Before the Bell: US futures cautious about Trump misery, trade negotiations; RBC starts bank income



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US equity futures became cautious at the beginning of Wednesday when legal problems for former Donald Trump employees and the prospect of a low-level trading meeting weighed heavily on investor sentiment. On Bay Street, the futures had changed little, with Royal Bank starting the quarterly earnings season for banks with a record profit and a dividend increase.

Abroad, global equities were relatively stable, with MSCI's index for the entire country higher after the S & P 500 had an intraday record during Tuesday's session. That index is now at a very short distance from the longest bull runs in its history, depending on the standard used. To hit that mark, the S & P has to finish the session in black. Europe started to weaken the day, but remained stable when trade continued and the Asian markets remained mixed.

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Wednesday is the start of a trade meeting between US and Chinese officials. Mr Trump has already said that he does not expect any major developments from the session.

"With expectations that are so low, only the slightest hint of good news would be enough to ignite risk appetite," said Jasper Lawler, head of research for London Capital Group. "At the absolute minimum, the two parties must walk away from this meeting and agree to more talks."

That, he said, would give hope that the trade tariffs to be applied at the end of the month could be put on hold. "Under this scenario, we would expect the rise of the US dollar against the Japanese yen and the broader US equity market to raise the record slope costs on its way to a record run," said Mr. Lawler.

"If the two parties fail to agree to further talks, we could see that the S & P is dropping sharply from its record high and end up in safe haven currencies such as the yen increase."

Market sentiment is also tempered by developments in the United States, where former chairman Paul Manafort of Trump was found as guild of eight charges for financial offenses. Mr Trump's former lawyer pleaded guilty of campaign financing violations and other charges.

In this country, the Royal Bank of Canada recorded a record high of $ 3.109 billion or $ 2.10 per share in the third quarter. As expected, the bank also increased the dividend to 98 cents of 94 cents. The major banks in Canada are expected to see another solid reporting season with analysts predicting earnings growth of about 9 percent in the last quarter. Canadian Imperial Bank of Commerce is the next with its results before the start of trading on Thursday.

On Wall Street, retailers continue to report their income with Lowes Cos. And Target Corp. both publish results. Lowes' shares fell by more than 3 percent on the pre-sellers market on Wednesday, after the home improvement retailer missed out on the same sales. Lowes' earnings exceeded expectations with a corrected earnings per share of US $ 2.07. Wall Street was looking for income with that measure of about US $ 2.02. However, the same sales growth increased by 5.2 percent in the three-month period, in short, the analysts' increase by 5.3 percent per forecast.

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Later in the session, markets will also have a look at the Fed's machinations with the appearance of the last minutes of the central bank. The bank has already raised interest rates twice this year and economists expect two hikes before the end of 2018. Earlier this week, Mr. Trump said in an interview that he was not "in the clouds" with the march from the central bank to hiring financing costs. According to economists, it is unlikely that the comments will change the bank's course, but they may raise questions about the perception of the market by the market if a shift in the economic course of the nation leads the Fed to hold an interest rate increase in December. .

Overseas, European markets changed course to act a little higher after starting the session on the back foot. The pan-European STOXX 600 increased by 0.06% at the last check. The FTSE 100 in Great Britain rose 0.32 percent. The German DAX rose by 0.06 percent and the French CAC 40 rose by 0.28 percent.

In Asia, Nikkei ended up in Japan with 0.64 percent. The Hang Seng from Hong Kong has corrected early losses to reach 0.63 percent. The Shanghai Composite Index fell 0.70 percent.

Commodities

Oil prices were higher with Brent crude oil US $ 73 per barrel on the combined impact of a report showing a decline in US stocks and continued market concern about the potential impact of US sanctions on Iran. Brent oil was at the last check near the top of the daily range from US $ 72.70 to US $ 73.75. West Texas Intermediate was also more than 1 percent and fluctuated around the top of the daily range from US $ 65.98 to US $ 66.72.

"Oil prices are a bit higher at night due to a drop in rough US stocks and a weaker position [U.S.] dollar, while concerns about a potential shortage in future Iranian supply due to US sanctions also provide underlying support, "said OAMDA analyst Dean Popplewell in an early note.

