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Equities
Canada’s main stock index fell at the opening bell Monday with weaker crude prices hitting energy shares. South of the border, Wall Street’s main indexes also started in the red on concern about the rising number of coronavirus infections and the lack of progress in reaching a new stimulus deal.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 107.4 points, or 0.66 per cent, at 16,196.68.
In the U.S., the Dow Jones Industrial Average fell 149.75 points, or 0.53 per cent, at the open to 28,185.82.
The S&P 500 opened lower by 23.97 points, or 0.69 per cent, at 3,441.42, while the Nasdaq Composite dropped 107.64 points, or 0.93 per cent, to 11,440.64 at the opening bell.
“It is becoming difficult for investors to keep a cool head,” Axi market analyst Milan Cutkovic said. “The number of new COVID-19 cases continue to rise rapidly, and an increasing number of European countries are moving towards another nationwide lockdown.”
“Whether there will be another major sell-off or a continuation of the stock market rally will likely depend on how quickly governments and central banks will react to the latest developments in the COVID-19 pandemic,” he said, adding it now looks likely that U.S. stimulus package will follow the Nov. 3 presidential election.
The U.S. has now reported record high numbers infections over the past two days. Over the weekend, White House Chief of Staff Mark Meadows said the Trump administration can’t control the pandemic and is going to focus on vaccines and therapeutics. Meanwhile, Vice President Mike Pence continued campaigning on Sunday despite a COVID-19 outbreak among his aides.
In Europe, France also hit a record for new infections while Spain announced a state of emergency.
In Canada, investors will get the Bank of Canada’s next decision on interest rates on Wednesday. The central bank also releases its latest monetary policy report.
“RBC economists expect a steady hand from the BoC in this week’s meeting statement and MPR release, leaving the overnight target at 0.25 per cent, forward guidance on rates and QE unchanged, and maintaining its minimum $5-billioin/week of GoC bond purchases,” RBC chief currency strategist Adam Cole said.
On the corporate side, energy shares will be in focus after the Sunday announcement that Cenovus Energy Inc. will buy Husky Energy Inc, creating Canada’s fourth-biggest energy company.
Cenovus, known for its Alberta oil sands operations, said on Sunday it will issue shares and stock-purchase warrants to acquire Husky. The $3.8-billion deal offers a 21-per-cent premium to Husky’s recent share prices, and Cenovus will also take on more than $6-billion in Husky debt.
Cenovus shares were down 12 per cent in early trading in Toronto.
South of the border, investors will get a flood of results from big tech names later in the week. Apple, Facebook, Amazon and Google-parent Alphabet are all slated to release earnings this week.
Overseas, major European markets were down in afternoon trading with the pan-European STOXX 600 falling 0.96 per cent. Britain’s FTSE 100 fell 0.37 per cent. Germany’s DAX dropped 2.60 per cent. France’s CAC 40 lost 0.97 per cent.
In Asia, Japan’s Nikkei closed down 0.09 per cent. The Shanghai Composite Index fell 0.82 per cent. Markets in Hong Kong were closed for a public holiday.
Commodities
Demand concerns continued to weigh on crude prices as COVID-19 cases rose around the world.
The day range on Brent is US$40.36 to US$41.63. The range on West Texas Intermediate is US$38.42 to US$39.74. Both benchmarks were down more than 2 per cent in early going.
Brent lost 2.7 per cent last week while WTI fell 2.5 per cent.
“At this stage of the oil demand recovery cycle, waning global demand due to COVID-19′s second and third wave mobility restrictions and more barrel coming to market due to Libya lifting the force majeure is unequivocally the most toxic elixir for oil markets to kick off a new week,” Axi chief market strategist Stephen Innes said in an early note.
“Fortunately, there are several vaccines in the pipeline, or we could have been looking at a pretty significant market reset this morning with COVID-19 flash points flaring up in virtually every corner of the globe this weekend.”
In addition to demand concerns, supply issues are also hitting sentiment. Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1 million barrels per day (bpd) in four weeks.
“New barrels of Libyan oil come at a time when the crude oil market had just faced the disappointment from the recently concluded OPEC+ ministerial panel when the organization made no new policy proposals,” Avtar Sandu, senior manager commodities at Phillip Futures in Singapore, told Reuters.
