Equities
U.S. stock futures looked set for a weaker start early Monday as the markets weigh mixed messages over the state of U.S.-China trade relations. On Bay Street, TSX futures were little changed as oil prices rose for the fourth session on continued hopes that OPEC would cut production. World stocks started the week firmer with trade issues and worries by the U.S. Federal Reserve over a possible global slowdown at the forefront.
“European stocks are higher this morning despite the continued political uncertainty in Europe and Asia," CMC markets analyst David Madden said. "The political landscapes in the U.K. and Italy are still unsettled, and the U.S.-China trade tensions rumble on. Theresa May is still hanging in as British Prime Minister even though she is on shaky ground, and dealers await the EU’s response to Italy’s budget plans. "
Over the weekend, U.S. vice president Mike Pence said at the APEC meeting in Papua New Guinea that there would be no end to U.S. tariffs on US$250-billion in Chinese goods until China changes its approach. Those comments came after the markets took solace Friday from suggestions by U.S. President Donald Trump that he might not impose more tariffs after China sent a list of measures it was willing to take to ease trade tensions.
On currency markets, the U.S. dollar took a breather after Fed vice chair Richard Clarida raised concerns about the possibility of slowing global growth. Mr. Clarida said a potential slowdown is "something that is going to be relevant” for the outlook for the U.S. economy, raising questions about the pace of future U.S. interest rate hikes.
In corporate news, Nissan Motor Co. shares fell in European trading after the auto maker said Monday that it was moving to terminate chairman Carlos Ghosn from his post on concerns over financial misconduct following an internal investigation. Renault shares were down 13 per cent in Paris in morning trading and were among Europe’s worst performing stocks. (Mr. Ghosn is also chairman and chief executive of Nissan’s French partner Renault) Nissan’s German-listed shares fell 12 per cent.
Apple Inc. shares, meanwhile, were down more than 1 per cent in premarket trading ahead of the North American open after the Wall Street Journal reported that the company has cut production orders in recent weeks for all three iPhone models launched in September. The report said the move was the result of lower-than-expected demand for the new iPhones and the impact of a bigger line of iPhones, which made it harder to anticipate the number of components and handsets the company needs.
Overseas, European markets were mixed. Britain’s FTSE was up 0.29 per cent. Germany’s DAX slipped 0.07 per centand France’s CAC 40 fell 0.05 per cent.
In Asia, markets finished mostly higher. Japan’s Nikkei ended up 0.65 per cent. Hong Kong’s Hang Seng rose 0.72 per cent and the Shanghai Composite Index gained 0.91 per cent.
Commodities
Crude prices rose for the fourth day, supported by market expectations that Saudi Arabia will push OPEC for production cuts later this year. Brent crude and West Texas Intermediate were both higher ahead of the start of trading. The day range on Brent is US$66.74 to US$67.64. The range on WTI is US$56.64 to US$57.33.
OPEC members meet next month and the market is looking for an output cut of between 1 million and 1.4 million barrels a day to curb oversupply. Reuters reported on Monday that Russian Energy Minister Alexander Novak said Russia, which is not an OPEC member, planned to sign a partnership agreement with the group, and that details would be discussed at OPEC’s Dec. 6 meeting in Vienna. Concerns about oversupply have pushed Brent prices down 25 per cent from their peak of US$86.74 in October.
“Oil traders remain intently focused on support levels into the month end and OPEC headlines.” OANDA analyst Stephen Innes said. “Oil prices rose on Friday on hope OPEC and partners, will act to reverse bearish sentiment, but from a technical set up, bear mode remains intact with downside WTI target falling between the US$52-54 levels.”
In other commodities, gold prices slipped on profit taking with a softer U.S. dollar adding some support. Spot gold was down 0.1 per cent at US$1,219.98 per ounce in morning trading in Europe. Gold prices added 0.7 per cent in the previous session. U.S. gold futures were down 0.3 per cent at US$1,219.6 per ounce.
Silver prices fell 0.8 per cent while platinum was down 0.8 per cent.
