Equities
U.S. stock futures pointed higher early Wednesday as political turmoil in Italy continued to cast a shadow over world markets. Investors on Bay Street get another round of bank earnings today with results from Bank of Montreal and National Bank of Canada. Later in the morning, the markets also get the Bank of Canada’s latest policy announcement, although no move on interest rates is expected. Bay Street futures were modestly positive ahead of the North American open.
“European equity markets are largely positive this morning, but political uncertainty still looms over Italy and Spain,” CMC Markets analyst David Madden said. “Short covering and bargain-hunting have pushed stocks higher, but as the underlying political problems are far from being fixed, the positive move might not last long.”
Trade concerns also continue to haunt global markets, he said, after the United States issued a surprise trade announcement this week, saying it still holds the threat of imposing US$50-billion in import tariffs unless Beijing deals with intellectual property issues.
Markets took some solace early Wednesday from reports that Italy’s two anti-establishment parties - the 5-Star Movement and the League - were again looking at attempting to form a coalition government, easing worries over the possibility of a snap election. On the weekend, the two parties had dropped plans after President Sergio Mattarell blocked a cabinet pick.
On Bay Street, bank earnings will be front and centre with results from Bank of Montreal and National Bank.
Bank of Montreal topped market forecasts reporting earnings excluding items of $2.20 a share. Analysts had been expecting earnings closer to $2.12. The bank also raised its dividend by 3 cents from the preceding quarter to 96 cents. The dividend is up 7 per cent from a year ago.
National Bank hiked its dividend to 62 cents a share from 60 cents. It also reported earnings per share of $1.44, up from $1.28 a year earlier. Excluding items, earnings per share totaled $1.45, topping analysts forecasts of earnings of $1.39.
Elsewhere, Canadian Pacific Railway shares could see some attention after failed contract talks resulted in more than 3,000 workers going on strike. The walkout began at 10 p.m. ET on Tuesday and came after months of talks. Separately, CP reached an agreement with the union representing 360 signal workers, averting a labour disruption with those workers.
On Wall Street, Results are due from Michael Kors and Dick’s Sporting Goods.
Overseas, the pan-European STOXX 600 was little changed at last check. Banking shares were among those struggling Wednesday amid concerns over fallout from Italy’s political situation. Britain’s FTSE was up 0.16 per cent. Germany’s DAX rose 0.34 per cent. France’s CAC 40 fell 0.53 per cent.
In Asia, markets were mostly lower as renewed trade concerns weighed. Japan’s Nikkei ended down 1.52 per cent. Banking and metal sectors were among the worst performers. The broader Topix was down 1.46 per cent.
Hong Kong’s Hang Seng fell 1.40 per cent. The Shanghai Composite Index lost 2.53 per cent.
Commodities
Crude prices were up slightly in early going with tight supply offsetting continuing concerns about possible OPEC production increases. Brent crude was higher and had a range for the day of US$74.81 to US$75.95. West Texas Intermediate was also positive with a range so far today of US$66.35 to US$67.15.
Brent crude has lost nearly US$5 since the middle of the month when it touched a three-and-a-half year high of US$80.50 a barrel following reports that OPEC’s June meeting could see members and non-member Russia move to increase production by a million barrels a day after more than a year of capping output.
Later Wednesday, the markets will get U.S. inventory figures from the American Petroleum Institute. Those numbers will be followed Thursday by the more official weekly figures from the U.S. Energy Information Administration. Analysts are expecting that report to show a decline in crude inventories of about 600,000 barrels.
In other commodities, gold prices were mostly steady as concerns over U.S. trade with China and the political situation enticed investors into safe-have holdings despite a firmer U.S. dollar. Spot gold was little changed at last check while gold futures for June delivery were slightly lower.
“There has been a little bit of support from what has been happening in Italy and the potential implications for the euro zone from the Italian crisis,” Capital Economics commodities economist Simona Gambarini told Reuters.
“But it doesn’t seem like the worries are big enough to warrant an increase in prices,” she said.
Silver prices were also little changed early on.