U.S. stock futures added to early gains after new inflation figures signalled a gradual pickup in price pressures. The increase, however, was tempered by news that U.S. President Donald Trump had ousted Rex Tillerson as secretary of state. On Bay Street, futures were also slightly higher with oil prices stabilizing somewhat after the previous session's losses. Overnight, world shares were mostly flat with the MSCI all-country world index of stocks, which tracks shares in 47 countries, rising less than 0.1 per cent.
According to the latest figures, the U.S. consumer price index rose 2.2 per cent in February compared with the same month a year earlier. That's also up from January's annual rate of 2.1 per cent and in line with analysts forecasts. For the month CPI rose 0.2 per cent, down from January's 0.5 per cent. The February decline came on the back of moderating gasoline prices and a decline in rent costs.
Although the Federal Reserve relies on different measures of inflation, the CPI report was being closely watched by the markets. Traders had been debating the likelihood of four U.S. interest rate hikes this year, but the latest inflation figures appear to offer little support for more aggressive increases.
"The Fed has no reason to get any more aggressive on rate hikes than its current dot plot forecast already builds in," CIBC World Markets chief economist Avery Shenfeld said in a note after Tuesday's inflation report.
Ahead of the open, Mr. Trump confirmed in a tweet that CIA director Mike Pomeo would take over as secretary of state, replacing Mr. Tillerson. Mr. Trump gave no explanation for the change.
On Bay Street, attention will turn this morning to a speech by Bank of Canada Governor Stephen Poloz. He's set to speak at 10:30 a.m. (ET) on the subject of today's labour market and the future of work. A news conference will be held after the speech.
On the corporate side, shares in Eldorado Gold could see some movement after the miner announced "several changes" to its senior management team. The moves include the departure of its chief financial officer Fabiana Chubbs at the end of next month. Eldorado says the changes are intended "to support the company's strategy of focusing on delivering production and earnings growth from its portfolio of high quality assets." Eldorado is looking for a replacement for Ms. Chubbs.
On Wall Street, Qualcomm shares were down nearly 5 per cent in premarket trading on news that the White House had moved to block chip maker Broadcom Ltd.'s proposed takeover of the company, ending what would have been the biggest tech sector takeover on record. The decision was made over concerns that the deal would cost the United States' lead in creating technology and setting standards for next generation of mobile cell phone communications would be lost to China if Singapore-based Broadcom acquired San Diego's Qualcomm, according to Reuters.
Overseas, markets in Europe were mostly flat. The pan-European 600 STOXX was up a slim 0.06 per cent at last check, with major sectors mixed. Britain's FTSE 100 was largely unchanged. France's CAC 40 rose 0.38 per cent. Germany's DAX advanced 0.13 per cent.
Asian markets were mixed with Japan's Nikkei ending up 0.66 per cent after a choppy session. Hong Kong's Hang Seng edged up 0.02 per cent. The Shanghai Composite Index slid 0.46 per cent.
Crude prices steadied somewhat early on after the previous session's losses although rising U.S. output continues to weigh on sentiment. Brent and West Texas Intermediate had been trading higher in the predawn hours, but both gave back those early gains as the North American open approached. The day range on Brent is US$64.67 to US$65.25. WTI had a day range of US$61.13 to US$61.69.
Both crude benchmarks lost about 1 per cent on Monday.
"Oil prices fell on the back of concerns that surging U.S. production ... could push inventories in the U.S. higher," ANZ bank said on Tuesday.
The U.S. Energy Information Administration posts its latest weekly production figures on Wednesday. In a report released on Monday, the EIA said U.S. crude production will likely rise by 131,000 barrels a day in April to hit a record 6.954 million barrels a day. The International Energy Agency projects that U.S. production will climb above 11 million barrels a day by late 2018, taking the top spot from Russia.
In other commodities, gold prices were slightly lower on a stronger U.S. dollar and concerns that upcoming inflation data could increase market expectations for further U.S. interest rate hikes this year. Spot gold and U.S. gold futures for April delivery were both lower at last check.
"Gold traders are adopting a more neutral stance ... While a March hike is fully priced in, traders usually get a bit anxious awaiting the Fed statement and key forward guidance," said Stephen Innes, APAC trading head at OANDA.
Silver prices, meanwhile, were a touch higher.
