Equity Markets
U.S. stocks opened slightly lower on Tuesday after a three-day holiday weekend as oil prices fell and investors assessed a barrage of economic data for clues regarding the health of the economy.
The Dow Jones Industrial Average fell 26.96 points, or 0.13 per cent, to 21,053.32. The S&P 500 lost 2.28 points, or 0.09 per cent, to 2,413.54. The Nasdaq Composite was up 3.95 points, or 0.06 percent, to 6,214.15.
Canada's main stock index see-sawed in early trade on Tuesday, helped by a rise in shares of Canadian National Railway Co after it avoided a workers' strike and gains for gold miners, while energy stocks weighed.
The Toronto Stock Exchange's S&P/TSX composite index was down 11.05 points, or 0.07 percent, at 15,410.86 shortly after the open.
Financial stocks will likely get some attention today as the last of Canada's biggest banks posts its latest results. Bank of Nova Scotia topped market expectations with an adjusted profit of $1.62. Analysts had expected the figure to come in closer to $1.56. Scotiabank also announced plans for a share buyback amounting to about 2 per cent of its outstanding stock. So far, most of the country's big banks have been able to sidestep a jittery housing market and worries over the U.S. business climate to post better-than-expected results in the latest quarter. Laurentian Bank also reported earnings Tuesday, posting adjusted earnings per share of $1.39, ahead of estimates of $1.37. As well, Laurentian raised its dividend by a penny.
The energy sector could also draw some attention as Kinder Morgan Canada pushes ahead with its initial public offering on the Toronto Stock Exchange, despite new political challenges emerging in B.C. to its proposed Trans Mountain pipeline expansion. Earlier in the week, the provincial NDP and Green Party leaders said they have a deal to form government and will oppose the project. Prime Minister Justin Trudeau said Tuesday that the pipeline will proceed regardless of political threats. Shares in Kinder Morgan's Canadian unit began trading Tuesday below the IPO price of $17 in Toronto.
On Wall Street, economic reports will be front and centre. The U.S. Commerce Department said Tuesday consumer spending rose 0.4 per cent in April after a 0.3-per-cent rise in March. It was the best showing since December. Incomes rose 0.4 per cent.
"With markets still heavily pricing in a rate hike at the next meeting in a couple of weeks, there is the potential for disappointment yet again today," OANDA senior market analyst Craig Erlam said in a morning note.
Overseas, European shares were mostly lower, with bank shares among the worst performers, in part due to dovish comments from European Central Bank chief Mario Draghi. After being closed for a long weekend, Britain's FTSE 100 was down 0.27 per cent. Germany's DAX was down 0.05 per cent and France's CAC 40 was off 0.50 per cent.
In Asia, markets in China, Hong Kong and Taiwan markets were closed. Japan's Nikkei ended down 0.02 per cent, held back by a stronger yen.
Commodities
Oil prices slipped in early trading Tuesday as competing forces of OPEC production cuts and rising U.S. output continued to fight it out on the markets. Benchmark crude and U.S. West Texas Intermediate were both lower with WTI continuing to trade below $50 (U.S.) a barrel.
Reuters reports that Goldman Sachs analysts have cut their forecast for crude prices, citing falling U.S. production costs that they say will keep supply climbing for several years. Goldman says that once OPEC's production growth resumes after its self-imposed cuts, U.S. and OPEC output would rise by 1 million to 1.3 million bpd between 2018 and 2020.
"While we are bullish on near-term prices as inventories normalise ... 2018-19 futures need to be in the $45-$50 range," Goldman said.
So far, U.S. drillers have added rigs for the last 19 weeks, with the current level sitting at its highest since early 2015.
In metals, gold prices were steady after hitting a one-month higher on Monday. The prospect of early elections in Italy, rising worries about Greek debt and narrowing polls in the upcoming British election have all collectively helped move investors away from riskier assets recently.
Early Tuesday, spot gold prices touched their highest level in a month before pulling back a bit. Gold futures were off modestly as the U.S. dollar rose.
Silver prices, meanwhile, managed their best showing since late April before falling back slightly. Copper prices drifted with Chinese markets closed for a public holiday.
Currencies and bonds
The Canadian dollar was trading lower with the week's biggest economic report - first-quarter GDP - still a day away and oil trading down. The day range so far is 74.19 cents (U.S.) to 74.34 cents. Economists expect Wednesday's report to show an annual growth rate of about 4.3 per cent after growing at a rate of 2.6 per cent in the final quarter of 2016.
