Equity Markets
U.S. and Canadian stock markets opened lower Tuesday as geopolitical tensions continued and kept investors nervous. Britain called an early election before Brexit talks began, tensions over North Korea continue, and the coming election in France is keeping investors on edge. Other political factors still out there include Syria and U.S. relations with Russia and China. Many markets are reopening after the Easter holiday long weekend.
In early trading, the Dow is off 0.5 per cent, with the S&P 500 down 0.4 per cent and Nasdaq off 0.3 per cent. The TSX 60 is also down 0.3 per cent.
European shares fell with the DAX off 0.6 per cent, the FTSE down 1.7 per cent, and the CAC off 1.2 per cent. Low-risk government debt, a favoured investment in uncertain times, was in demand, while gold held firm close to five-month highs touched on Monday, the day after a failed ballistic missiles test by Pyongyang.
French yields fell and the spread with Germany narrowed to its tightest since April 13 after an opinion poll put centrist Emmanuel Macron first in the first round of voting, just ahead of far-right, anti-euro candidate Marine Le Pen with a bigger gap to far-left representative Jean-Luc Melenchon. France's election is on Sunday.
In Asia, the Nikkei added 0.4 per cent, but the Shanghai index fell 0.8 per cent and the Hang Seng fell 1.4 per cent.
Commodities
Oil prices hit their lowest in 11 days on news that U.S. shale oil output in May is expected to post the biggest monthly increase in more than two years, fuelling concerns that U.S. production growth is undermining efforts to cut oversupply.
U.S. government drilling data showed shale production next month was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd.
Global benchmark Brent crude futures were down 49 cents at $54.87 a barrel. They touched $54.76 intraday, the lowest since April 7. U.S. West Texas Intermediate crude futures traded down 46 cents at $52.19 a barrel. Their intraday low was $52.16, also the weakest since April 7.
Copper was down 0.6 per cent at $$5,655 a tonne
Gold was marginally higher on the day at $1,283 an ounce, having touched a five-month high of $1,295 on Monday, bolstered by the dollar softening versus the yen, North Korea tensions and the French presidential election.
Currencies and bonds
The U.S. dollar steadied against the yen, with worries that U.S. currency manipulation complaints could touch Japan offset by U.S. Treasury Secretary Steven Mnuchin's favouring of a strong dollar in the long term.
Mr. Mnuchin told the Financial Times that he agreed with U.S. President Donald Trump's view that the dollar's strength in the short term was hurting exports, but that he saw the currency's strength over the long term as a positive.
But upbeat words from the two sides after the first round of talks in Tokyo failed fully to quell worries among investors that Japan's long-running efforts to weaken the yen will affect the dialog. Concerns about North Korea and French presidential elections also kept a lid on the dollar against the yen, traditionally a haven for capital in the face of political and economic stress.
U.S. 10-year Treasuries rose 0.9 per cent to 2.252 per cent after rising Monday from five-month lows.
The Canadian dollar was down 0.2 at 74.87 cents (U.S.). The Canadian 10-year bond was up 0.2 at 1.49 per cent.
Stocks set to see action
Bank of America reported a 44-per-cent rise in quarterly profit as higher interest rates bulked up earnings from loans and an increase in trading boosted revenue. The second-largest U.S. bank said net income attributable to shareholders rose to $4.35-billion in the quarter from $3.02-billion a year earlier. Earnings per share rose to 41 cents per share from 28 per share. Analysts on average had expected earnings of 35 cents per share, according to Thomson Reuters I/B/E/S. Its shares gained 0.7 per cent in early trading.
Goldman Sachs Group Inc. reported an 80 per cent jump in quarterly profit as the Wall Street bank benefited from a pick up in global equity and debt offerings. Net income applicable to common shareholders jumped to $2.16-billion in the first quarter, from $1.2-billion a year earlier. Earnings per share rose to $5.15 from $2.68, but that was far less than the $5.31 per share analysts had expected, according to Thomson Reuters I/B/E/S. Its shares were off 3.1 per cent in early trading.
Health insurer UnitedHealth rose 1.4 per cent after the company reported quarterly revenue and profit that beat analysts' estimates.
Johnson & Johnson slipped 2.8 per cent after the healthcare conglomerate reported quarterly revenue that missed analysts' expectations.
U.S. drug distributor Cardinal Health Inc. is buying medical device maker Medtronic Plc's medical supplies businesses for $6.1-billion in cash. Cardinal Health is acquiring Medtronic's patient care, deep vein thrombosis and nutritional insufficiency units. Cardinal's shares fell 11 per cent in early trading
U.S. motorcycle maker Harley-Davidson Inc. kept its 2017 outlook unchanged despite first-quarter shipments hitting the high end of the company's forecast. Its shipments fell 14.7 percent to 70,831 units in the quarter ended March 26, compared with its forecast of 66,000-71,000 units. Earnings were $1.05 per share, just beating analyst expectations of $1.02 per share. Its stock fell 5.4 per cent in premarket trading.
United Airlines' profit plunged 69 per cent in the first three months of the year, and that was before the terrible publicity surrounding the dragging of a bloodied passenger off a plane. The cost of fuel, labour and maintenance all rose sharply in the first quarter, helping push United's profit down to $96-million, despite higher revenue.The results released late Monday beat Wall Street expectations, however. In premarket trading Tuesday, United Continental's shares were up 0.5 per cent.
Streaming video pioneer Netflix Inc. reported late Monday that it ended the first quarter with fewer customers than Wall Street expected but issued a bullish forecast on the number of new subscribers it expects by midyear, in a positive sign for its big international expansion. Its shares were down 1.9 per cent in early trading.
Earnings expected today include: Bank of America Corp.; Citrix Systems Inc.; Comerica Inc.; Goldman Sachs Group Inc.; Harley-Davidson Inc.; International Business Machines Corp.; Johnson & Johnson; Kinder Morgan Inc.; Lam Research Corp.; Las Vegas Sands Corp.; Prologis Inc.; Rogers Communications Inc.; Roxgold Inc.; United Continental Holdings Inc.; UnitedHealth Group Inc.; WW Grainger Inc.; Winpak Ltd.
More reading: Tuesday's small-cap stocks to watch
Economic News
U.S. homebuilding fell in March as the construction of single-family homes in the Midwest recorded its biggest decline in three years, likely reflecting bad weather. Housing starts declined 6.8 per cent to a seasonally adjusted annual rate of 1.22 million units, the Commerce Department said. February's starts were revised up to a 1.30 million-unit pace from the previously reported 1.29 million-rate. Economists polled by Reuters had forecast groundbreaking activity falling to a 1.25 million-unit pace last month. Homebuilding was up 9.2 percent compared to March, 2016. Pointing to underlying strength in the housing market, building permits increased 3.6 per cent, driven by a 13.8-per-cent surge in the multi-family segment. While single-family permits fell 1.1 per cent, they were not too far from the more than nine-year high reached in February.
(8:30 a.m. ET) Canada international securities transactions for February.
(9 a.m. ET) Canada existing home sales and average prices for March. The estimate is increase of 3.5 per cent and 6.0 per cent, respectively, year over year.
(9 a.m. ET) MLS Home Price Index for March. Estimate is an increase of 16.6 per cent year over year.
(9:15 a.m. ET) U.S. industrial production and capacity utilization for March. Consensus is an increase of 0.5 per cent from February and 76.2 per cent, up 0.3 per cent from previous month, respectively.
(12:30 p.m. ET) Bank of Canada Senior Deputy Governor Carolyn Wilkins speaks in Toronto.
With files from wire services