Equities
Canada’s main stock index saw a muted start Tuesday as investors weigh results from a pair of the country’s big banks. On Wall Street, key indexes were also treading water as traders await key economic data later in the week.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 10.81 points, or 0.05 per cent, at 20,014.33.
In the U.S., the Dow Jones Industrial Average fell 28.86 points, or 0.08 per cent, at the open to 34,531.12.
The S&P 500 opened lower by 0.56 points, or 0.01 per cent, at 4,432.75, while the Nasdaq Composite dropped 17.90 points, or 0.13 per cent, to 13,687.23 at the opening bell.
“If the U.S. stock indices close in negative territory for this month, it would be the first negative month for the S&P 500 in more than 5 months,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said in an early note.
“It is important to emphasize that this particular month, the S&P 500 flirted with its all-time high, so it is very natural to experience some profit taking, which is the main reason behind the current sell-off.”
On the fundamental side, he said, markets have experienced a sell-off mainly due to uncertainty about the Fed’s next monetary policy move.
“Many in the markets believe that a September rate hike is still very much on the table, although several Fed members are of the mind frame that they are very much done with the interest rate hike,” he said.
Markets are now pricing in a more than 70-per-cent chance that the Fed will hold steady on rates in September but a roughly 60-per-cent chance of a hike by November, the CME FedWatch tool suggests.
In Canada, earnings from the country’s biggest banks continue. Bank of Montreal and Bank of Nova Scotia reported third-quarter results this morning.
The Globe’s Stefanie Marotta reports that BMO earned $1.45-billion, or $1.97 per share, in the three months that ended July 31. That compared with $1.37-billion, or $1.95 per share, in the same quarter last year. Adjusted to exclude certain items, including acquisition-related costs, the bank said it earned $2.78 per share. That fell below the $3.09 per share analysts expected, according to Refinitiv.
Meanwhile, Scotiabank earned $2.21-billion, or $1.72 per share, in the three months that ended July 31. That compared with $2.61-billion, or $2.10 per share, in the same quarter last year. Adjusted to exclude certain items, including additional income taxes, the bank said it earned $1.73 per share. That matched the $1.73 per share analysts estimated, according to Refinitiv.
BMO’s stock was down more than 1 per cent shortly after the opening bell in Toronto. Scotiabank stock was up more than 1 per cent.
Royal Bank and Toronto-Dominion Bank both reported last week, offering a mixed bag of results. The rest of Canada’s big lenders report results through the week.
On Wall Street, investors get earnings from retailer Best Buy this morning and HP after the close of trading. On the economic side, U.S. employment figures are due Friday while a reading on the Fed’s key inflation measure also comes out later in the week.
Overseas, the pan-European STOXX 600 was up 0.79 per cent by afternoon. Britain’s FTSE 100 jumped 1.68 per cent after being closed on Monday. Germany’s DAX and France’s CAC 40 advanced 0.52 per cent and 0.51 per cent.
In Asia, Japan’s Nikkei finished up 0.18 per cent. Hong Kong’s Hang Seng rose 1.95 per cent.
Commodities
Crude prices were up modestly in early trading with as demand and supply concerns continue to play out while storms heading toward the U.S. gulf coast pose a risk to production in the region.
The day range on Brent was US$84.11 to US$84.84 in the early premarket period. The range on West Texas Intermediate was US$79.79 to US$80.50.
Markets continue to weigh the potential impact on demand of uncertainty over the future course of interest rates and recent weakness in the Chinese economy. Traders are now awaiting key U.S. jobs figures, due on Friday.
Meanwhile, Tropical Storm Idalia hjit western Cuba on Monday and was almost a hurricane as it headed toward Florida, Reuters reported. The storm is likely to cause power outages and could impact crude production on the eastern side of U.S. Gulf Coast.
“Crude oil steadied above the $80 per barrel with the news that the tropical storm Idalia could interrupt crude production in the Gulf Coast and put an additional short-term pressure on oil prices,” Swissquote senior analyst Ipek Ozkardeskaya said.
Later in the day, markets will get weekly inventory figures from the American Petroleum Institute. More official numbers are due on Wednesday morning from the U.S. Energy Information Administration.
In other commodities, gold prices rose as the recent runup in the U.S. dollar took a breather and Treasury yields pulled back.
Spot gold climbed 0.2 per cent to US$1,922.50 per ounce early Tuesday morning, trading close to its highest level since Aug. 10 reached on Monday. U.S. gold futures gained 0.2 per cent to US$1,950.30.
Currencies
The Canadian dollar was down slightly while its U.S. counterpart slipped against a group of currencies with key economic data due later in the week.
The day range on the loonie was 73.45 US cents to 73.61 US cents in the early premarket period. The loonie is down more than 2 per cent over the past month against the greenback.
There were no major Canadian economic releases due Tuesday.
On world markets, the U.S. dollar index, which weighs the currency against a group of global counterparts, slid 0.06 per cent to 103.88, after slipping 0.2 per cent on Monday. The index is up about 2 per cent so far this month. Traders are awaiting U.S. jobs data this week as well as a reading on the Federal Reserve’s preferred measure of inflation.
The euro was up 0.1 per cent to US$1.0828, according to figures from Reuters. Britain’s pound was last at $1.262, up 0.17 per cent on the day, moving off last week’s two-month lows.
In bonds, the yield on the U.S. 10 year note was lower at 4.20 per cent in the predawn period.
More company news
High Liner Foods Inc. says chief executive Rod Hepponstall is stepping down. The company says its board has accepted Hepponstall’s resignation, effective on or before Jan. 2, 2024. High Liner says it will begin a comprehensive internal and external search for a new CEO. Hepponstall has been chief executive at the seafood company since May 2018. -The Canadian Press
3M said on Tuesday it had agreed to pay US$6-billion to settle nearly 260,000 lawsuits accusing it of selling defective combat earplugs that caused hearing loss in hundreds of thousands of current and former U.S. military service members. Under the agreement, 3M will contribute a total amount of US$6-billion between 2023 and 2029, which is structured under the agreement to include US$5-billion in cash and US$1-billion in 3M common stock, the company said. The industrial giant said it will record a pre-tax charge of about US$4.2-billion in the third quarter of 2023. -Reuters
Top U.S. electronics retailer Best Buy Co Inc on Tuesday reported a smaller-than-expected drop in quarterly comparable sales, as deeper discounts encouraged bargain-hunting Americans to shop for high-end products like televisions and laptops. The company’s comparable sales fell 6.2% in the second quarter ended July 29, compared with analysts’ estimates of a 6.92% drop, according to IBES data from Refinitiv. -Reuters
Economic news
(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index (20 city) for June.
(9 a.m. ET) U.S. FHFA House Price Index for June.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for August.
(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for June.
With Reuters and The Canadian Press
Terry Weber