Coming off of a very strong November, December is off to a mixed start for equity markets. US index futures trading finds Dow futures flat and NASDAQ futures down 0.15%. Overseas, the DAX and FTSE are up about 0.6% to 0.7%, but the Hang Seng dropped 1.25% overnight.
Energy markets are also mixed. Natural gas is down 1.0%, while WTI Crude Oil is up about 0.2%. OPEC+ announced 2.2 mmbbl/d of production cuts for the first quarter of 2024, but 1.3 million of that were extensions of existing cuts. Recent market action suggests that the 0.9 mmbbl of new cuts were less than what traders had been hoping for. Metals are also mixed today with Gold flat, Silver down 0.5%, and Copper up 0.7%.
Treasury yields are steady today with investors looking ahead to comments from Fed Chair Powell, who is speaking at 11:00 am and 2:00 pm EST. Two other Fed officials are also speaking today. Investors may look to Powell for hints on US monetary policy and in particular if the Fed’s timeline outlook for interest rates (and particularly the timing of future rate cuts) aligns with what the recent drop in treasury yields has been pricing in.
Manufacturing PMI reports have been rolling out over the last 24 hours and continue this morning. Generally speaking, reports have landed in the high 40s, usually better than what the street had feared, but still below 50 in contraction territory. Notable reports included the particularly strong Chicago PMI (55.8 vs street 45.4), and China Caixin Manufacturing PMI (50.7 vs street 49.8) numbers both of which exceeded expectations and jumped back above 50 into expansion territory. Canada Manufacturing PMI (previous 48.6) is due at 9:30 am EST, followed by US ISM Manufacturing PMI (street 47.6) at 10:00 am EST.
Canada added 24.9K jobs in November which was better than the 15K the street had expected and last month’s 17.5K increase. Hourly Average Wage inflation pressure remained consistent (5.0% unchanged). US Construction Spending (Street 0.4%), is due at 10:00 am EST.
Canadian big bank earnings week wraps up today with mixed results from Bank of Montreal ($2.81 vs street $2.87) and National Bank ($2.44 vs street $2.26). This means the banks performance relative to expectations finishes at a 3-3 tie between banks who beat the street and banks who disappointed. Continuing two of the overall themes of this week, BMO raised its dividend but also announced a significant jump in loan loss provisions.