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Figures released by the American Petroleum Institute Tuesday said US crude stocks fell by 5.2 million barrels last month. The market expected a decline closer to 1.5 million barrels. Traders will now turn their attention to the morning release of more official figures from the US Energy Information Administration. Analysts also expect these figures to show a clear decrease in inventories.

Meanwhile, the gold price was close to their highest level in a week before the release of the Fed minutes. Spot gold was relatively stable at the last check. Earlier in the session, prices reached US $ 1,197.98, the highest since August 14. Gold futures were also higher. A slightly weaker US dollar also lent support to bullion prices for the opening of the North American market.

Silver prices were higher. Platinum prices were mostly flat.

Currency & bonds and bonds

The Canadian dollar traded higher against its US counterpart, supported by higher oil prices and a somewhat weaker performance of the greenback against its global counterparts. Just before 7:00 am the dollar was close to the top of its daily range of 76.66 US dollar cents to 76.86 dollar cents.

The American dollar index, which hit a hit earlier this week on Mr. Trump on the Fed fell by about 0.1 percent to 95,138. Investors are waiting for the afternoon release of Fed minutes that are expected to show that the central bank is on course for a few more rate increases before the end of the year.

For Canada, the main economic release comes at 8:30 am EST with the Statistics Canada report on retail sales in June. The figures indicate the last major report before the release of August 30 of the GDP report for the second quarter. In the retail market, RBC economists expect a decrease of 0.4 percent for the month, partly due to a fall in sales figures for cars and the reception of petrol stations. On the BBP report, the bank's economists expect an annual growth of 3 percent in the quarter. At the moment, the market has taken into account a probability of around 40 percent of an interest rate increase at the policy meeting of the 5 Bank of Canada Sept. RBC says that an increase in October is a more likely scenario.

In other currencies, the euro rose against the US dollar for the sixth consecutive day with markets awaiting the Fed minutes and the outcome of the trade meeting between the US and China.

In bonds, the yield on the US 10-year note was lower at 2,833 percent. The return on the 30-year note was also lower with 2.997 percent.

Stocks set to see action

Target Corp. reported a better than expected increase of 4.9 percent in comparable sales in the second quarter as more customers visited stores and made purchases online. Target shares rose by about 4 percent in premarket trading on the results. On average, analysts had expected sales in stores that would open for at least a year to increase by 3.99 percent, Thomson Reuters I / B / E / S. Items without items earned in the quarter ended on August 4. profit of US $ 1.47 per share, higher than the average estimate of US $ 1.40 per share.

Newly appointed Air France-KLM chief executive Ben Smith held talks with the French minister of Transport, Elisabeth Borne, a spokesman for the government said Wednesday, while the aviation group trade unions are preparing to decide on further strike action on pay. The minister met Smith on Tuesday for a "first discussion of the main issues" that the group is facing, the spokesman said. The former director of Air Canada was named last week as the first non-French CEO of Air France, three months after his predecessor had stopped in the midst of paralyzing wage strikes.

Facebook has identified and banished hundreds of accounts, groups, and pages that are engaged in misleading political behavior, a much larger discovery than a & # 39; advanced & # 39; effort that was reported with a lot of tamtam three weeks ago, reports The Associated Press. The social network said Tuesday that it had removed 652 pages, groups and accounts linked to Russia and, unexpectedly, Iran, for "coordinated non-authentic behavior" that included sharing political material.

American Airlines, the largest US airline of passengers, said it would drop a route between Chicago and Shanghai, with the second direct flight from the US to China being canceled in four months. It had canceled a flight to Beijing in May, although it still runs daily flights to the capital from Los Angeles and Dallas-Fort Worth, Tex.

Read more:

While S & P 500 is approaching the record, investors are torn between celebrating or shrinking

Economic news

(8:30 am ET) Canadian retail sales for June. Estimation is a decrease of 0.2 percent compared to May. Without car, the projection is unchanged compared to the previous month.

(10 am AM) American existing home sales for July. Consensus on the Street is an annual increase of 0.7 percent per year.

(2 o'clock in the afternoon) US Federal Open Market Committee minutes from July 31 – August. 1 meeting has been released.

With Reuters and The Canadian Press


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