Home Commodities Premarket: TSX futures muted as commodities decline offset investor optimism

Premarket: TSX futures muted as commodities decline offset investor optimism


Futures for Canada’s main stock index were subdued on Wednesday, as optimism for a sustained rally following the index nearing a record high in the previous session was contained by lower commodity prices.

June futures on the S&P/TSX index were up 0.1% at 6:45 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX composite index ended 0.1% higher on Tuesday, extending its gains to a fifth session. The index closed at its highest level in four weeks.

The index began its rally after the U.S. Federal Reserve left its key interest rate unchanged at its meeting last week, but indicated that its next move will be to cut rates.

Data showing slowing U.S. job growth in April on Friday and easing annual wage gains fueled expectations that the central bank would commence its easing cycle in September, further uplifting sentiment.

Wall Street futures were also muted on Wednesday after a strong run of gains that pushed the benchmark S&P 500 to over three-week highs.

On the commodities front, prices of both precious and base metals fell on Wednesday as the dollar firmed, making the commodities more expensive.

Oil prices fell by over $1 as industry data showed a pile-up in crude and fuel inventories in the U.S., and cautious supply expectations emerged ahead of an OPEC+ policy meeting next month.

Data-wise, investors will look at employment data for April, due later in the week in Canada, alongside a weekly report of jobless claims due in the U.S.

In Canadian corporate news, second-largest oil producer Suncor Energy beat first-quarter profit estimates on Tuesday, boosted by strong demand for refined products and record oil sands production.

U.S. stock index futures were muted on Wednesday after a strong run of gains that pushed the benchmark S&P 500 to over three-week highs, as investors sought more clarity on the Federal Reserve’s plans for interest rate cuts.

The S&P 500 closed higher for a fourth straight session on Tuesday, its best winning run since March, while the blue-chip Dow scored a fifth session of gain in its longest positive run since December 2023.

Markets have mostly traded higher so far in May, as investors took comfort from an upbeat earnings season as well as a recent softer-than-expected labor market report, which tempered concerns about the Fed keeping interest rates higher for longer.

Investors will focus on comments on Fed Vice Chair Philip Jefferson, Boston Fed President Susan Collins and Governor Lisa Cook during the day for fresh clues on the central bank’s monetary easing plans.

With the earnings season at its tail-end and only a few economic reports expected this week, markets are now awaiting next week’s consumer prices reading to gauge if inflation is cooling.

Traders are pricing in a 49% chance of the U.S. central bank cutting interest rates by 25 basis points in September, according to the CME Group’s Fedwatch tool, up from 43% a week ago. They are also pricing in a 36% chance of another rate cut in December.

S&P 500 e-minis were up 0.25 points. Nasdaq 100 e-minis slipped 3.5 points, or 0.02%, and Dow e-minis were up 13 points, or 0.03%

Overall, the first-quarter earnings have been much better than expected. Of the 424 S&P 500 companies that reported through Tuesday, nearly 78% topped analysts’ estimates, according to LSEG data. In a typical quarter, 67% beat estimates.

Uber, Fox Corp and Philip Morris, among other U.S. companies, will report results before the opening bell.

Reddit climbed nearly 14% premarket after the social media platform said it could post an adjusted profit in the second quarter, thanks to its booming advertising business and content-licensing deals with AI companies.

Lyft climbed 5.4% after the ride-hailing company projected higher-than-expected gross bookings and a core profit for the current quarter. Rival Uber also gained 3.3%.

Rivian slid 4.3% after the electric-pickup truck maker stuck to a 2024 production forecast that was well below Wall Street targets and reported a wider-than-expected first-quarter loss as it ended a weeks-long manufacturing halt.

World shares were mostly higher on Wednesday after U.S. stocks held relatively steady on Wall Street.

Oil prices fell and the yen weakened further against the U.S. dollar.

Germany’s DAX rose 0.2% to 18,626.00 and the CAC 40 in Paris jumped 0.6% to 8,122.40. Britain’s FTSE 100 gained 0.4% to 8,347.77.

The futures for the S&P 500 and the Dow Jones Industrial average were nearly unchanged.

In Asian trading, Tokyo’s Nikkei 225 lost 1.6% to 38,202.37.

Nintendo Co.’s share price sank 5.4% after the company’s forecasts disappointed investors and it announced that news of a successor product to its popular Switch device will be made by March 2025.

Sony Corp. shed 5% amid speculation over a potential buyout of Paramount Global by Sony Pictures and the private equity firm Apollo Global Management.

Market players are watching to see how authorities react to the yen’s persisting weakness against the U.S. dollar.

The dollar rose to 155.35 Japanese yen from 154.50 yen. Japanese officials have expressed concern after the yen’s value slipped to 160.25 per dollar in recent days, prompting the Ministry of Finance to intervene.

“Exchange-rate moves could have a big impact on the economy and prices, so there’s a chance we may need to respond with monetary policy,” Kazuo Ueda, governor of the Bank of Japan, told lawmakers on Wednesday.

A weak yen helps the profits of Japanese companies that earn much of their revenue overseas, but fluctuations in rates can upend planning and the yen’s weakness has severely eroded the purchasing power of both households and businesses, pushing up costs of imports of food and energy, among other things.

Elsewhere in Asia, Hong Kong’s Hang Seng index shed 0.8% to 18,331.76 and the Shanghai Composite index gave up 0.6%, falling to 3,128.48.

Australia’s S&P/ASX 200 edged 0.1% higher to 7,804.50, while the Kospi in South Korea rose 0.4% to 2,745.05.

Taiwan’s Taiex gained 0.2%.

On Tuesday, the S&P 500 edged 0.1% higher in a quiet day following three straight leaps for the index of at least 0.9%.

The Dow Jones Industrial Average added 0.1% and the Nasdaq composite slipped 0.1%.

Markets have steadied after Federal Reserve Chair Jerome Powell said the central bank remains closer to cutting its main interest rate than hiking it, despite a string of stubbornly high readings on inflation this year. A cooler-than-expected jobs report on Friday suggested the U.S. economy could pull off the balancing act of staying solid enough to avoid a bad recession without being so strong that it keeps inflation too high.

In other trading, U.S. benchmark crude oil fell $1.05 to $77.33 per barrel in electronic trading on the New York Mercantile Exchange. It lost 10 cents on Tuesday to $78.38 per barrel.

Brent crude oil, the international standard, declined $1.05 cents to $82.11 per barrel.

The euro dropped to $1.0738 from $1.0755.

– Reuters and The Associated Press

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