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Equities

Stock indexes on both sides of the border opened lower Monday, weighed down by global growth worries and concern over progress in trade talks between the United States and China.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 31.91 points, or 0.19 per cent, at 16,867.78.

On Wall Street, the Dow Jones Industrial Average fell 83.62 points, or 0.31 per cent, at the open to 26,851.45.

The S&P 500 opened lower by 8.57 points, or 0.29 per cent, at 2,983.50. The Nasdaq Composite dropped 11.18 points, or 0.14 per cent, to 8,106.49 at the opening bell.

On world markets, MSCI’s all-country index slid 0.2 per cent after surveys of purchasing managers in France, Germany and the euro zone all came in weaker than expected.

The euro zone survey showed business growth across the bloc ground to a halt in September. IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index (PMI) fell to 50.4 in September from 51.9 in August. The latest reading was below market forecasts and just above the key 50 mark, which separates growth from contraction in the sector. The latest reading was the lowest since the middle of 2013.

Markets were also weighing latest developments in the U.S.-China trade talks after mid-level discussions last week in Washington. Beijing called the talks “constructive” while Washington labelled the discussions “productive.” However, an element of uncertainty remained after Chinese officials cancelled a planned visit to a U.S. farm on Friday. Higher level talks are expected next month.

“Trade tensions between the two largest economies in the world are having an impact around the global, and the dreadful manufacturing figures from Germany this morning is a great example of how the problem spills out beyond the U.S. and China,” David Madden, market analyst with CMC Markets U.K., said. “The DAX is the worst performer in Europe on the back of the manufacturing update. Germany is feeling the pain from the trade dispute, plus it also has the uncertainty of Brexit to contend with.”

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In corporate news, Halifax-based DHX Media Ltd. said fourth-quarter revenue rose 12 per cent to $108.8-million. The company reported a net loss of $62.8-million or 47 cents a share in the quarter, compared with a loss of $21.6-million or 16 cents a year earlier. Adjusted earnings rose to $20.2-million in the fourth quarter, from $16-million last year. DHX also said it will change its name to WildBrain. “Rebranding as WildBrain embraces our commitment to creativity, imagination and innovation, and our 360° approach to brand management,” CEO Eric Ellenbogen said in a statement. DHX shares were up more than 2 per cent in early trading.

Canadian miner First Quantum Minerals Ltd said Monday it had no knowledge of any potential takeover bids but confirmed discussions around a possible sale of a minority stake in its Zambian copper assets. Last week, Bloomberg reported First Quantum was drawing preliminary takeover interest from global miners. First Quantum opened down about 10 per cent in Toronto.

In Europe, Thomas Cook, the world’s oldest travel firm, collapsed on Monday, leaving hundreds of thousands of travellers stranded around the globe.

The U.K.’s Civil Aviation Authority (CAA) said Thomas Cook had now “ceased trading with immediate effect" and the regulator and government would work together to bring the more than 150,000 British customers home over the next two weeks. The travel company had been engaged in last ditch talks over the week in an effort to stave off the collapse.

“I would like to apologize to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years,” Chief Executive Peter Fankhauser said in a statement released early Monday. “It is a matter of profound regret to me and the rest of the board that we were not successful.”

In Europe, the pan-European STOXX 600 was down 0.84 per cent in afternoon trading. In the wake of the Thomas Cook collapse, other European travel and tour stocks rose. TUI AG jumped 6.23 per cent. Shares of Ryanair, British Airways owner IAG and easyJet were all higher.

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Britain’s FTSE 100 was off 0.24 per cent. Germany’s DAX sank 1.17 per cent. France’s CAC 40 lost 1.08 per cent.

In Asia, markets finished mostly lower. The Shanghai Composite Index ended down 0.98 per cent. Hong Kong’s Hang Seng fell 0.81 per cent. Markets in Japan were closed.

Commodities

Crude prices came off earlier highs following a report that Saudi Arabia is nearing a return to full production following attacks on facilities in the kingdom a week ago.

The day range on Brent so far is US$64.20 to US$65.50. The range on West Texas Intermediate is US$58.11 to US$59.39.

Brent crude had spiked more than 1 per cent at one point in early going but had given back some of those gains as the North American open approached with economic concerns in the wake of weak PMI reports in Europe pressuring prices.

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Last week, attacks on sites in Saudi Arabia had knocked out about 5 per cent of the world’s crude output. The kingdom quickly moved to reassure markets that it would have supply back on line by the end of the month. Reuters reported early Monday that Saudi Arabia has already restored around 75 per cent of crude output lost. Oil was up earlier in the day, supported by skepticism over how quickly production would return.

