U.S. and Canadian stock futures were lower ahead of the opening bell, pointing to a weak start as the day begins for North American markets.
September futures on the S&P/TSX index were down 0.17 percent at 7:15 a.m. ET. Dow, S&P 500, and Nasdaq futures were down by a similar amount.
In Canada, investors awaited a report on the country’s manufacturing sales for May, scheduled for release at 830 a.m. (ET).
European stocks drifted lower with S&P 500 futures as investors prepared to digest a flood of earnings as well as the latest clues from the Federal Reserve on monetary policy in the world’s biggest economy. Goldman Sachs was the latest bank to report quarterly results this morning; while headline earnings per share seemed to easily beat analysts forecasts, the stock was trading lower in the premarket.
On the Stoxx Europe 600 Index, gains in mining and chemicals shares were offset by declines in telecommunications and utilities. Futures on the Nasdaq declined as Netflix Inc. tumbled in pre-market trading after delivering disappointing subscriber growth. Japanese stocks outperformed in Asia, while the yen held close to its weakest level since January.
Earnings and U.S. monetary policy have become the main drivers of market sentiment this week. That’s giving respite from a backdrop of worsening trade relations between the world’s biggest economic powers. Company results have been mixed thus far, with Deutsche Bank AG and Bank of America Corp. beating estimates, counterbalancing the Netflix reading.
Later Tuesday, Fed Chairman Jerome Powell will likely make the case for further tightening in testimony before a U.S. Senate panel, with markets pondering whether he’ll strike a more hawkish tone than Federal Reserve Bank of Minneapolis President Neel Kashkari, who said there’s little reason to raise rates much further.
“I doubt he’ll surprise the market with hawkishness,” Societe Generale global fixed income strategist Kit Juckes wrote in a note. “The U.S. economy is in good shape, but the President is laying waste to the global synchronized growth theme.”
Commodities climbed after Monday falling to the lowest in 11 months as crude traded in New York steadied at about $68 a barrel. Emerging market stocks headed lower for a second day, while their currencies climbed. The New Zealand dollar jumped after the central bank’s core inflation measure accelerated at the fastest pace in seven years.
Even before Powell’s testimony, traders said the Sino-US trade conflict was keeping a keeping a lid on equity prices and currencies in both countries.
The Chinese government said on Tuesday it would hit its 2018 growth target, a day after it reported slower growth in the second quarter and the weakest expansion in factory activity in June in two years.
On Tuesday, economists at UBS lowered their estimates for Chinese gross domestic product to take into account trade war escalation, warning clients the country’s currency is likely to weaken.
Chinese stocks were among the biggest losers in Asia on Tuesday, falling 1.7 per cent.
Trading in government bonds was largely subdued ahead of Powell’s testimony. Euro zone government bond yields across the bloc inched lower by 0.5 to 2 basis points, with investors unwilling to push yields any higher before Powell testifies.
Reuters, with files from bloomberg News