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Equities
Canada’s main stock index edged higher at the open Monday on gains in energy prices and improved global sentiment. On Wall Street, indexes were also positive at the opening bell as easing concerns over the Omicron variant helped calm investors’ frayed nerves after last week’s volatility.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 17 points, or 0.08 per cent, at 20,650.27.
In the U.S., The Dow Jones Industrial Average rose 53.35 points, or 0.15 per cent, at the open to 34,633.43.
The S&P 500 opened higher by 9.94 points, or 0.22 per cent, at 4,548.37, while the Nasdaq Composite gained 32.16 points, or 0.21 per cent, to 15,117.63 at the opening bell.
“Given how well markets have performed this year, and liquidity likely to diminish the nearer we get to the Christmas period, there is a risk that what we are seeing from investors is a collective ‘what we have we hold’ attitude to risk management, with the prospect that we might see further profit taking in the days ahead, especially if this week’s U.S. CPI report for November surges to a new 31 year high,” Michael Hewson, chief market analyst with CMC Markets, said in an early note.
“This may help explain the move back into U.S. treasuries as investors reorientate their asset allocation heading into year end, moving out of stocks and into government bonds.”
In this country, investors will be awaiting the Bank of Canada’s policy decision. Analysts are increasingly looking for the central bank to move on rates in the first half of next year, particularly after a much-better-than-expected reading from Statistics Canada on November hiring. The decision is due Wednesday at 10 a.m. ET.
“Virus concerns and inflation will be in focus in the Bank of Canada policy meeting (Wednesday),” Alvin Tan, Asia FX strategist with RBC, said. “Conditions in the economy have unfolded broadly in line with the central bank’s expectations, and arguments to keep policy interest rates at emergency low levels are getting thin.
“We continue to expect the first rate hike to come in April next year, and the BoC to reiterate that, barring significant further disruptions from the new virus variant, the economy is on track to fully recover by mid-2022.”
More Canadian earnings come later in the week with Lululemon, Empire Co and Transat AT all scheduled to release results on Thursday.
Overseas, the pan-European STOXX 600 was up 0.62 per cent in morning trading. Germany’s DAX rose 0.53 per cent. Britain’s FTSE 100 gained 0.82 per cent and France’s CAC 40 was up 0.54 per cent.
In Asia, Japan’s Nikkei slid 0.36 per cent, paring losses seen earlier in the session. Hong Kong’s Hang Seng slumped 1.76 per cent on weakness in tech shares.
Commodities
Crude prices gained in early going on hopes that the illness caused by the Omicron variant is less severe than initially feared.
The day range on Brent is US$70.24 to US$71.94. The range on West Texas Intermediate is US$66.72 to US$68.43. Both benchmarks saw a sixth consecutive weekly decline last week.
Sentiment was helped by reports out of South Africa suggesting Omicron cases there only had mild symptoms as well as comments from the top U.S. infectious disease official that “it does not look like there’s a great degree of severity” so far, according to a Reuters report.
“If Omicron is proven over the coming days (or weeks) to be less aggressive, even if it is more contagious, then we can say 100 per cent last week’s lows were the bargain of the quarter,” OANDA senior analyst Jeffrey Halley said.
He also noted that Saudi Arabia raised its January prices to Asian and U.S. customers over the weekend, although it cut selling prices to European customers.
“Saudi Arabia’s confidence, along with the South African omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it,” Mr. Halley said.
Gold prices, meanwhile, edged lower, pressured by a strong U.S. dollar and a more hawkish Federal Reserve.
Spot gold fell 0.2 per cent to US$1,780.63 per ounce, while U.S. gold futures dropped 0.1 per cent to US$1,782.70.
Currencies
The Canadian dollar was firmer amid higher crude prices and improved risk sentiment while its U.S. counterpart edged up against a group of world currencies.
The day range on the loonie is 77.79 US cents to 78.17 US cents.
“A somewhat more constructive risk mood is helping lift the Canadian dollar — and its commodity peers — in early trade,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The Canadian dollar was rewarded only temporarily for Friday’s strong jobs print but, assuming market concerns regarding the variant continue to moderate, we expect the economic and policy backdrop to provide more support a somewhat undervalued Canadian dollar in the medium term.”
There were no major Canadian economic releases on Monday’s calendar. Investors will get international trade numbers for October on Tuesday followed by the Bank of Canada policy decision on Wednesday.
On world markets, the U.S. dollar index inched 0.10 per cent higher at 96.29, within range of November’s 16-month peak of 96.938, according to figures from Reuters. It was also 0.2 per cent higher against the yen at 113.05 yen and rebounded 0.4 per cent to the Swiss franc.
The euro slipped a quarter per cent to the U.S. dollar.
The Australian dollar was up 0.5 per cent to US$0.7035, bouncing off a 13-month low. The New Zealand dollar rose 0.1 per cent to US$0.6750.
In bonds, the yield on the U.S. 10-year note was up at 1.395 per cent.
After a rough weekend, bitcoin last down 3.9 per cent at US$47,567.
More company news
Dye & Durham Ltd. has signed a deal to buy Telus’ financial solutions business for $500-million. The financial solutions business provides a national payment infrastructure that helps people make payments online. The business also helps connect Canadian financial institutions with lawyers when doing residential real estate transactions.
Teck Resources Ltd. says its coal sales in the fourth quarter will be lower than it had earlier estimated due to the heavy rain, flooding and mudslides in B.C. that have disrupted the railways in the province. The company says it now forecasts its fourth-quarter steelmaking coal sales at 5.2 million to 5.7 million tonnes, compared with earlier expectations for between 6.4 million and 6.8 million tonnes, due to the disruptions in rail shipments to terminals in the B.C. Lower Mainland. Teck, which has diverted shipments to Ridley Terminals in Prince Rupert, B.C., says when rail service is fully restored it will be able to substantially recover the delayed fourth-quarter sales in the first half of 2022.
Crescent Point Energy Corp. raised its quarterly dividend as it increased its production guidance for next year. The company says it will pay a quarterly dividend of 4.5 cents per share on April 1 to shareholders of record as of March 15, up from its fourth-quarter dividend of three cents. In addition to increasing its dividend, Crescent Point also plans to spend up to $100 million on share repurchases over the following six months.
EU antitrust regulators have temporarily halted their investigation into Nvidia’s bid for British chip designer ARM, the largest ever chip deal, as they await more information, according to a European Commission filing. The European Commission stopped the clock on its previous deadline on Nov. 25. Such delays have been common since the COVID-19 pandemic as companies try to gather data from customers struggling with lockdown restrictions and staff shortages. The deal hit its biggest hurdle last week when the U.S. Federal Trade Commission sued to block Arm’s acquisition by U.S. company Nvidia, the world’s biggest maker of graphics and artificial intelligence (AI) chips.
Economic news
China trade surplus
Germany factory orders
With Reuters and The Canadian Press
Terry Weber