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Equities
Canada’s main stock index fell at the start of trading Tuesday with materials stocks weighed down by weaker gold prices and energy shares pressured by declines in crude. On Wall Street, rising Treasury yields hit tech shares.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 66.48 points, or 0.36 per cent, at 18,652.74.
In the U.S., the Dow Jones Industrial Average fell 43.5 points, or 0.13 per cent, at the open to 33127.88. The S&P 500 fell 7.7 points, or 0.20 per cent, at the open to 3963.34, while the Nasdaq Composite dropped 50.8 points, or 0.39 per cent, to 13008.804 at the opening bell.
“Wall Street appears to have put the travails from the liquidation of positions related to Archegos Capital Management quickly behind it, even if some banks’ share prices have not,” OANDA senior analyst Jeffrey Halley said.
“The unfortunate liquidation of the fund’s holdings is not a systematic risk, although apparently, the SEC and FINRA have called in the banks involved for a ‘fireside chat.’”
He said attention is now turning to U.S. President Biden’s stimulus package, with details expected to be outlined on Wednesday.
“Although tax increases are forecast, more debt issuance is inevitable, and that saw long-end U.S. yields rise overnight,” he said.
In this country, investors will get results from BlackBerry and Lululemon Athletica after the close of trading.
Dialogue Health Technologies Inc. made its market debut on the TSX. The Montreal-based telemedicine company priced 8.34 million shares in its IPO at $12 each to generate aggregate gross proceeds of about $100-million, but its stock jumped by 20 per cent to reach $14.50 shortly after trading began.
Elsewhere, the Globe’s Eric Atkins reports that two big shareholders in Canadian Pacific Railway Ltd. and Kansas City Southern Railway say they will vote for the US$25.2-billion takeover by the Calgary freight hauler.
Richard Chilton, whose Chilton Investment Co. hedge fund owns US$172-million worth of shares in Kansas City Southern, said the deal will be good for railway investors, customers and the countries the proposed network will link. Edward Molson, a senior partner at London-based Egerton Capital, which is CP’s eighth-largest investor with a US$1.15-billion stake, said the deal will create value for shareholders while fostering competition.
Overseas, the pan-European STOXX 600 rose 0.22 per cent by afternoon. Britain’s FTSE 100 slid 0.09 per cent. Germany’s DAX and France’s CAC 40 advanced 0.61 per cent and 0.44 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.16 per cent. Hong Kong’s Hang Seng gained 0.84 per cent.
Commodities
Crude prices slid in early going as investors look ahead to a meeting of OPEC and its allies later in the week, awaiting hints about timing on future production increases.
The day range on Brent is US$64.44 to US$65.41. The range on West Texas Intermediate is US$60.91 to US$62.27.
On Thursday, the OPEC+ group is expected to discuss whether to keep current production caps in place. Reuters reported earlier this week that Saudi Arabia is ready to accept an extension of current curbs through to June as some regions of the globe battle a third coronavirus wave.
“The focus is very much on the OPEC+ meetings...with the widespread expectation that there is roll-over for at least another month of the bulk of the production quotas,” Axi chief market strategist Stephen Innes said in a note.
“One potential concern is that Russia and Kazakhstan may once again seek an exemption that allows them to raise production in line with the original OPEC+ agreement The decline in oil prices since the last meeting probably means that Saudi Arabia’s cautious view carries more weight than it did when Brent was close to US$70 a barrel.”
Prices were also tempered Tuesday by the success this week of efforts to remove a stuck container ship which had disrupted travel through the Suez Canal for nearly a week.
In other commodities, gold prices slid to a two-week low, hit by a higher U.S. dollar and rising Treasury yields.
Spot gold fell 0.4 per cent at US$1,705.25 per ounce. Earlier in the session, bullion touched US$1,703.39, its lowest since March 12.
U.S. gold futures were down 0.4 per cent at US$1,707.80 per ounce.
“Primary weighing factor on gold prices is the continuous rise in the U.S. long-term yields,” DailyFX strategist Margaret Yang said.
Currencies
The Canadian dollar was little changed as risk sentiment improved but crude slid while its U.S. counterpart gained against global counterparts as the U.S. vaccination effort gathers steam.
The day range on the loonie is 79.30 US cents to 79.48 US cents.
“The CAD is unchanged on the session as weaker crude oil prices vie with a moderately positive risk tone, while markets shrug off (for now, at least) a new wave of COVID-19 contagions,” Shaun Osborne, chief FX strategist with Scotia bank said.
“Still, Canada’s underperformance in the vaccine race, while contagions climb rapidly, could see the CAD weaken against the dollar,” he said in a note.
There were no major Canadian economic releases on Tuesday’s calendar.
On world markets, the U.S. dollar index, which weighs the greenback against a basket of world currencies, rose above the 93 mark and was last up around a quarter of a percent at 93.122, its highest level in four months, according to figures from Reuters.
The U.S. dollar also rose above 110 yen, its best level since last March. It is on track for the best month since late 2016.
The euro also weakened on the day to US$1.17335, its lowest level since November.
More company news
Canada’s Turquoise Hill Resources Ltd said on Tuesday its Oyu Tolgoi mining unit in Mongolia declared force majeure on some Chinese contracts, after shipments to China were suspended due to COVID-19 related restrictions. The force majeure compounds problems at one of the world’s largest copper-gold-silver mines Oyu Tolgoi, which is already at the center of a protracted dispute between Turquoise and its top shareholder, Rio Tinto
RIO-N -1.40%decrease
, over funding for the underground expansion of the mine.
The votes on whether to form a union at Amazon.com Inc’s Alabama fulfillment center are set to be reviewed starting on Tuesday, with momentum for future labor organizing at America’s second-largest private employer hanging in the balance. An agent from the U.S. National Labor Relations Board will sift through ballots sent to more than 5,800 workers at Amazon’s Bessemer, Alabama-based warehouse as part of a prolonged process expected to last days and spark legal challenges.
Google’s Maps app will start directing drivers along routes estimated to generate the lowest carbon emissions based on traffic, slopes and other factors, the company announced on Tuesday. Google, an Alphabet Inc unit, said the feature would launch later this year in the U.S. and eventually reach other countries as part of its commitment to help combat climate change through its services.
Obsidian Energy has ended its hostile takeover attempt for Bonterra Energy Corp. The company allowed its offer to buy Bonterra to expire on Monday. Obsidian interim CEO Stephen Loukas said the economic environment has changed substantially since the company launched its offer last year.
Economic news
(9 a.m. ET) U.S. S&P Case-Shiller Home Price Index (20 city) for January.
(9 a.m. ET) U.S. FHFA House Price Index for January.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for March.
With Reuters and The Canadian Press
Terry Weber