Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index started lower Tuesday with weaker crude prices weighing on energy stocks. On Wall Street, a pullback in energy stocks again hit sentiment, with the Nasdaq starting down more than 2 per cent.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 214.26 points, or 1.11 per cent, at 19,147.62.
In the U.S., the Nasdaq Composite dropped 286 points, or 2.13 per cent, to 13115.854 at the opening bell.
The Dow Jones Industrial Average fell 170.1 points, or 0.49 per cent, at the open to 34,572.74 and the S&P 500 fell 38.1 points, or 0.91 per cent to 4,150.34.
“The volatility of the past 24 hours has once again caught investors napping,” IG chief market analyst Chris Beauchamp said. “In contrast to expectations, 2021 has been a quiet year overall for major indices, with downward shocks confined to growth names and upward surges mostly concentrated in various esoteric alternative assets driven by a speculative frenzy.
“But as we move into the poorer period of the year for markets from the strong October-April period it will be harder for indices to maintain their sang-froid. Inflation worries are not going away, and are going to get louder and more insistent.”
In this country, earnings continue to roll. Centerra reported this morning while Kinross Gold releases earnings after the close. Retailer Aritzia releases also results after the end of trading.
Miner Centerra reported a first-quarter profit of US$167.4-million or 57 US cents per share on US$401.9-million in revenue compared with a profit of US$20 million or 7 US cents per share on US$378.8 million in revenue a year ago. On an adjusted basis, Centerra says it earned 28 US cents per share in its most recent quarter compared with an adjusted profit of 16 US cents per share in the first three months of 2020.
Ahead of the start of trading, Paper Excellence said it has struck a deal to acquire Domtar for $55.50 a share in cash. After the close of the deal, Paper Excellence says it plans to continue operations of Domtar as a stand-alone business. Domtar shares were up 14 per cent in early trading in Toronto.
Meanwhile, investors will also be watching developments in the fight over Enbridge’s Line 5 pipeline in Michigan as organized labour makes a last-minute plea to law makers to oppose the ordered shutdown of the project.
Michigan’s Governor Gretchen Whitmer has set May 12 as the day by which Line 5 must cease operations after giving notice last year she would revoke an easement permit that allowed the pipeline to cross the Straits of Mackinac, a major waterway. Enbridge has said it won’t cease operations without a court order. The Globe reports that members of the United Steelworkers union will testify before Michigan House and Senate committees Tuesday and rally outside. They say as many as 300 refinery jobs would be lost by a permanent shutdown.
Overseas, major European markets were deep in the red by afternoon with the pan-European STOXX 600 down more than 2 per cent. Britain’s FTSE 100 fell 2.6 per cent. Germany’s DAX and France’s CAC 40 lost 2.2 per cent and 2 per cent, respectively.
In Asia, Japan’s Nikkei closed down 3.08 per cent. Hong Kong’s Hang Seng fell 2.03 per cent.
Commodities
Crude prices fell as the continuing rise in COVID-19 cases in India weighs on sentiment and concerns about a U.S. pipeline outage ease.
The day range on Brent is US$67.50 to US$68.38. The range on West Texas Intermediate is US$64.09 to US$65.02.
“The rally in oil prices was short-lived as the Colonial Pipeline disruption seems it will not have a prolonged impact and as WTI returned to contango,” OANDA senior analyst Ed Moya said in a note.
“Also weighing on crude prices was the WHO’s reclassification of the highly contagious triple-mutant Covid variant spreading in India as a ‘variant of concern.’”
A key component, he said, for the bullish view for oil prices in the second half of the year is for emerging markets to have COVID-19 under control and for international travel to resume.
Meanwhile, the operator of the Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said on it was working on restarting in phases with “the goal of substantially restoring operational service by the end of the week,” according to a Reuters report.
Later in the session, investors get the first of two weekly U.S. inventory reports, with fresh numbers due from the American Petroleum Association. Analysts are looking for a decline in weekly crude stocks of about 2.3 million barrels, continuing the decline seen in the prior week.
In other commodities, gold prices slid as a rebound in the U.S. dollar weighed on bullion’s appeal.
Spot gold was down 0.1 per cent at US$1,833.00 per ounce, after hitting its highest since Feb. 11 at US$1,845.06 on Monday.
U.S. gold futures fell 0.2 per cent to US$1,834.20 per ounce.
Currencies
The Canadian dollar was firmer while its U.S. counterpart held near its lowest levels in more than two months against a basket of currencies.
The day range on the loonie is 82.55 US cents to 82.73 US cents. The Canadian dollar has gained alongside other resource-linked currencies amid the recent rally in commodity prices.
“Spreads are stable and while crude oil prices have dipped, the broader commodity complex remains well-supported around recent (multi-year) highs,” Shaun Osborne, chief FX strategist with Scotiabank, said. “The Bloomberg commodity index is trading modestly higher on the day, in fact.”
There were no major Canadian economic releases on Tuesday’s calendar.
On global markets, the U.S. dollar index, which weighs the greenback against a group of world currencies steadied at 90.283, just above a Feb. 25 low of 90.03 hit in the previous session.
The Australian dollar held around US$0.7827, hovering just below a two-month high hit on Monday while the New Zealand dollar sat at February highs, according to figures from Reuters.
More company news
Loblaw parent George Weston Ltd. reported a net loss available to common shareholders $62-million or 41 cents per diluted share for the quarter ended March 27. The result compared with a profit of $582-million or $3.78 per diluted share a year earlier. George Weston says the loss came as it recorded an unfavourable fair value adjustment of a trust unit liability as a result of the increase in Choice Properties REIT unit prices in the quarter. On an adjusted basis, the company says it earned $243-million or $1.59 per diluted share for the quarter, up from an adjusted profit of $239-million or $1.55 per diluted share a year ago.
Elon Musk early on Tuesday asked his followers in a poll on Twitter whether Tesla Inc should accept payment in dogecoin. Musk’s latest tweet comes just days after he said that his commercial rocket company, SpaceX, will accept the meme-inspired cryptocurrency as payment. “Do you want Tesla to accept Doge?” Musk asked his about 53.8 million followers on Twitter.
Toshiba Corp’s independent directors are finalizing the hiring of advisers to work with the Japanese conglomerate at the centre of a potential private equity bidding war, and a decision could be taken this week, people familiar with the matter told Reuters. The directors received pitches from investment banks in the past weeks to take on a broad advisory role after the firm found itself in the crosshairs of a potential takeover bid last month, the report said. An announcement of the appointment could be made as soon as Friday at Toshiba’s earnings briefing, one of the people Reuters reported.
L Brands Inc said its board had approved a plan to separate the company into two independent, public companies, Bath & Body Works and Victoria’s Secret, after deciding against a sale of the lingerie brand.
Economic news
(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for March.
With Reuters and The Canadian Press
Terry Weber