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Equities

Canada’s main stock index opened down Tuesday on broad declines. South of the border, key indexes were also weaker ahead of remarks by Federal Reserve chair Jerome Powell.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 109.37 points, or 0.59%, at 18,307.37.

In the U.S., the Dow Jones Industrial Average fell 19.8 points, or 0.06%, at the open to 31501.89. The S&P 500 fell 19.4 points, or 0.50%, to 3857.07, while the Nasdaq Composite dropped 270.4 points, or 2.00%, to 13262.607 at the opening bell.

“Fed Chair Jerome Powell will either make or break the day for investors at his semiannual testimony before the Senate today and tomorrow,” Ipek Ozkardeskaya, senior analyst with Swissquote, said.

“There is a good chance that he reiterates the Fed’s full support to the financial markets and the economy until substantial progress is made in jobs market. But he will sure be questioned on the rising inflation expectations, and saying that there is no inflation just yet won’t get him out of the woods given the record jump in producer prices printed last month.”

On this side of the border, bank earnings will be in the spotlight ahead of the start of trading.

The Globe’s James Bradshaw reports that Bank of Montreal’s fiscal first quarter profit jumped 27 per cent higher, surpassing prepandemic levels with strong results from U.S. retail banking and its capital markets arm.

For the three months that ended Jan. 31, BMO reported profit of $2-billion, or $3.03 per share, compared with $1.59-billion, or $2.37 per share, a year ago. After adjusting for one-time items, BMO said it earned $3.06 per share, far higher than the $2.12 in adjusted earnings per share predicted by analysts, according to Refinitiv.

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Bank of Nova Scotia, meanwhile, reported first-quarter net income of $2.4-billion, or $1.86 per share, compared with $2.33-billion, or $1.84 per share, in the same quarter last year. Adjusted for certain items, Scotiabank said it earned $1.88 per share. On average, analysts expected the bank to report adjusted earnings of $1.53 per share, according to Refinitiv.

Scotiabank shares were up nearly 2 per cent shortly after the open in Toronto. BMO shares gained nearly 3 per cent.

Elsewhere, Bank of Canada Governor Tiff Macklem is also scheduled to speak on Tuesday, addressing the Chamber of Commerce and the Calgary Chamber of Commerce at 12:30 ET. A press conference will follow the event and markets will be watch closely for the central banker’s view on inflation.

The Globe’s Mark Rendell reports that several key measures of inflation were higher in January than previously reported, Statistics Canada said on Monday, after backtracking on a methodological change that had painted a more mild picture of inflation only five days ago. The sudden revision surprised economists, causing some to question whether Statscan had an accurate picture of inflation. The change was made amid growing concern about higher-than-expected inflation, which is driving bond yields up and sending jitters through the market.

Overseas, the pan-European STOXX 600 was down 0.91 per cent in morning trading. Britain’s FTSE 100 lost 0.12 per cent. Germany’s DAX and France’s CAC 40 fell 1.26 per cent and 0.27 per cent, respectively.

In Asia, the Shanghai Composite Index fell 0.17 per cent. Hong Kong’s Hang Seng added 1.03 per cent. Markets in Japan were closed.

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Commodities

Crude prices gained in early going with optimism over the rollout of COVID-19 vaccines and the slow return of U.S. output bolstering prices.

The day range on Brent is US$65.35 to US$66.79. The range on West Texas Intermediate is US$61.52 to US$63. Both benchmarks gained about 4 per cent on Monday.

“The positive momentum continues in the oil complex, with investors unabashedly predisposed to a bullish view,” Axi chief market strategist Stephen Innes said.

“So, the unwinding of the Texas cold snap effect and the prospects of some delicate negotiation ahead of the next OPEC+ meetings in early March are imparting little influence on price and giving way to the anticipated commodity reflation effect of Democrats pushing Biden’s $1.9-trillion stimulus through reconciliation and positive vaccine headlines.”

Later Tuesday, markets will get the first of two weekly U.S. inventory reports, with new numbers from the American Petroleum Institute.

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Analysts polled by Reuters are expecting to see a decline in crude oil and refined products, reflecting the recent disruption in the sector in Texas as a result of last week’s winter storm.

In other commodities, gold prices hit a one-week high, helped by a weaker U.S. dollar.

Spot gold was up 0.1 per cent at US$1,810.71 per ounce, after hitting its highest since Feb. 16 at US$1,815.63 earlier in the session. U.S. gold futures gained 0.1 per cent to US$1,810.20.

“One of the few assets that is more out of favor than gold at the moment is the dollar... so that is supporting gold prices by extension,” said IG Market analyst Kyle Rodda.

Currencies

The Canadian dollar edged higher as its U.S. counterpart touched its weakest level in more than a month against a group of world currencies.

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The day range on the loonie is 79.24 US cents to 79.46 US cents.

For the loonie, the day’s key event will be Bank of Canada Governor Tiff Macklem’s midday remarks.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was last at 90.046, flat on the day, having earlier fallen to 89.941, its weakest since Jan. 13. Investors will be paying close attention to Fed chair Jerome Powell’s testimony in Washington for hints about the direction of monetary policy.

“We fully expect a strongly dovish message along the lines of the Fed stands ready to give whatever support is required,” Elsa Lignos, global head of FX strategy with RBC, said.

“His recent speeches and press conferences though suggest the [Jerome Powell] spiel is becoming less effective.”

Britain’s pound hit a new nearly three-year high of US$1.4098, up 0.3 per cent on the day, as investors stuck with their bets that a rapid vaccine rollout would allow the British economy to reopen over the next few months, according to Reuters.

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The Japanese yen steadied at 105.13 per U.S. dollar, down slightly.

More company news

Home Depot Inc beat quarterly same-store sales estimates on Tuesday, riding a sustained wave of demand for home improvement goods as the COVID-19 pandemic drags on. Same-store sales rose 24.5% in the fourth quarter ended Jan. 31, beating analysts’ average estimate of an 18.9% increase, according to IBES data from Refinitiv.

Macy’s Inc holiday quarter same-store sales fell 17%, the department store chain reported on Tuesday, as a surge in online sales failed to offset the blow from fewer customers visiting stores due to the pandemic. Analysts on average had expected same-store sales on an owned basis to fall 16.60% in the fourth quarter ended Jan. 30, according to IBES data from Refinitiv.

Cosmetics maker Estee Lauder Cos. Inc. said on Tuesday it had offered about $1-billion to take control of DECIEM Beauty Group Inc, the parent company of Ordinary skincare brand. The M.A.C brand owner, which is raising its stake to about 76% from about 29%, said it had agreed to purchase the remaining interest in the company after a three-year period.

Marriott International Inc on Tuesday appointed Tony Capuano, group president for global development, as its chief executive officer, replacing Arne Sorenson, who died last week while on treatment for pancreatic cancer. Mr. Capuno joined Marriott in 1995 and was in charge of the company’s U.S. and Canada lodging business.

Economic news

(9 a.m. ET) U.S. S&P Case-Shiller Price Index (20 city) for December.

(9 a.m. ET) U.S. FHFA House Price Index for December.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for February.

(10 a.m. ET) U.S. Fed Chair Jerome Powell testifies to the Senate Banking Committee.

(12:30 p.m. ET) Bank of Canada Governor Tiff Macklem speaks to the Edmonton and Calgary Chambers of Commerce (videoconference); press conference follows

With Reuters and The Canadian Press

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