Before the bell: TSX, Wall Street futures muted ahead of U.S. inflation data

Equities

Wall Street futures were in a holding pattern early Tuesday as traders await the latest reading on inflationary pressures in the U.S. economy. Major European markets saw modest gains. TSX futures were up slightly with a raft of corporate earnings due.

In the early premarket period, futures linked to the three key U.S. indexes hovered near break even. On Monday, all three put in a positive showing, gaining more than 1 per cent apiece. The S&P/TSX composite index finished Monday’s session up 0.44 per cent.

Key on Tuesday will be the release of U.S. inflation figures for January before the start of trading.

“Today’s report is expected to act as an important indicator as to how many more 25-basis-point rate hikes might be in the pipeline as the Fed looks to push inflation back to its 2-per-cent target,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“Today’s numbers for January could well go some way to reinforcing the more hawkish commentary we’ve seen from various Fed officials since the January rate meeting as well as upend U.S. stock markets even further,” he said in an early note.

Economists are expecting to see the consumer price index rise 0.4 per cent on a monthly basis in January. The annual rate of U.S. inflation is seen ticking lower to 6.2 per cent, from 6.5 per cent a month earlier. Core inflation is seen going down to 5.5 per cent from 5.7 per cent from a month earlier.

In Canada, earnings are in focus with results due this morning from Tim Hortons parent Restaurant Brands International. TC Energy, Hydro One and CAE also release results before the start of trading. After the close, energy giant Suncor reports its latest quarter.

U.S. companies reporting include Coca-Cola and Airbnb.

Investors are also closely watching for developments in Rogers Communications $20-billion bid for Shaw Communications. The companies extended the self-imposed deadline for the deal to Feb. 17 from Jan. 31 as they wait for final approval from Industry Minister François-Philippe Champagne.

Overseas, the pan-European STOXX 600 rose 0.45 per cent. Britain’s FTSE 100 was up 0.47 per cent. Germany’s DAX and France’s CAC 40 advanced 0.26 per cent and 0.47 per cent, respectively.

In Asia, Japan’s Nikkei closed up 0.64 per cent after the Japanese government announced Kazuo Ueda as its nominee to head the country’s central bank. Hong Kong’s Hang Seng slid 0.24 per cent.

Commodities

Crude prices were lower after the U.S. government said it would release more crude from its Strategic Petroleum Reserve and as economic concerns continue to cloud the demand outlook.

The day range on Brent was US$85.67 to US$86.42 in the early premarket period. The range on West Texas Intermediate was US$78.99 to US$79.61.

The U.S. Department of Energy said Monday it would sell 26 million barrels of oil from the SPR, a release that would likely push the reserve to its lowest level since 1983, according to a Reuters report. The department had weighed cancelling the sale but such a move would have required action from Congress.

“Energy traders were expecting to hear news about refilling the SPR and not tapping them for more supplies,” OANDA senior analyst Ed Moya said.

Meanwhile, traders continue to watch economic indicators amid concern that a slowing global economy could put the squeeze on crude demand.

“Most indications point to a global oil market that is likely to tighten and that prices could gain momentum in the coming months,” Stephen Innes, managing partner with SPI Asset Management, said.

“However, the potential upside for crude oil prices could be capped if the expected recovery in global oil demand is slower than anticipated, particularly in China. Moreover, weakening U.S. gasoline demand makes one wonder how consumption is evolving elsewhere.”

Later Tuesday, markets will get the first of two U.S. weekly inventory reports, with new numbers due from the American Petroleum Association. More official figures follow on Wednesday from the U.S. government.

In other commodities, gold prices were higher as the U.S. dollar pulled back.

Spot gold was up 0.5 per cent at US$1,861.91 per ounce by early Tuesday morning, after falling to its lowest since early January on Monday.

U.S. gold futures rose 0.4 per cent to US$1,870.50.

Currencies

The Canadian dollar was largely steady in early trading while its U.S. counterpart slid against a group of world currencies.

The day range on the loonie was 74.88 US cents to 75.04 US cents ahead of the North American open.

There were no major Canadian economic releases due Tuesday.

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, fell 0.19 per cent to 103.02 by early Tuesday morning. The index is down about 10 per cent since hitting a two-decade high in September, according to figures from Reuters.

Britain’s pound rose 0.32 per cent to US$1.2179. The euro was up 0.23 per cent at US$1.0750.

The Japanese yen rose 0.31 per cent to 132 per U.S. dollar Kazuo Ueda was nominated as the Bank of Japan’s next governor.

Economic news

(8:30 a.m. ET) U.S. CPI for January.

With Reuters and The Canadian Press