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Equity Markets

Canada's main stock index fell on Tuesday, tracking global market sentiment, with financials and energy stocks leading the index lower.

The Toronto Stock Exchange's S&P/TSX composite index fell 36.69 points, or 0.24 per cent, to 15,373.09 shortly after the open.

Seven of the index's 10 key sectors were in the red, with materials, which rallied on surging gold prices, among the lone gainers.

U.S. stocks opened lower as investors turned risk averse ahead of British elections and former FBI Director James Comey's much-anticipated testimony before Congress later this week.

The Dow Jones Industrial Average fell 52.77 points, or 0.25 per cent, to 21,131.27. The S&P 500 lost 6.48 points, or 0.26 per cent, to 2,429.62. The Nasdaq Composite dropped 14.11 points, or 0.22 per cent, to 6,281.57.

Investors also moved away from risky assets in reaction to rising tensions in the Middle East.

On what BayernLB analysts called "Super Thursday," British voters will go to polls in an increasingly unpredictable general election, the European Central Bank is due to meet and later the same day former FBI director James Comey will testify before Congress.

"We have a big week or so ahead of us with the U.K. heading to the polls and the ECB announcing its latest monetary policy decision on Thursday and the Federal Reserve doing the same next Wednesday," said Craig Erlam, a market analyst for OANDA securities.

"Once these events pass, we may have a little more clarity and therefore see a little less caution in the markets."

World stocks fell while safe-haven gold and German government bonds were in demand on Tuesday.

European stocks fell early on Tuesday after leading Arab powers cut ties with Qatar the previous day, accusing it of supporting Islamist militants and Iran.

Britain's FTSE was off 0.25 per cent, Germany's DAX fell 1.09 per cent, and France's CAC declined 0.88 per cent.

Investors instead bought gold and German government bonds - two of the safest assets in the world - pushing gold prices to six-week highs and German 10-year borrowing costs to six-week lows.

Japan's Nikkei share average slumped on Tuesday, surrendering the 20,000 level after losses on Wall Street and a stronger yen sapped sentiment.

The Nikkei ended down 1 per cent at 19,979.90, moving away from Friday's high of 20,239.81, which was its loftiest since August , 2015.

China stocks ended higher on Tuesday, with consumer and financial shares lending support as investors pondered the impact of new regulations on initial public offerings and ahead of a flurry of economic data. The Shanghai Composite Index gained 0.35 per cent to 3,102.13 points and Hong Kong's Hang Seng was up 0.52 per cent.


Oil prices slipped further below $50 (U.S.) a barrel on Tuesday on concerns that a diplomatic rift between Qatar and several Arab states including Saudi Arabia could undermine efforts by OPEC to tighten the market.

Benchmark Brent crude oil was 10 cents a barrel lower at $49.37, down around 8 per cent from the open of futures trading on May 25, when an OPEC-led policy to cut oil output was extended into the first quarter of 2018.

Gold rose to its highest in seven weeks on Tuesday as weak economic data in the United States reduced expectations of rapid U.S. interest rate rises this year, pushing the dollar to a seven month-low and lowering U.S. bond yields.

Investors were also pushed to gold, seen as a safe place to park assets, by political uncertainty over the next few days.

Spot gold was up 1 per cent at $1,291.88 (U.S.) an ounce, having earlier touched its highest since April 18 at $1,292.16.  U.S. gold futures were 0.9 percent higher at $1,294.40 an ounce.

Currencies and bonds

The Canadian dollar was little changed against its U.S. counterpart on Monday, as investors shrugged off lower oil prices and positioned for comments by Bank of Canada Governor Stephen Poloz and other events later this week.

The currency was driven by "technically-related" trading, with investors "jockeying for position" ahead of some key events, said Mazen Issa, senior FX strategist at TD Securities.

The Bank of Canada will on Thursday release its review of developments in the financial system, followed by a news conference with Poloz. Investors will weigh the central bank governor's assessment of the health of the housing and mortgage markets in light of recent troubles at non-bank lender Home Capital.

The U.S. dollar sank to its lowest in six weeks against the yen on Tuesday, as more unsettling economic data drove U.S. government bond yields towards critical lows which have held since November and a handful of major risk events loomed.

The dollar index, which tracks the currency against a basket of trade-weighted peers, fell to its lowest level since the November U.S. election. Data on Monday of U.S. services sector activity slowing in May as new orders tumbled also hit the greenback.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year price fell 5 Canadian cents to yield 0.715 percent and the 10-year declined 11 Canadian cents to yield 1.413 percent.

On Friday, the 10-year yield touched a nearly seven-month low at 1.382 percent after weaker-than-expected U.S. employment data suggested a cautious approach to interest rate hikes from the Federal Reserve beyond June.

Stocks set to see action

Marijuana financier Cannabis Wheaton Income Corp. cut ties Monday with two investment banks with employees who own significant personal stakes in the company, in the midst of an $80-million financing. In the latest development around a small deal that's attracting outsize attention on Bay Street, Cannabis Wheaton and investment dealers Eight Capital and Canaccord Genuity Corp. announced they "mutually agreed to terminate" their relationship. The bankers were raising money that Cannabis Wheaton planned to invest in upstart pot producers, in exchange for a percentage of the companies' future marijuana sales.

The parent of Tim Hortons, which has faced rising pushback from its franchisees about its tight-fisted management style, held its annual meeting on Monday but didn't give them a chance to air their grievances. Daniel Schwartz, chief executive officer of Restaurant Brands International Inc., which acquired Tim Hortons in late 2014, cut off the meeting when other companies usually take questions from the audience.

General Motors is holding its annual meeting Tuesday where an activist shareholder has suggested  splitting the stock into two classes: One for capital appreciation, the other for those who want dividends. The move is in response to the company's stagnant stock price. But the automaker's management opposes the proposal as too risky. Its shares were up 0.35 per cent in premarket trading.

Shares of Perrigo fell 2 per cent in premarket trading after the drugmaker said its chief executive officer planned to retire. Its shares fell 1.9 per cent in premarket trading.

HD Supply Holdings was down 5.5 per cent after the industrial distributor said it would sell its waterworks unit to private equity firm Clayton, Dubilier & Rice for $2.5 billion. Its shares fell 3.8 per cent in premarket trading.

Apparel retailer Land's End lost 24 cents per share in its latest quarter, two cents more than expected, and revenue also missed targets.

Arts and crafts retailer Micheals Cos. missed estimate by a penny a share, with earnings coming in at 38 cents per share. Revenue fell shy of estimates as well, as same-store sales dropped 1.2 per cent. Its shares fell 6.7 per cent in premarket trading.

Japan's Sumitomo Metal Mining Co. on Tuesday said it had agreed to take a 27.75-per cent interest in a Canadian gold mining project from Toronto-based Iamgold Corp. for $195-million. The purchase of the stake in the Cote Gold Project in Ontario comes as Japan's biggest gold miner looks to boost its output through acquisitions and exploration.

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Economic News

(10 a.m. ET) Canada Ivey PMI for May

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for April.

With files from Reuters and Bloomberg