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Equities
Canada’s main stock index opened lower Monday with declining crude prices weighing on energy shares. South of the border, major indexes also started in the red in the wake of last week’s record run.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 89.14 points, or 0.49 per cent, at 17,952.93.
In the U.S., the Dow Jones Industrial Average fell 82.6 points, or 0.27 per cent, at the open to 31015.37. The S&P 500 fell 21.5 points, or 0.56 per cent, at the open to 3803.14, while the Nasdaq Composite dropped 153.2 points, or 1.16 per cent, to 13048.776 at the opening bell.
“Familiar themes, (vaccine rollout, fiscal support, and ample central bank liquidity) continue to set the tone,” Axi chief market strategist Stephen Innes said.
“They should continue to do so with more stimulus on the way and a steadier US geopolitical scrim; it feels like the risk-on party is tough to argue.”
Events in Washington will continue to impact sentiment. House Speaker Nancy Pelosi says the House will go ahead with legislation to impeach President Donald Trump unless Vice President Mike Pence invokes the constitutional authority to force him out. Ms. Pelosi says House action could start as soon as Monday.
Investors also continue to look for further U.S. stimulus after President-elect Joe Biden vowed more relief. The need for further action was highlighted by the surprise loss of 140,000 jobs in December. It was the first monthly decline in U.S. employment since April.
In this country, bank CEOs will speak at the RBC Capital Markets 2021 Canadian Bank CEO conference, with markets looking for an assessment of how executives see the road ahead as many regions of the country continue to contend with spiking COVID-19 numbers and related lockdowns.
The Globe reports that Quebec media baron Pierre-Karl Péladeau is urging the federal cabinet to deny Air Canada’s proposed takeover of Air Transat, offering to pay more for the struggling airline to guarantee competition and fairer prices for Canadian travellers. The Globe and Mail has obtained three letters from Mr. Péladeau to Transport Minister Marc Garneau calling for a rejection of the merger, saying he will pay $6 a share or 20 per cent more than Air Canada to purchase Transat AT Inc., a Montreal-based airline and tour company.
Overseas, Europe’s major markets were lower with the pan-European STOXX 600 falling 0.63 per cent by afternoon. Britain’s FTSE 100 was down 0.85 per cent. Germany’s DAX fell 0.90 per cent. France’s CAC 40 lost 0.84 per cent.
In Asia, Hong Kong’s Hang Seng added 0.11 per cent. The Shanghai Composite Index ended down 1.08 per cent. Markets in Japan were closed.
Commodities
Crude prices fell amid renewed concerns about the impact of COVID-19-related lockdowns on demand.
The day range on Brent is US$54.99 to US$56.39. The range on West Texas Intermediate is US$51.55 to US$52.70. Both were down about 1 per cent in the predawn period. On Friday, WTI managed its best level in nearly a year. Brent has advanced in the previous four session.
Virus concerns are at the forefront. Reuters reports that mainland China saw its biggest daily increase in virus infections in more than five months with new infections rising in Hebei, which surrounds the capital Beijing.
Shijiazhuang, the provincial capital and epicentre of the new outbreak, is in lockdown, with people and vehicles barred from leaving, as authorities seek to rein in the spread, the agency reports.
At the same time, much of Europe continues under lockdown in a bid to temper the spread of the virus.
“If you ask any oil trader on the street what their biggest worry other than the failure of the vaccine to launch, the resurgence of the virus in China ranks up there a close second,” Axi’s Stephen Innes said.
“Throughout most of the immunization sentiment-driven oil market rally since November, China has been doing much of the heavy lifting on the markets physical side. So, a resurgence and wider spread of the virus in China would be a sentiment dampener at least until the vaccine get more widely distributed in the Herbie province and the rest of the mainland.”
Monday’s losses, however, were tempered by news that President-Elect Joe Biden plans more stimulus to bolster the U.S. economy.
In other commodities, edged higher after touching a six-week low early in the session.
Spot gold was up 0.3 per cent at US$1,853.96, recovering from a six-week low of US$1,816.53 per ounce hit during the session, while U.S. gold futures gained 0.8 per cent to US$1,850.30. Prices had dropped 4.4 per cent on Friday.
Currencies
The Canadian dollar was weaker as risk sentiment faltered and its U.S. counterpart gained against global currencies.
The day range on the loonie is 78.29 US cents to 78.77 US cents.
“A whiff of risk-off in the air overnight, providing the U.S. dollar with a lift,” Alvin Tan, Asia FX strategist with RBC, said.
“Rising U.S. bond yields are again being named as the chief culprit, plus a possibly overstretched risk rally.”
Canadian markets will get the Bank of Canada’s business outlook survey shortly after the start of trading, although Mr. Tan notes that the report “has not been particularly useful during the pandemic period, with the lag from the survey period to release date challenging.”
On world markets, the U.S. dollar index was up 0.1 per cent at 90.418 on Monday.
The euro fell to US$1.2167, its lowest since Dec. 25, after climbing to US$1.2349 last week.
More company news
Lululemon Athletica Inc. said Monday it now expects revenue and earnings to be at the high end of its previous forecasts in the fourth quarter. For the quarter, the company now expects the growth rate in net revenue to be at the high end of its mid-to-high teens expectation. The company also expects the growth rate in adjusted diluted earnings per share to now be at the high end of its mid-single digits expectation.
Gilead Sciences Inc raised its full-year profit forecast on Monday, boosted by increased sales of COVID-19 treatment remdesivir, as hospitalization and treatment rates were higher than expected given the most recent surge in cases. The U.S. drugmaker expects adjusted earnings for 2020 in the range of $6.98-$7.08 per share, compared with the earlier forecast of $6.25- $6.60 per share.
Economic news
(10:30 a.m. ET) Bank of Canada Business Outlook Survey and Survey of Consumer Expectations for Q4.
With Reuters and The Canadian Press
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Terry Weber