"We're looking for 3.5 per cent GDP growth for Q1, putting the three-quarter average at 3.3 per cent, the best pace since 2013," BMO's chief economist Douglas Porter said in a recent note. "And, there's likely upside to our forecast, with the monthly data suggesting we could see a 4-handle."
On Tuesday, Statistics Canada said the country's current account gap widened by $2.3-billion in the first quarter to $14.1-billion, as the goods balance moved from a surplus to a deficit. Economists had expected a deficit of about $11.4-billion. The report had little immediate impact on the loonie, but economists said the worse-than-expected result offered some insight into the currency's recent fluctuations. "There's a lot of red ink in Canada's current account, a reason why the recovery in crude prices hasn't yielded much of a rebound in the (Canadian dollar)," CIBC economist Avery Shenfeld said in a note.
In world currencies, the U.S. dollar index was up slightly in early trading in Europe as concerns over the performance of U.S. President Donald Trump on the world stage eased. The euro was lower in early going on low inflation readings in Spain and parts of German as well as comments from ECB chief Mario Draghi, which signalled continued commitment to emergency stimulus.
In bonds, benchmark 10-year U.S. Treasury yields touched 2.224 per cent, their lowest in 11 days, while 30-year yields touched 2.885 per cent to mark their lowest in 12 days, according to Reuters.
Stocks set to see action
Bank of Nova Scotia, Canada's third-biggest lender, reported second-quarter results which beat market expectations benefiting from a strong performance from its international business. The bank said earnings per share, excluding one-off items, increased to $1.62, compared with $1.46 a year earlier. Analysts had on average forecast earnings of $1.56 per share, Thomson Reuters I/B/E/S data showed.
Prime Minister Justin Trudeau says Kinder Morgan's Trans Mountain pipeline will proceed despite the political threat to kill the project in British Columb. Kinder Morgan is facing new challenges to its proposed pipeline expansion as New Democratic Party and Green Party leaders say they have a deal to form government in British Columbia and will oppose the project. Kinder Morgan's shares were down 1.8 per cent in premarket trading.
Canadian National Railway Ltd. has reached a tentative contract agreement with the Teamsters union representing 3,000 freight train conductors, ahead of a Tuesday morning strike deadline.
Shares in British Airways owner IAG fell over 4 per cent in early trading on Tuesday after a huge IT failure left 75,000 passengers stranded over the holiday weekend, dealing a major blow to its reputation.
London Stock Exchange has agreed to buy The Yield Book, Citigroup's fixed-income analytics and indexing business, for $685-million in cash, the companies said on Tuesday. Citigroup's shares were off 0.4 per cent in premarket trading.
U.S.-listed shares of Frontline were up 2.5 per cent in premarket trading after reporting first-quarter results.
Autozone was up 0.2 per cent after Goldman Sachs raised its rating on the auto parts retailer to "buy."
Whiting Petroleum fell 3.5 per cent as Goldman Sachs cuts its rating on the stock to "sell" from "neutral."
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Economic News
Canada's current account deficit widened by $2.3-billion in the first quarter to $14.1-billion, as the goods balance moved from a surplus to a deficit, Statistics Canada says. Economists had expected a deficit of about $11.4-billion.
Statscan said Tuesday the industrial product price index rose 0.6 per cent in April, mainly due to higher prices for energy and petroleum products. The raw materials price index increased 1.6 per cent, mainly as a result of higher prices for crude energy products.
The U.S. Commerce Department said consumer spending rose 0.4 per cent in April after a 0.3-per-cent rise in March. It was the best showing since December. Incomes rose 0.4 per cent.
U.S. home prices climbed in March at the strongest rate in nearly three year as a dwindling supply of houses for sale is causing prices to significantly outpace income growth. The Standard & Poor's CoreLogic Case-Shiller 20-city home price index released Tuesday rose 5.9 per cent over the past 12 months ended in March, the most since July 2014. Home values are increasing at more than double the pace of average hourly earnings, making it more difficult for many people to afford to buy a home.
U.S. consumers were slightly less confident in May for the second straight month, but they remain bullish overall. The Conference Board, a business research group, said Tuesday that its consumer confidence index fell to 117.9 from 120.3 in April. The index hit 124.9 in March, its highest mark in 16 years.
With files from Reuters and The Associated Press