Currencies and bonds
The Canadian dollar was slightly weaker, holding below the 76-US-cent mark, as its U.S. counterpart steadied following its biggest weekly drop in two months in the wake of dovish comments by Fed officials. The day range on the loonie so far is 75.92 US cents to 76.09 US cents.
For the Canadian dollar, the week’s biggest data points come on Friday with the release of the latest inflation and retail sales figures.
Sue Trinh, head of Asia FX strategy for RBC, says she expects to see the annual rate of inflation for October rise to 2.4 per cent with auto prices accounting for much of the upward pressure. For retail sales, the bank expects a flat reading, in line with market consensus.
In other currencies, the U.S. dollar index was steady against a basket of world counterparts, holding at 96.48. Last week, the index lost about half a per cent, marking the biggest weekly decline since September. The greenback came under pressure after the comments from the Fed’s Mr. Clarida.
“Dovish Fed comments on Friday gave some encouragement to investors to take profits on dollar positions which have risen in recent weeks,” Jane Foley, head of FX strategy at Rabobank based in London, told Reuters.
The British pound, meanwhile, rose 0.2 per cent against the U.S. dollar at US$1.2864. Sterling lost about 1 per cent against the greenback last week after Ms. May’s Brext deal hit major opposition, resulting in a number of departures from her cabinet.
Stocks set to see action
Fairfax Financial Holdings, owned by Canadian billionaire Prem Watsa, said on Monday it bought an almost 14 per cent stake in steelmaker Stelco Holdings for $250.1-million. It acquired over 12 million shares of Stelco at $20.50 per share, a premium of 4.2 per cent to its close on Friday.
The whistleblower who helped reveal suspected money laundering involving Danske Bank told Denmark’s parliament on Monday that the bank had not heeded his warnings and had later offered him money to keep quiet. Suspicious payments totalling €200-billion ($228.5 billion) through Danske Bank’s Estonian branch between 2007 and 2015 have sparked investigations in Denmark, Estonia, Britain and the United States and cost the chief executive and chairman of Denmark’s largest lender their jobs. Howard Wilkinson, the head of the bank’s trading unit in the Baltics from 2007 to 2014, said that Danske Bank’s management had not taken his suspicions of money laundering seriously and he did not now expect investigations to lead anywhere.
China’s JD.com Inc reported third-quarter revenue on Monday that fell short of analysts’ estimates on sluggish sales in its core e-commerce business. Revenue was 104.8 billion yuan (US$15.09-billion) for the quarter ended Sept. 30, compared with an average estimate of 106.2 billion yuan from 22 analysts, according to IBES data from Refinitiv. JD.com’s sales volumes are seasonally lower in the third quarter as it ramps up to its November Singles’ Day promotion period. This year, it sold 158.9 billion yuan in goods during the month-long event, up 17 per cent from a year earlier.
The Globe’s Christine Dobby reports that Freedom Mobile Inc. is using the holiday shopping season to target one of the biggest consumer irritants in the wireless industry: the dreaded data overage fee. The regional carrier, which is owned by Shaw Communications Inc. and operates in Ontario, British Columbia and Alberta, is set to announce a short-term offer on Monday that will give customers an extra 100 gigabytes of data that they can dip into at any point during a two-year contract if they go over their monthly cap.
Industrial equipment maker Colfax Corp said on Monday it would acquire DJO Global Inc from Blackstone Group for US$3.15-billion in cash, as it diversifies into selling medical products such as shoulder implants and knee braces. Colfax also said it was exploring strategic options for its air and gas handling business, which includes heat exchangers and gas compressors.
U.S.-listed shares of BlackBerry were up 2 per cent in premarket trading after CIBC upgraded the stock to ‘outperform’ from ‘neutral’.
More reading:
Monday’s small-cap stocks to watch
Economic news
(10 a.m. ET) U.S. NAHB Housing Market Index for November. The Street expects a reading of 68, unchanged from October.
With Reuters and The Canadian Press
Terry Weber