Currencies and bonds
The Canadian dollar was little changed after its U.S. counterpart pulled back slightly on inflation figures showing a tempered rise in price pressures. The loonie had a day range so far of 77.66 US cents to 77.93 US cents.
For the Canadian dollar, the key event will be a speech by Bank of Canada Governor later in the morning, although the markets aren't braced for any big surprises after the central bank held rates steady last week, citing concerns over trade and slower household borrowing.
"Any comments on the current stance of policy are unlikely to deviate much from last week's BoC statement," RBC chief currency strategist Adam Cole said. "The bank did acknowledge firmer wages in their rate statement last week but argued that they are still consistent with some slack."
Meanwhile, the U.S. dollar index, which weighs the greenback against a basket of world currencies, was slightly lower at 89.85 after the U.S. Labor Department reported an annual rate of inflation of 2.2 per cent, in line with market forecasts. Traders said a higher-than-expected reading could stoke concerns that the Fed could wind up hiking interest rates four times before the end of 2018. The Fed meets again next week and is widely expected to hike interest rates at that session.
In other currencies, the U.S. dollar was near a two-week high against the yen. The Japanese currency is under pressure after the minister of finance confirmed Monday that it altered documents related to a discounted sale of state-owned land to a school operator with ties to Prime Minister Shinzo Abe's wife.
In bonds, the yield on the U.S. 10-year note ticked higher at 2.877 per cent. The yield on the 30-year note was also a touch higher at 3.14 per cent.
Stocks set to see action
Cannabis producer Aphria Inc. said Tuesday that the company received a license amendment from Health Canada that provides it with additional production space of 200,000 square feet, as part of its Part III expansion at its facility in Leamington, Ontario. This will more than triple the Company's production capacity of medical cannabis from 9,000 kg annually to 30,000 kg annually, Aphria said in a statement.
Over 1,000 Amazon workers in Spain plan to stage their first strike with a two-day walkout to protest what unions claim are efforts to reduce employees' rights, union Comisiones Obreras (CCOO) said on Tuesday. The strike, which has been called by Spain's largest union CCOO together with other unions, will take place March 21 and 22 and will include 1,100 workers at Amazon's San Fernando logistic warehouse on the outskirts of Madrid, CCOO said. The union claimed the company aims to block salary increases, cut wages and reduce payments for those working weekends or holidays as part of a new contract agreement.
Bombardier Inc.'s plan to sell a manufacturing plant on a coveted piece of land near Toronto is running into opposition from the company's own employees, Bloomberg reports. Unifor, the union that represents about 2,000 production and office staff at the Downsview facility, is lobbying government officials to reject any requests for a re-zoning to allow residential development, which would make it easier for Bombardier to find a buyer. Downsview, where the company assembles Global 6000 business jets and Q400 turboprops, is now restricted to industrial use.
Apple Inc. is acquiring Texture, the all-you-can-read digital magazine service partly owned by Rogers Communications Inc. For Apple, the move to buy Texture – which gives subscribers access to more than 200 U.S. and Canadian magazines for between $10 and $15 a month – is being hailed as another way for the iPhone maker to increase its service revenue. The company hopes to increase the money it earns from services such as movie rentals, music streaming and app downloads to US$50-billion by 2021., The Globe's Christine Dobby reports.
The global economy will see its strongest growth in seven years in 2018 thanks to a rebound in trade and investment, the OECD said on Tuesday, while also warning a trade war could threaten the improved outlook. Updating its outlook for G20 economies, the Organization for Economic Co-operation and Development raised its global growth forecast for both 2018 and 2019 to 3.9 per cent – the highest since 2011 – from a previous estimate of 3.6 per cent for both years. The raised forecast was in part due to expectations that U.S. tax cuts would boost the world's biggest economy, it said.
The U.S. Labor Department said its Consumer Price Index rose 0.2 per cent last month after jumping 0.5 per cent in January. In the 12 months through February, the CPI rose 2.2 per cent, up from 2.1 per cent in January as the weak reading from last year dropped from the calculation. Excluding the volatile food and energy components, the CPI gained 0.2 per cent after accelerating 0.3 per cent in January. The year-on-year increase in the so-called core CPI was unchanged at 1.8 per cent in February.
(10:15 a.m. ET) Bank of Canada Governor Stephen Poloz speaks at Queen's University in Kingston, Ont., on "Today's Labour Market and the Future of Work."
With files from Reuters and The Canadian Press