., German and French government debt also fell while Spanish and Italian bond yields ticked higher. Japan sold 10-year debt at a yield of minus 0.24 per cent, the lowest-ever rate.
U.S. news picks up again today, with factory orders and New York Fed President William Dudley (one of the Big 3 at the Fed) speaking. Wednesday brings a number of significant announcements for North America, led by FOMC minutes where any lookahead statements on Brexit could attract particular attention. U.S. and Canada trade figures plus U.S. service PMI reports may also spark trading action.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA: (as of about 7 a.m. ET)
Futures
Dow -0.38 per cent; S&P 500 -0.43 per cent; Nasdaq: -0.42 per cent; TSX 60: -0.17 per cent
Equities
Japan's Nikkei -0.67 per cent
Shanghai composite index +0.62 per cent
Hong Kong's Hang Seng -1.46 per cent
Germany's DAX -1.44 per cent
London's FTSE +0.40 per cent
France's CAC 40 -1.34 per cent
Commodities
WTI crude oil (Nymex Aug) -2.39 per cent at $47.82 (U.S.) a barrel
Gold (Comex Aug) +0.94 per cent at $1,351.60 (U.S.) an ounce
Copper (Comex July) -0.72 per cent at $2.201 (U.S.) a pound
Currencies
Canadian dollar -0.30 at 77.51 cents (U.S.)
U.S. dollar index -0.099 at 95.550
Bonds
Canada 10-year bond yield -0.032 at 1.013 per cent
KEY ECONOMIC RELEASES
(10 a.m. ET) U.S. factory orders for May. Consensus is a decline of 0.8 per cent from April.
KEY STOCKS TO WATCH
Superior Plus Corp said it was selling its construction products distribution business for $325 million to reduce debt and focus on its other businesses.
Tesla fell 3.9 per cent to $208 in premarket trading after the electric car maker missed vehicle deliveries target for the second consecutive quarter.
Also see: Tuesday's small-cap stocks to watch
With files from Bloomberg and other wire services