Investing.com | Nov 05, 2018 04:39
European stocks as well as futures for the Dow, NASDAQ 100 and S&P 500 came under pressure on Monday after waning expectations for a US-China trade deal weighed on Asian trade overnight.
However, both US contracts and the STOXX Europe 600—which was weighed on by carmakers and bank shares—managed to bounce back, climbing into positive territory by late European morning.
Investors bought into US Treasurys, probably motivated by ongoing equity declines and Friday’s strong monthly jobs report, which bolstered the case for the Federal Reserve to keep raising interest rates. The rotation pushed the yield on 10-year bonds into a short-term correction, below 3.2 but still well above the short-term uptrend.
h2 Global Financial Affairs/h2On Friday, US stocks took a hit after the White House's top economic advisor Larry Kudlow contradicted hints by US President Donald Trump of a forthcoming trade agreement with China. Despite losses on the last session of the week, the S&P 500 still managed to seal its best weekly performance in six months.
Nonfarm payroll figures smashed expectations, showing a labor market still in expansion mode. Perhaps more significant, year-on-year wage gains passed the three-percent level for the first time since 2009, underscoring the possibility of robust consumer spending—which makes up 75 percent of US economic growth.
US companies, three quarters of which have already reported financial results, are on track for posting their fastest earnings growth in 8 years, thereby helping support the country's upbeat economic outlook. Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), for instance, which are among the companies that reported results on Friday, confirmed the strongest quarterly performance in four years. After their respective releases, the stocks—as well as their dividends—may be even more attractive.
Apple (NASDAQ:AAPL), which can be seen as a barometer of the broader tech sector universe, beat estimates and hit an all-time record on services revenues. However, the tech giant's stock suffered its biggest selloff in four years on softer guidance. Does Apple's slide signal a plateau in the market, as investor appetite for growth has become unrealistic? Or does it underpin a period of correction in an otherwise bull market?
Wall Street is sharply divided on the issue. While we have highlighted some glitches in the current equity market, we lean towards the latter explanation.
In FX trading, the yen is weaker against the dollar, as the greenback became the favorite safe-haven currency during trade jitters. The dollar is set to close at the highest level in almost a month.
In commodities markets, gold gave up early gains but remained in positive territory.
Conversely, oil kept falling for the sixth consecutive day, breaking below the $63 level for the first time since early April. A day after the official start of US sanctions against Iran, fears of a supply squeeze were eased by some waivers as well as comments by the Middle Eastern country's President Hassan Rouhani that Tehran will shun restrictions and resume selling oil.
h2 Up Ahead/h2Bank of Canada Governor Stephen Poloz speaks on Monday.
Canadian Building Permits for September are released on Tuesday.
The Canadian Ivey PMI for October is released on Wednesday.
The Canadian New Housing Price Index for September is released on Thursday.
Stocks
Canada’s S&P/TSX Composite closed down 0.20 percent last Friday.
Currencies
The Canadian loonie was up 0.09 percent against the U.S. greenback early Monday, trading at 0.7638.
Bonds
Canada’s Canada 10-Year was down early Monday at 2.529, a 0.20-percent decrease.
Commodities
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