Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Canada’s main stock index rose on Tuesday, as a jump in oil prices lifted energy shares, while gains in material and financial companies also supported the market.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 38.87 points, or 0.24 per cent, at 16,145.11.
Energy stocks rose 1 per cent with Encana up 2.4 per cent and Canadian Natural Resources up 1.2 per cent as oil rose to around US$67 a barrel on Tuesday, supported by Saudi Arabia’s plan for further voluntary supply curbs in April and a cut in oil exports from Venezuela due to a power outage.
Materials stocks rose 09 per cent as Detour Golf rose 3 per cent and Goldcorp rose 2.1 per cent. Financial shares rose 0.06 per cent.
In the U.S., the S&P 500 and Nasdaq eked out gains at open on Tuesday as February’s benign inflation data supported the Federal Reserve’s “patient” approach towards further rate hikes, while a second day of losses in Boeing pressured the Dow.
The Dow Jones Industrial Average fell 50.58 points, or 0.20 per cent, at the open to 25,600.30.
The S&P 500 opened higher by 4.04 points, or 0.15 per cent, at 2,787.34. The Nasdaq Composite gained 13.79 points, or 0.18 per cent, to 7,571.85 at the opening bell.
The Labor Department said its Consumer Price Index (CPI) rose 0.2 per cent, in line with estimates, implying benign underlying inflation last month and supports the Federal Reserve’s “patient” approach for further interest rate hikes this year.
Investors are also watching out for developments on the Brexit front. British lawmakers, are due to vote on the Brexit deal again at around 3:00 p.m. ET.
Last-minute tweaks to Britain’s divorce deal lifted stocks worldwide, but the gains soon petered out after Britain’s Attorney General Geoffrey Cox said a revised deal with the EU did not give Britain legal means of exiting the so-called backstop arrangement unilaterally if “intractable differences” arose.
“It is difficult to assess the seemingly conflicting stories on Brexit that come out. The story has gotten so complicated in terms on how it could be resolved,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
Boeing Co fell 3.7 per cent, extending a fall from the previous session as more countries grounded the planemaker’s best selling line of jets amid heightened anxiety among travellers about the safety of the plane.
“The Boeing news is in focus as it is a big part of the U.S. economy and whether Boeing is responsible in some way or if there is a problem in its aircraft is something investors are still trying to digest,” Meckler said.
The world’s largest planemaker, which is the best performing Dow component this year by a wide margin, fell as much as 13.4 percent on Monday and weighed on the Dow Jones Industrial average.
After the deadly Ethiopian Airlines crash of Boeing’s new 737 MAX 8 airplane, many airlines around the world have grounded the plane while countries including Singapore and Australia have moved to suspend operation of the aircraft in and out of their airports.
Most global airlines – including Air Canada and WestJet – will continue to fly the Boeing 737 Max 8 aircraft as investigators seek to understand why one of the planes crashed on Sunday, the second in five months, a disaster that again killed all people on board.
However the blue-chip Dow pared losses, and all three indexes ended Monday higher boosted by a tech-led rally. Wall Street had posted five straight sessions of declines in the previous week, their biggest fall since 2018-end.
Among other stocks, Coca-Cola Co edged up 0.08 per cent after HSBC downgraded the soda maker’s stock.
F5 Networks Inc fell 7.5 per cent after network software maker said it would buy privately held, NGINX.
Oil rose to around US$67 a barrel on Tuesday, supported by Saudi Arabia’s plan for further voluntary supply curbs in April and by a cut in oil exports from Venezuela due to a power outage.
Saudi Arabia, seeking to drain a supply glut and support prices, plans in April to keep its oil output well below the level required of it as part of an OPEC-led supply cutting deal, a Saudi official said on Monday.
Brent crude, the global benchmark, rose by 70 cents to US$67.28 a barrel. U.S. West Texas Intermediate crude added 57 cents to US$57.36.
“This shows Saudi Arabia’s resolve to keep the oil market balanced by keeping oil supply tight,” said Carsten Fritsch, analyst at Commerzbank.
“Additional buoyancy has come from news that the massive power outage in Venezuela is also hampering the country’s oil exports.”
Crude has rallied this year after the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, returned to supply cuts as of Jan. 1.
Saudi Arabia has voluntarily cut its supply by more than the deal requires and in April will keep output “well below” 10 million bpd, the Saudi official said - below the 10.311 million bpd that the kingdom had agreed to pump.
