Stock markets around the world have turned decisively downward overnight and into the morning. Overseas, The Hang Seng lost 0.9%, the Nikkei fell 1.1%, the CAC is down 1.0%, the Dax is down 0.7% and the FTSE is down slightly. Yesterday’s small losses for US indices have accelerated with NASDAQ futures down 1.3%, S&P futures down 0.9%, and Dow futures down 0.5%.
Sentiment has turned bearish following a series of negative reactions to earnings reports from Mega Caps. Tesla earnings fell short of expectations ($0.52 vs street $0.61, down 8.5% premarket). Alphabet beat the street on earnings ($1.89 vs street $1.85), but soft sales for YouTube were enough to dip it into the red with a 4.2% drop premarket. Visa is down 3.9% premarket after reporting in-line results. Texas Instruments is up 1,6% premarket after beating the street ($1.22 vs street $1.16). Canadian National Railway kicked off earnings season north of the border with a big miss ($1.84 vs street $1.93) and is down 3.5% premarket. Results from IBM, Ford, Newmont, and Chipotle are due after the close today.
The Bank of Canada announces its latest interest rate decision at 9:45 am EDT today. It cut its benchmark rate at its last meeting and investors are now looking to see if they are one and done like the European Central Bank, if they are prepared to go two cuts in a row, or if they go on hold but hint towards more cuts later this year. A cut now would suggest rather than celebrating victory over inflation, the central bank may be getting worried about the health of the economy. A pause today would suggest confidence in the state of the economy. What the Bank of Canada decides and any comments it makes in its statement about the North American economy could provide hints toward what the Fed may be talking about when the US central bank meets next week.
US Crude Oil is bouncing back with a 1.2% gain after API reported a bigger than expected drawdown of 3.9 mmbbl in this week’s US oil inventory report. DOE weekly inventories are due at 10:30 am EDT. Natural Gas is down 2.6%. In metals action, Copper is down 0.2%, Gold is up 0.2%.
Flash PMI reports from around the world have been mixed. US Flash Manufacturing PMI (street 51.7) and Flash Services PMI (street 54.4) are due at 9:45 am. US New Home Sales are due at 10:00 am EDT.