World markets are sloppy to start the week. US index futures are down 0.1% to 0.3%, consolidating Friday’s gains of 0.35% to 1.75%. European markets are mixed with the Dax down 0.1% and the FTSE up 0.3%. Asia Pacific trading was mostly soft with Tokyo up 0.5%, but Sydney, Seoul and Shanghai all falling 1.0% and Hong Kong slipping 0.2%.
Treasury yields are on the rise again this morning after Fed Chair Powell reiterated in a 60 Minutes interview over the weekend that the Fed is not in a hurry to cut interest rates and that the number of cuts this year is likely less than what markets have been pricing in. Central banks remain front and center this week with a steady stream of Fed speakers out on the circuit. Also the Reserve Bank of Australia is meeting on Tuesday and Bank of Canada Governor Macklem is speaking tomorrow.
The US 10-year treasury note yield has climbed back up to 4.10%, while the Germany 10-year Bund yield has crept up to 2.30% igniting another rally in the US Dollar. Gold is down 0.7% this morning, while Silver is down 1.2%.The Euro, Aussie and Canadian Dollars are all down about 0.3%. Commodities also in retreat again today alongside Chinese markets with Copper down 0.4% and US Crude Oil down 0.5%.
Earnings season continues this morning headlined by results from McDonalds which beat the street on earnings but fell short on sales ($2.95 vs street $2.82, same store sales 3.4% vs street 4.7%) due to the impact of war on Middle East locations and has dipped 1.0% in premarket trading. Caterpillar* is up 4.7% in premarket action after posting significantly stronger than expected earnings ($5.23 vs street $4.76).
This week features fewer reports from US mega cap stocks but a lot of results from US mid and small cap stocks plus Canadian companies. Results are due across a wide spectrum of sectors including Insurance, Restaurants, Energy, Communications and Materials. Headliners include Simon Property after the close this afternoon, Ford and Dupont tomorrow, Disney and Sun Life on Wednesday, ConocoPhillips, Cameco and BCE on Thursday, finishing with Pepsico, Enbridge and Telus on Friday.
Service PMI reports have been rolling out this morning and generally have been better than expected and improved from last month with several countries including the UK, Japan and Italy above 50 in expansion territory. US ISM Service PMI is due at 10:00 am EST (street 52.0 vs previous 50.6). The Prices Paid inflation component (previous 57.4) may also attract attention. The rest of this week is relatively quieter for data headlined by Canadian PMI Tuesday, trade data and Bank of Canada minutes on Wednesday, China inflation on Thursday and Canadian employment/wage inflation on Friday. Friday is also Lunar New Year.
*Shares of Caterpillar are held in some portfolios managed by SIA Wealth Management.