Ben Bernanke has his work cut out for him. He'll be delivering a speech this afternoon in Indianapolis that will likely try to turn the market's attention back to the U.S. Federal Reserve's aggressive monetary stimulus policy and away from the nagging worries about slowing global economic growth.
Overnight, there was more evidence that economies are running without much juice. China's manufacturing activity contracted for a second straight month in September, with the government's purchasing mangers' index coming in at 49.8. That's a little better than August's reading of 49.2 but fell short of expectations for a reading over 50, which would have indicated expansion. Meanwhile, euro zone manufacturing put in its worst performance in the three months to September since the depths of the Great Recession, according to fresh figures this morning.
Despite the discouraging data, U.S. futures are pointing to a modestly higher start to North American trading. Some positive sentiment is flowing from European shores, where stocks are solidly higher after Spanish banks on Friday released stress test figures that were in line with estimates and didn't offer any further reasons to panic.
Economists expect Mr. Bernanke to stress that quantitative easing works and the Fed will be able to manage any possible inflationary flare ups that it could ignite.
That could help stocks get back to a more confident footing, given that traders were spooked last week when the president of the Philadelphia Fed Bank, Charles Plosser, cautioned that the the third round of the quantitative easing program announced last month may not create jobs and could risk the Fed's credibility. Mr. Plosser's comments had stocks retracing some of their QE3-inspired gains.
The U.S. releases its latest manufacturing index later today, which could also influence markets.
Now, here's the full rundown of what else you need to know before the trading day gets underway:
MARKETS:
Equities:
Futures: Dow +0.48 per cent, S&P 500 +0.41 per cent, Nasdaq +0.57 per cent
Hong Kong's Hang Seng index +0.37 per cent
Shanghai Composite index +1.84 per cent
Japan's Nikkei -0.83 per cent
London's FTSE 100 +1.10 per cent
France's CAC 40 +1.50 per cent
Germany's DAX index +1.19 per cent
Commodities:
WTI (Nymex Nov) -0.15 per cent at $92.05 (U.S.) a barrel
Gold (Comex Dec) +0.24 per cent at $1,778.10 (U.S.) an ounce
Copper (Comex Dec) -0.04 per cent at $3.76 (U.S.) a pound
Currencies:
Canadian dollar down 0.0024, or 0.23 per cent, at $1.0176 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Statistics Canada revised its second quarter data for annualized economic growth to 1.9 per cent from an initial 1.8 per cent on Monday to reflect the adoption of updated accounting standards.
Statistics Canada said industrial prices fell 0.1 per cent in August from July, in with with estimates. And it said raw material prices rose a greater-than-expected 3.4 per cent in August from July, mostly because of higher crude oil prices.
(1000 a.m. ET) The U.S. Institute for Supply Management issues its manufacturing index for September. Economists expect a reading of 50.
(1000 a.m. ET) U.S. releases construction spending for August. A reading of plus 0.6 per cent is expected.
(1230 p.m. ET) Ben Bernanke speaks to the Economic Club of Indiana in Indianapolis. The title of his speech is "Five questions about the Federal Reserve and Monetary Policy."
Microsoft was downgraded by RBC to a "sector perform" rating, with a revised price target of $33 (U.S.), down $1. It cited recent share appreciation and a stock price that already reflects some of the sales potential of Windows 8.
RIM shares are up 0.1 per cent in the premarket after Friday's 5 per cent rally on Nasdaq, ignited by better-than-expected quarterly results.
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Darcy Keith