Stocks Consolidate as Focus Turns to Central Banks

US equities are consolidating yesterday’s big post-election rally which saw the big cap S&P 500 gain 2.5% and the small cap Russell 2000 soar 5.8%, with index futures up 0.2% to 0.5% this morning. Over in Europe, the Dax is up 1.4% on indications the country’s leading political coalition is fracturing and an election may be held next year, while the FTSE is flat. 

Chinese markets rallied overnight with Hong Kong up 2.0% and Shanghai up 2.5% on the back of a positive trade report. The Middle Kingdom posted a stronger than expected trade surplus ($95.2B vs street $75.1B) driven by strong growth in exports (12.7% vs street 5.0%). Imports (-2.3% vs street -1.5%), however, were disappointing and commodity action has been mixed on this news with Copper up 2.3%, but US Crude Oil down 1.0%.

The Bank of England announced a 0.25% interest rate cut today, as had been widely expected, and the Fed is also expected to cut by a quarter point this afternoon with the announcement due at 2:00 pm EDT. Ahead of the Fed announcement, the US 10-year treasury note yield is steady near 4.4%. The US Dollar is giving back some of yesterday’s big gains with the Euro, Yen, Loonie and Pound all up in the 0.4%-0.6% range.

Earnings season has resumed following the election break. Qualcomm beat expectations ($2.69 vs street $2.56, up % premarket). Warner Bros Discovery is up % premarket after posting a surprise profit. In Canada, insurers Manulife Financial* ($1.00 vs street $0.94) and Great West Lifeco ($1.14 vs street $1.07) both beat the street along with TC Energy ($1.03 vs street $0.97) and Canadian Tire ($3.60 vs street $3.02). BCE and Barrick Gold disappointed.

*Shares of Manulife Financial are held in portfolios managed by SIA Wealth Management.

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