Coming off a strong Thursday and mixed Friday for US indices, US index futures are trading flat to down slightly to start the new trading week. European action is similar with the Dax flat and the FTSE down 0.25%.
Sentiment toward China has started to soften again with Shanghai falling 0.9% and Hong Kong sliding 0.5%. This retreat also appears to be impacting China-sensitive commodities with Copper down 1.1% and US Crude Oil down 0.4%. Other metals and energy action is mixed with Gold down 0.4%, Platinum down 2.2% and Natural Gas up 4.4%. Bitcoin and Ethereum are down 0.9%-1.0% suggesting that recent risk appetite may be starting to fade.
Month end is on Leap Day Thursday and until then, it’s relatively quiet for economic news. The main events are Manufacturing PMI reports on Friday and US Core PCE Inflation (the Fed’s favorite measure) on Wednesday. US Construction Spending comes out Friday but North American employment numbers are not out until later next week. The Reserve Bank of New Zealand, who was the lead domino for the recent tightening cycle, meets Wednesday and may give an indication on whether any central banks are seriously considering interest rate cuts in the coming month or not.
Canada’s Big Six banks plus the two largest regional banks report results this week, mostly between Tuesday and Thursday. Investors may look to their reports for insights into whether Canada is in an recession or not, the health of the financial system in both Canada and the US, and whether interest rate cuts may be coming any time soon. Their quarter ran from November to January, a particularly strong period for stocks and bonds, so their Capital Markets and Wealth Management divisions could potentially boost overall results. Stateside, earnings reports are dominated by retailers and computer hardware producers.