Here are five things you need to know this morning:
Futures in the green: Markets seem poised for overall gains today, as traders bet that inflation data later this week with give the U.S. Federal Reserve licence to keep cutting interest rates as swiftly as they hope. Expectations for the CPI print on Thursday are for the headline rate to cool to 2.3 per cent, down from 2.5 per cent previously. That’s still hotter than the current pace in Canada, where the last inflation number showed the uptick in the cost eased to two per cent. Currently, the market is expecting just a 25-point cut from the Fed at their next policy meeting, but another 50-pointer is at least on the table. And it should be in Canada too, according to a former Bank of Canada official. Former Deputy Governor (and regular BNN commentator) Paul Beaudry told Bloomberg yesterday he thinks there are plenty of reasons for the BOC to pick up the pace as soon as this month.
U.S.-listed Chinese names sell off: While the market seems set to be in the green overall, names linked to China are plunging into the red after Beijing stopped well short of unveiling more stimulus spending. The ADRs of names like Alibaba, Baidu, JD.com Li Auto and others are down by double digits. And foreign firms that are heavily dependent on Chinese consumer spending like Estee Lauder, Las Vegas Sands and Amer Sports are also lower.
Pepsi fizzles: Another name to the downside is snack and beverage giant Pepsico. The company cut its guidance for the year after consumer demand was unexpectedly weak this summer. Revenue edged down to just over US$23 billion, bucking analyst expectations for a slight gain. And profit decreased to $2.93 billion from $3.09 billion before. Shares are down about one per cent in the premarket, for a stock that has mostly moved sideways this year and missed out on the overall market rally and a noteworthy 17 per cent gain for rival Coke.
Milton taking aim at Florida: Hurricane Milton is churning its way across the Gulf of Mexico, gathering strength as it goes. It’s already a Category 4 storm, enough to make it one of the strongest to ever make U.S. landfall, with some models seeing it double in size even as it weakens in intensity. It’s on track to hit somewhere near Tampa, Florida on Wednesday evening, but its exact trajectory and intensity are still unclear. While it’s impossible to downplay the human toll of an expected 15-foot storm surge and winds already in excess of 230 kilometres per hour, markets are tallying some of the economic impacts. Insured losses could top US$200 billion, Bloomberg reports, while natural gas traders are already pricing in a drop in demand due to reduced demand from power plants knocked offline.
Trade deficit balloons to $1.1B: After a slight delay from its planned release of 8:30 eastern time, Statistics Canada reported this morning that Canada’s economy recorded a trade deficit of $1.1 billion in August. It marks the sixth deficit in a row and came in twice as large as the $500 million economists were expecting. Exports fell by one per cent, led by lower oil prices. Imports, meanwhile, grew by 0.3 per cent.