Canada’s main stock index opened down Tuesday after the latest reading on inflation put the focus back on the Bank of Canada’s next move on interest rates. On Wall Street, key indexes were also weaker in early trading as disappointing economic data out of China weighed on global sentiment.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 163.94 points, or 0.81 per cent, at 20,126.6.
In the U.S., the Dow Jones Industrial Average fell 88.26 points, or 0.25 per cent, at the open to 35,219.37.
The S&P 500 opened lower by 10.85 points, or 0.24 per cent, at 4,478.87, while the Nasdaq Composite dropped 27.85 points, or 0.20 per cent, to 13,760.48 at the opening bell.
In Canada, investors got the latest reading on inflation this morning.
Statistics Canada said the annual rate of inflation in July rose to 3.3 per cent, from 2.8 per cent in June. Economists had been expecting a number closer to 3 per cent in the latest report. Month-over-month, the consumer price index was up 0.6 per cent, also higher than a forecast of a 0.3-per-cent increase.
However, the average of two of the Bank of Canada’s core measures of underlying inflation, CPI-median and CPI-trim, came in at 3.65 per cent compared with 3.70 per cent in June, Reuters reported.
“Overall, the strength in the underlying core components leaves our forecast for a final 25-basis-point hike from the BoC in September in place,” CIBC economist Katherine Judge said.
Also on Tuesday morning, Canadian investors will got a snapshot of the country’s housing market with the release of the July home sales figures from the Canadian Real Estate Association.
CREA said national home sales slid 0.7 per cent month-over-month in July. Actual monthly activity was up 8.7 per cent compared with the same month a year ago. The actual, not seasonally adjusted, national average sale price rose 6.3 per cent year-over-year.
On Wall Street, Home Depot reported quarterly results this morning. Later in the week, U.S. retail giants Walmart and Target are also set to release their latest earnings.
Home Depot said comparable sales fell 2 per cent in the second quarter, compared with analysts’ average estimate of a 3.54- per-cent drop, according to Refinitiv IBES data. The retailer also announced a US$15-billion share buyback plan.
Meanwhile, the U.S. Commerce Department reported that U.S. retail sales rose a better-than-expected 0.7 per cent in July from June. Sales for June were revised to a gain of 0.3 per cent. Excluding autos and gas, sales were up 1 per cent.
Overseas, the pan-European STOXX 600 was down 0.74 per cent by midday. Britain’s FTSE 100 lost 1.13 per cent. Germany’s DAX and France’s CAC 40 were off 0.76 per cent and 0.95 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.56 per cent after second-quarter GDP topped forecasts. Hong Kong’s Hang Seng finished down 1.03 per cent. New figures out of China showed slowing industrial output and retail sales. That country’s central bank also cut key policy rates.
Crude prices turned lower with fresh signs of weakness in the Chinese economy offset by rate cuts from that country’s central bank.
The day range on Brent was US$85.78 to US$86.68 in the early premarket period. The range on West Texas Intermediate was US$81.99 to US$82.91.
Figures released early Tuesday showed China’s economy continuing to wobble with retail sales and industrial spending down from the year before. However, the People’s Bank of China also lowered the rate on its one-year medium-lending facility to some financial institutions to 2.5 per cent, offering some support to sentiment.
“The demand side is weakening and that could stall the oil rally at the actual levels, forcing a return of the barrel of U.S. crude toward the US$80-per-barrel level, as worries regarding the Chinese recovery are real, and China will have to deploy further stimulus measures to fix things and bring investors back on their side of the table,” Swissquote senior analyst Ipek Ozkardeskaya said.
“If that’s the case however, oil prices could take a lift.”
Later Tuesday, traders will get the first of two weekly U.S. inventory reports with the release of data by industry group American Petroleum Institute. More official U.S. government figures follow on Wednesday morning.
In other commodities, spot gold fell 0.3 per cent to US$1,902.90 by early Tuesday morning, trading near Monday’s lows.
U.S. gold futures dropped 0.5 per cent to US$1,934.90.
The Canadian dollar was down amid weaker risk sentiment in broader markets while its U.S. counterpart slid against a group of world currencies after hitting its best level in more than a month during the previous session.
The day range on the loonie was 74.09 US cents to 74.40 US cents. The Canadian dollar is down more than 2 per cent against the greenback over the past month.
“The CAD has drifted a bit lower still this morning, easing in line with its major commodity currency peers in a reflection of weaker equity markets and softer commodity prices,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, slid 0.06 per cent to 103.11 after hitting a 1-1/2-month high at 103.46 on Monday, according to figures from Reuters.
Britain’s pound rose 0.12 per cent to US$1.2700, after rising as much as 0.28 per cent to $1.2720 following data showed a rise in British wages in the three months to June.
In bonds, the yield on the U.S. 10-year note was higher at 4.223 per cent in the predawn period.
More company news
Suncor Energy joined its global peers in reporting a sharp drop in quarterly profit, as oil and gas prices retreated from last year’s peak. Global oil prices slipped in the quarter from a year earlier, as a banking sector crisis and worries about a possible recession raised concerns around demand. Suncor also took a $275-million restructuring charge during the second quarter related to its plans to cut 1,500 jobs this year to reduce costs. -Reuters
(8:30 a.m. ET) Canadian CPI for July.
(8:30 a.m. ET) Canadian manufacturing sales and new orders for June.
(8:30 a.m. ET) U.S. retail sales for July.
(8:30 a.m. ET) U.S. import prices for July.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for August.
(9 a.m. ET) Canada’s existing home sales and average prices for July.
(9 a.m. ET) Canada’s MLS Home Price Index for July.
(10 a.m. ET) U.S. NAHB Housing Market Index for August.
(10 a.m. ET) U.S. business inventories for June.
With Reuters and The Canadian Press