Markets Shrug Off U.S. Debt Negotiations

Markets Shrug Off U.S. Debt Negotiations
The Chase by BNN.ca Staff:

The markets are stubbornly failing to reflect the lack of progress in U.S. Congressional debt-limit negotiations. Although the major stock indices pulled back more than a half-percent yesterday, the futures market indicates Wall Street will bounce back today. Asian markets gained ground, and Europe – after starting the Tuesday trading session mixed but mostly higher – turned more negative on news that the British economy is, indeed, growing - but at a slower pace.

The loonie broke above the $1.06 level overnight and has traded this morning as high at $1.0612 U.S. – surpassing the three-and-a-half year high touched last Thursday. The Canadian dollar has typically been viewed as being "riskier" than the Japanese yen or the U.S. dollar, but with the United States approaching the deadline to raise its federal debt-limit or risk defaulting on some of its financial obligations, currency traders are increasingly looking at the loonie as a safer place to be invested. The U.S. Dollar Index, which tracks the American currency against six of its main trading partners, has fallen to the lowest level since June 7.

In earnings news, it was a good news bad news situation for Ford. The good news: the automaker's quarterly profit beat Wall Street expectations helped by higher prices and improved sales in North America of smaller cars. The bad news: improving profits make labour negotiations with the United Auto Workers more difficult. We'll be watching the conference call.

Rogers Communications beat expectations. The house of Ted made more money from smartphones – but reported flat profit as its fought hard to keep its lead position in Canada's wireless sector from being assailed by competitors.

Second-quarter profit at Cenovus more than tripled, helped by higher refining margins and strong crude prices. Rising crude prices also helped BP Plc – which has recovered from the $17 billion quarterly loss it posted a year ago, while fighting the Gulf of Mexico oil spill. In the latest quarter, BP earned $5.6 billion. That works out to a profit of about $61 million per day.

Every morning Managing Editor Marty Cej writes a "chase note" to BNN's editorial staff listing the stories and events that will be in the spotlight that day. In his absence, today's note was written by BNN's web editors.