“After the horrible EU PMI prints, those lingering demand worries could start to compete for centre stage in the oil markets again even more so if Saudi Arabia makes good on their promise to restore production quickly,” Stephen Innes, Asia Pacific market strategist with AxiTrader, said in a note.

“The broader market continues to skirt oil risk thinking its one-off phenomena. But investors lower sensitivity to the oil supply shock could be due to higher inventory and spare capacity globally.”

In other commodities, Mr. Innes noted that silver had a “wild opening” on Monday gaining over 2 per cent “and, for a change, is offering its more prominent brother gold a bit of support today as the under positioned and undervalued silver markets could be viewed as a key and critical early indicator for risk sentiment — a canary in the coal mine of sorts.”

Silver was last up 1.6 per cent at US$18.26 per ounce.

Spot gold fell 0.2 per cent to US$1,514.44 per ounce, but held near the over one-week high of $1,516.81 seen Friday.

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Currencies

The Canadian dollar was lower in early going as its U.S. counterpart gained against a basket of world currencies after disappointing economic reports weighed on the euro.

The economic cupboard is relatively bare this week. Statistics Canada said wholesale trade rose 1.7 per cent in July, although the report is viewed mostly as a second-tier release for the loonie. The dollar steadied somewhat after the release of the report but continued to trade down slightly.

“The loonie ended the week ever so slightly firmer, but remains seemingly anchored around the $1.325 ((75.47 US cents) level,” Benjamin Reitzes, director of Canadian rates and macro strategist for BMO, said. “Last Monday’s surge in oil prices provided only a small lift, while the Fed’s hawkish cut and soft retail data drove some weakness. With little on the domestic agenda this week, we’ll be watching oil and the US$’s path.”

The day range on the loonie so far is 75.16 US cents to 75.47 US cents.

On world currency markets, the U.S. dollar index got a lift after the euro fell on weak purchasing managers’ surveys. The index, which weighs the greenback against a basket of its global counterparts, was last up 0.2 per cent at 98.748.

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The euro, which had been trading around US$1.10 before the PMI numbers were released, fell 0.5 per cent to as low as US$1.0966, its weakest since Sept. 12.

In bonds, Treasury yields were down on uncertainty over U.S.-China trade talks. The yield on the 10-year note was lower at 1.696 per cent. The yield on the 30-year note was also lower at 2.133 per cent.

More company news:

Canada’s Brookfield Asset Management and Dubai’s Meraas Holding have agreed to form a joint venture valued at five billion dirham ($1.8-billion) to own and operate Meraas’s retail assets. The assets include Dubai retail sites the Beach, City Walk and La Mer, Meraas said in a statement on Sunday.

EU antitrust regulators are set to open a full-scale investigation into Boeing’s US$4.75-billion bid for a controlling stake in Brazilian planemaker Embraer’s commercial aircraft arm, people familiar with the matter told Reuters on Monday. The European Commission’s current review of the deal is scheduled to end on Oct. 4.

The asset and wealth arm of Canada’s Manulife Financial Corporation said on Monday it had opened an office in Ireland to expand its European operations and as part of planning for Britain’s exit from the European Union. Banks, insurers and asset managers have been opening offices, hiring staff and moving capital to various locations across the trade bloc to ensure they can continue to serve clients in the event Britain leaves the EU without an exit deal. Currently staffed by four employees, Manulife Investment Management’s Dublin office plans to hire two more people over the next six to nine months. The employees are a mix of transfers and local hires, a spokeswoman said.

Japan’s SoftBank Group Corp, the biggest investor in WeWork owner The We Company, is exploring ways to replace Adam Neumann as chief executive of the U.S. office-sharing start-up, four people familiar with the matter said on Sunday. The rare showdown between SoftBank and one of its biggest investments comes after We Company postponed its initial public offering (IPO) last week, following pushback from perspective investors, not just over its widening losses, but also over Neumann’s unusually firm grip on the company.

Vivendi has kept its stake in Mediaset after a deadline to sell it expired at the weekend and is preparing to step up its legal action against the Italian broadcaster’s overhaul plan, two sources close to the matter told Reuters. Mediaset this month won shareholder approval to create a pan-European media group in an effort to pursue continental alliances with rivals and fend off growing competition from streaming services such as Netflix or Amazon Prime Video.

Economic news

Statistics Canada says wholesale sales rose 1.7 per cent in July to $65.4-billion. July marked the second straight month of gains for wholesale trade.

(9:45 a.m. ET) U.S. Markit PMI for September.

With Reuters and The Canadian Press

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