In other commodities, gold fell below the key psychological level of $1,900 to its lowest in more than a week.
Spot gold fell 0.2 per cent to US$1,897.71 per ounce, after hitting US$1,890.19, its lowest since Oct. 15. U.S. gold futures fell 0.3 per cent to US$1,900.50.
Currencies
The Canadian dollar fell in early going as the U.S. dollar gained against global counterparts and risk sentiment faded amid rising cases of coronavirus infection.
The range for the day so far on the loonie is 75.85 US cents to 76.18 US cents.
There were no major Canadian economic releases on Monday’s calendar. Markets are awaiting Wednesday’s Bank of Canada rate decision and quarterly monetary policy report.
“Weaker risk appetite and a general downturn in commodity markets amid surging COVID-19 cases globally are weighing on the CAD.” Shaun Osborne, chief FX strategist with Scotiabank, said.
The U.S. dollar index, which weighs the greenback against a basket of currencies, rose 02 per cent to 92.95. Euro/U.S. dollar - the most traded currency pair and part of the index - fell 0.3 per cent at 1.1831, according to figures from Reuters.
The U.S. dollar was up 0.1 per cent against the Japanese yen at 104.87 .
The biggest losers among major currencies were the Norwegian crown and the Australian dollar.
The Australian dollar was last down 0.3 per cent at 71.18 US cents. The Norwegian currency fell 0.9 per cent to 9.3015 against the U.S. dollar.
More company news
Blackstone Group Inc has reached an agreement to buy Simply Self Storage from Canada’s Brookfield Asset Management Inc for about US$1.2-billion, a spokeswoman for the asset manager said late on Sunday. Blackstone’s non-traded real-estate investment trust, known as BREIT, is acquiring the 8 million-square-foot portfolio of self-storage facilities, the spokeswoman said, confirming an earlier report from the Wall Street Journal.
Spirit AeroSystems said on Monday it reached a deal with Bombardier Inc to reduce the purchase price of the Canadian planemaker’s aerostructures unit to US$275-million from US$500-million. The companies expect to close the deal on Oct. 30, Spirit said.
Fiat Chrysler and PSA are set to win EU approval for their US$38-billion merger to create the world’s No.4 carmaker, Reuters reports, citing people close to the matter said. The green light from the European Commission would formalize the creation of Stellantis, a carmaking group that could tap hefty profits from selling Ram pickup trucks and Jeep SUVs to U.S. drivers to fund the expensive development of zero-emission vehicles for sale in Europe and China.
Hasbro Inc beat analysts' estimates for quarterly revenue, boosted by demand for the toymaker’s board games from stuck-at-home families looking for entertainment. The company’s net revenue rose to US$1.78-billion from US$1.58-billion in the third quarter ended Sept. 27, beating analysts' average estimate of US$1.75-billion, according to IBES data from Refinitiv.
Dunkin' Donuts and Baskin Robbins chains owner Dunkin' Brands Group Inc has held preliminary discussions to be acquired by Inspire Brands, a private equity-backed restaurant company, Dunkin' said in a statement on Sunday. “There is no certainty that any agreement will be reached,” said Karen Raskopf, Chief Communications Officer of Dunkin' Brands.
Coca-Cola Co’s European bottler has made a US$6.6-billion buyout approach to Australian peer Coca-Cola Amatil Ltd. The takeover by Coca-Cola European Partners PLC would be the biggest involving Australia this year, but prices the target company below its market valuation in February - before the COVID-19 pandemic began to rock global markets.
The COVID-19 vaccine being developed by the University of Oxford produces a similar immune response in both older and younger adults, and adverse responses were lower among the elderly, British drug maker AstraZeneca Plc said on Monday. “It is encouraging to see immunogenicity responses were similar between older and younger adults and that reactogenicity was lower in older adults, where the COVID-19 disease severity is higher,” an AstraZeneca spokesman told Reuters.
Economic news
(10 a.m. ET) U.S. new home sales for September.
With Reuters and The Canadian Press
Terry Weber