North American stock markets are poised to open mildly higher this morning, but few expect a rally to materialize today as two big events later this week could put the recent run-up in U.S. equities to multi-year highs in jeopardy.
On Wednesday, Germany's Federal Constitutional Court will rule on a challenge to the country's participation in the European Stability Mechanism. Approval is believed to be largely priced into stocks already, but potential conditions that could be attached are making traders nervous. Critics charge that the program robs Germany's parliament of its spending authority and is unconstitutional.
The next day may be an even bigger event, when the Federal Reserve releases its monetary policy statement after a two-day meeting. The majority of economists believe it will provide some form of stimulus, either by extending the date in which it is promising to keep its keep interest rate at an exceptionally low level, or through outright bond-buying using using a strategy known as quantitative easing. If the Fed doesn't do anything, watch out investors.
Futures held firm this morning as both Canada and the U.S. released trade data at 0830 a.m. (ET)
Meanwhile, gold and crude this morning are slightly higher, which should lend support to the TSX. The loonie is continuing to take flight, reaching another one-year high and pressing closer to 3 cents above parity.
Here's the run down of what else you need to know as the investing day gets underway.
MARKETS:
Equities:
Futures: Dow +0.3 per cent, S&P 500 +0.3 per cent, Nasdaq +0.3 per cent
Hong Kong's Hang Seng index +0.1 per cent
Shanghai Shenzhen CSI 300 -0.6 per cent
Japan's Nikkei -0.7 per cent
London's FTSE 100 -0.4 per cent
France's CAC 40 -0.4 per cent
Germany's DAX index +0.04 per cent
Commodities:
WTI (Nymex Oct) +0.01 per cent at $96.55 (U.S.) a barrel
Gold (Comex Dec) +0.09 per cent at $1,733.40 (U.S.) an ounce
Copper (Comex Dec) -0.08 per cent at $3.69 (U.S.) a pound
Currencies:
Canadian dollar up 0.0046, or 0.4 per cent, at 1.0276 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
The U.S. trade deficit grew slightly in July, as exports to Germany, France and other European nations shrank and imports from China soared to a new record. The monthly trade shortfall was $42 billion, compared to a downwardly revised estimate of $41.9 billion for June. Analysts surveyed before the report had expected a bigger shortfall of around $44 billion.
Canada posted its biggest trade deficit on record in July as crude oil exports tumbled and imports from the United States remained near record highs. The overall deficit bulged to $2.34- billion (Canadian) from a revised $1.93-billion deficit in June. Exports fell 3.4 per cent and imports decreased by 2.2 per cent in the month. Analysts in a Reuters survey had forecast, on average, a narrower deficit of $1.40-billion.
Canada Mortgage and Housing Corp. said housing starts in Canada were trending at 222,900 units in August. Economists expected 204,000 annualized starts. It attributed the rise, though, to a few multi-unit project starts ups in Toronto.
Corporate earnings include Detour Gold Corp
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