“We see a tightening underlying physical crude balance as a key pillar of support for outright prices at this point in the year,” said analysts at JBC Energy in a report.
Gold prices rose on Tuesday as the U.S. dollar weakened against the pound after the European Commission accepted amendments to the U.K.’s Brexit deal.
Spot gold rose 0.1 per cent to US$1,294.90 per ounce, while U.S. gold futures added 0.3 per cent to US$1,294.70 an ounce.
Gold also found some support from increasing concerns about global growth. U.S. retail sales rose modestly in January, but the recovery was not seen strong enough to alter the course of a U.S. economy that was losing momentum in early 2019.
“Market is now awaiting U.S. consumer prices index (CPI) data and any changes may affect the stance of Federal Reserve,” said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.
“There is no clear direction for gold and for a period of one week or two we can see it trading around US$1,280 and US$1,310 range.”
Among other precious metals, palladium was up 0.2 per cent at US$1,539.12 per ounce, while Platinum gained 0.4 per cent to US$827.74 per ounce. Silver advanced 0.4 per cent to US$15.37 per ounce, after touching its highest since March 1 earlier in the session.
Currencies and bonds
The Canadian dollar edged lower against its U.S. counterpart on Tuesday but held near its strongest in nearly a week as oil prices rose and tame U.S. inflation data weighed on the greenback.
The price of oil, one of Canada’s major exports, was supported by Saudi Arabia’s plan for further voluntary supply curbs in April and a cut in oil exports from Venezuela due to a power outage. U.S. crude oil futures rose nearly 1 per cent to US$57.33 a barrel.
The U.S. dollar fell against a basket of major currencies after data showed the smallest annual gain for U.S. consumer prices in nearly 2-1/2 years.
At 9:13 a.m., the Canadian dollar was trading 0.1 per cent lower at 1.3403 to the greenback, or 74.61 U.S. cents. The currency touched its strongest intraday level since last Wednesday at 1.3383.
The six-day high for the loonie came after domestic data on Friday showed a bumper jobs gain in February.
The dollar pared gains again the Japanese yen and extended losses against the euro after U.S. consumer prices showed that inflation remains low despite a tight labor market, bolstering the Federal Reserve’s case for keeping interest rates on hold.
The Consumer Price Index rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in nearly 2-1/2 years. The dollar index, which measures the greenback against a basket of six rivals, fell, and was last down 0.17 per cent on the day to 97.054.
The Canadian 10-year bond yield was down slightly at 1.753 per cent while the U.S. 10-year Treasury yield was up slightly 2.6447 per cent.
Stocks to watch
Dick’s Sporting Goods reported adjusted earnings of US$1.07 for the latest quarter, a penny better than expected. While revenue also came in above expectations, the retailer gave a weaker-than-expected outlook for its full year earnings. Its shares fell nearly 7 per cent in premarket trading.
Coca-Cola was downgraded to “hold” from “buy” by HSBC, which cited margin pressures on the company. The stock was down 0.7 per cent in premarket trading.
Yum China Holdings is partnering with China’s two biggest state oil giants to open franchise fast-food outlets at gas stations in the country, in a bid to tap new growth areas as the domestic economy slows. More than 100 outlets, likely KFC restaurants, will be opened at gas stations owned by Sinopec Corp and China National Petroleum Corporation (CNPC) over the next three years, Yum China said on Tuesday, without giving any financial details. The two Chinese oil firms collectively operate over 50,000 gas stations in the country.
Tesla CEO Elon Musk should not be found in contempt of court because he has complied with the terms of a securities fraud settlement, his attorneys wrote in documents filed Monday night with the U.S. District Court in Manhattan. Musk’s lawyers wrote that a Feb. 19 tweet merely restated prior disclosures on electric car production volumes. They wrote that the tweet after the markets closed did not reveal material information, nor did it alter the mix of data available to investors. The lawyers also accused the Securities and Exchange Commission of censorship and of violating Musk’s First Amendment rights.
Earnings include: Acreage Holdings Inc.; BTB REIT; Badger Daylighting Ltd.; Bird Construction Inc.; Black Diamond Group Ltd.; CES Energy Solutions Corp.; Chesswood Group Ltd.; Fission Uranium Corp.; Information Services Corp.; Pine Cliff Energy Ltd.; SIR Royalty Income Fund; Surge Energy Inc.
(8:30 a.m. ET) U.S. CPI for February. Consensus is an increase of 0.2 per cent from January.
With files from Reuters