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Equities
Canada’s main stock index was treading water at the opening bell Monday with gains by gold miners offset broader concerns about rising numbers of coronavirus infections in some parts of the world. South of the border, major indexes also struggled for direction in early trading.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 9.12 points, or 0.06 per cent, at 15,483.32.
The Dow Jones Industrial Average fell 6.38 points, or 0.02 per cent, at the open to 25,865.08.
The S&P 500 opened lower by 3.32 points, or 0.11 per cent, at 3,094.42. The Nasdaq Composite dropped 0.63 points, or 0.01 per cent, to 9,945.49 at the opening bell.
“The rise in the infection rate is unlikely to enhance confidence in the markets, but there might come a point where dealers become more accustomed to the situation, as a rise in new cases is the risk a government takes when it reopens their economy,” David Madden, market analyst with CMC Markets U.K., said.
“There are clearly some concerns circulating, but they are nothing like the panic that was seen in February and March.”
On Sunday, the World Health Organization reported the biggest one-day increase in coronavirus cases by count at more than 183,000 new cases in the latest 24 hours. The agency said Brazil led the way, followed by the U.S. and then India. Two-thirds of new deaths came from the Americas, the WHO said.
In this country, investors will get remarks from Bank of Canada Governor Tiff Macklem later Monday morning.
RBC chief currency strategist Adam Cole notes the remarks mark the first full speech by Mr. Macklem since taking over the central bank’s top job.
“His comments to date have been largely consistent with the BoC’s previous communication that it is protecting against deflation risks and a protracted recovery is likely,” Mr. Cole said.
“Macklem has repeated that the current 0.25-per-cent overnight rate setting is the effective lower bound, eschewing negative rates.”
In Europe, markets gave up early gains to trade lower by afternoon. The pan-European STOXX 600 was down 0.30 per cent. Germany’s DAX fell 0.21 per cent. France’s CAC 40 lost 0.38 per cent and Britain’s FTSE 100 lost 0.27 per cent.
In Asia, Japan’s Nikkei slid 0.18 per cent. Hong Kong’s Hang Seng finished down 0.54 per cent. The Shanghai Composite Index lost 0.08 per cent. China’s central bank left its benchmark lending rate unchanged for the second straight month on Monday, matching market expectations. The one-year loan prime rate (LPR) remained at 3.85 per cent from last month’s fixing, while the five-year LPR was kept at 4.65 per cent.
Commodities
Crude prices slipped as concerns about the potential economic impact of rising coronavirus infections offset efforts to curb production.
The day range on Brent so far is US$41.58 to US$42.53. The range on West Texas Intermediate is US$39.12 to US$40. Both gained about 9 per cent last week.
Reuters reports that, in Canada and the United States, the number of operating oil and natural gas rigs fell to a record low last week, even as crude prices continue to recover.
At a panel meeting of the OPEC+ group last week, Iraq and Kazakhstan agreed to step up compliance with current cuts of 9.7 million barrels a day. However, OPEC and its allies have yet to decide whether those production curbs should be extended again to August.
“2020 will be a challenging year for the oil industry, given the multitude of uncertainly, but one thing that’s certain demand is roaring back as consumers emerge from lockdown — suggesting that both supply and demand curves continue to move in opposite but bullish directions for prices through the next few months,” AxiCorp chief market strategist Stephen Innes said.
However, he added, one critical factor for pricing remains the notion “that governments will avoid at all costs reimposing wide-sweeping lockdowns [preferring] to handle them on proximity or soft lockdown basis.”
Gold prices, meanwhile, rose to their best levels in more than a month.
Spot gold was up 0.5 per cent at US$1,751.63 per ounce after hitting its highest since May 18. U.S. gold futures rose 0.7 per cent to US$1,764.50.
“General risk aversion is helping the market, we are seeing pressure on growth exposed currencies and on share markets. Overall, there are concerns about increasing infection rates,” Michael McCarthy, chief strategist at CMC Markets, said.
Currencies
The Canadian dollar was higher as investors await remarks from Mr. Macklem.
The day range on the loonie is 73.37 US cents to 73.74 US cents.
Mr. Macklem is scheduled to speak at 11 a.m. ET by video conference at an event hosted by Canadian Clubs and Cercles canadiens. The speech will be followed by a news conference.
“We don’t anticipate he (Macklem) will deviate much from his comments last week where he indicated the bank will continue its bond purchases until the recovery is well underway,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
Aside from Mr. Macklem’s remarks, there are no major Canadian economic data releases on the calendar for the rest of the week.
On global markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, slid overnight before stabilizing. It was at 97.452 in early trading in Europe, down 0.2 per cent on the day.
The Japanese yen was little changed, at 106.92 per U.S. dollar.
The euro was up 0.2 per cent versus the U.S. dollar, at 1.1201, edging away from recent two-and-a-half-week lows, according to Reuters.
Commodity currencies including the Australian and New Zealand dollars were higher in early London trading. The New Zealand dollar hit a session high of 64.39 US cents and was up about 0.5 per cent on the day. The Australian dollar was up 0.5 per cent at 68.65 US cents.
More company news
Wirecard AG said on Monday that there was a likelihood that the missing amount of 1.9 billion euros (US$2.13-billion) from its accounts simply did not exist. The German payments firm said it was also withdrawing its full-year 2019 and first quarter 2020 financial results. “The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist,” the company said in a statement.
Apple Inc on Monday will hold its annual conference for software developers, rolling out new features in its operating systems for iPhones and iPads and possibly signaling a departure from Intel Corp’s almost 15-year run supplying Mac computer processors. Apple’s Worldwide Developer Conference comes as paid services sold through the App Store have become central to the Cupertino, California, company’s revenue growth as consumers have slowed the growth of iPhone upgrades. Apple takes a 15% to 30% cut of the sales developers make through the App Store, which is the only way to distribute software onto Apple’s mobile devices, Reuters reports.
Billionaire Richard Branson’s space tourism company Virgin Galactic Holdings Inc has signed an agreement with NASA to develop a program to promote private astronaut missions to the International Space Station (ISS), the company said on Monday. Virgin Galactic will identify entities that are interested in purchasing private missions to the ISS and aid in transportation, on-orbit and ground resources.
American Airlines Group Inc said on Sunday it plans to secure US$3.5-billion in new financing, to improve the airline’s liquidity as it grapples with travel restrictions caused by the coronavirus. The company plans to raise US$1.5-billion by selling shares and convertible senior notes due 2025, the airline said in a statement. Additionally, the airline said it will offer US$1.5-billion in senior secured notes and that it intends to enter into a new US$500-million term loan facility due 2024.
Economic news
(11 a.m. ET) Bank of Canada Governor Tiff Macklem speaks on “Monetary Policy in the Context of COVID.”
With Reuters and The Canadian Press
Terry Weber