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Equities

Canada’s main stock index slid at the start of trading Monday on weakness in commodities and financial stocks. Wall Street’s key indexes were in the red at the opening bell with rate and economic concerns weighing.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 79.33 points, or 0.43 per cent, at 18,401.65.

In the U.S., the Dow Jones Industrial Average fell 53.57 points, or 0.18 per cent, at the open to 29,536.84.

The S&P 500 opened lower by 10.51 points, or 0.28 per cent, at 3,682.72, while the Nasdaq Composite dropped 34.54 points, or 0.32 per cent, to 10,833.38 at the opening bell.

“The mood is sour,” Swissquote senior analyst Ipek Ozkardeskaya said in a note, adding Goldman Sachs has slashed its year-end estimate for the S&P 500 to 3,600 from 4,300.

“I now start thinking, if both the equity and sovereign markets fall this dramatically, the Federal Reserve (Fed) will not be given the choice to continue tightening as aggressively as planned, even if inflation doesn’t come down at the speed the U.S. policy makers are aiming for.”

Last week, a series of global central banks, including the Fed, continued a course of interest rate hikes in a bid to slow inflation, sparking increased concerns about the prospect of a global recession. Early Monday, the OECD said world economic growth is slowing more than previously forecast. The Paris-based agency said, while global growth this year was still expected at 3 per cent, it is now expected to slow to 2.2 per cent in 2023. In June, the OECD had forecast growth next year of 2.8 per cent.

Monday's analyst upgrades and downgrades

On Monday, currency markets were also in rough waters, with the pound touching a record low against the U.S. dollar in the wake of last week’s economic plan which raised worries about government spending. In Asian trading, the pound fell roughly 5 per cent at one point to a low of US$1.0327.

“What the market is hearing is: who will finance this [British government] spending?” Ms. Ozkardeskaya said.

In this country, Bank of Nova Scotia names Finning International CEO Scott Thomson as its next chief executive when Brian Porter retires at the end of January. Mr. Thomson is also a current board member at Scotiabank. Scotia shares were down more than 1 per cent shortly after the start of trading in Toronto.

Monday’s Insider Report: This grocery CEO is a buyer after an earnings miss sends shares tumbling

Later in the day, investors will get results from Dye & Durham after the close of trading. On Friday, that company saw its planned acquisition of Australia’s Link Administration fall through. D&D said it was disappointed by the turn of events but also noted that it has a “robust pipeline” of merger and acquisitions.

Later in the week, Canadian investors will also get a reading on July GDP from Statistics Canada. Early estimates suggest economic growth contracted by 0.1 per cent for the month. The report is due Thursday morning.

“RBC Economics expects flat GDP growth through July in Thursday’s release - narrowly improving on Statscan’s advance estimate for a 0.1-per-cent decline,” Alvin Tan, Asia FX strategist with RBC said. “It likely ticked up in August but not by much, gaining 0.1 per cent. All three months’ data point to a broader levelling out of economic activity as the post-pandemic rebound loses steam.”

Overseas, the pan-European STOXX 600 was off 0.56 per cent by midday. Britain’s FTSE 100 slid 0.89 per cent. Germany’s DAX lost 0.13 per cent while France’s CAC 40 edged up 0.13 per cent.

In Asia, Japan’s Nikkei dropped 2.66 per cent. Hong Kong’s Hang Seng lost 0.44 per cent.

Commodities

Crude prices were down for a second day in early going, hit by worries about the strength of the global economy and the potential impact on demand.

The day range on Brent was US$84.51 to US$87.42 in the early premarket period. The range on West Texas Intermediate was US$77.21 to US$79.97. Both benchmarks hit their lowest levels since January early in the session after falling about 5 per cent on Friday, according to figures from Reuters.

“It seems central banks are poised to remain aggressive with rate hikes and that will weaken both economic activity and the short-term crude demand outlook,” OANDA senior analyst Ed Moya said in a note.

“The [U.S.] dollar rally is about to enter another level that could keep the pressure on commodities, especially oil prices.”

Markets are now looking ahead to the next OPEC+ meeting, scheduled for Oct. 5, after the group agreed to a small production cut at its last gathering. However, the group also continues to produce at a level below the current output target, raising questions about the effectiveness of any further cut.

Data last week showed OPEC+ missed its target by 3.58 million barrels per day in August, a bigger shortfall than in July, Reuters reported.

In other commodities, gold prices steadied after testing their lowest level in more than two years early Monday.

Spot gold was little changed at US$1,645.47 per ounce early in the session. Prices fell as much as 1 per cent earlier to hit US$1,626.41, their lowest level since April 2020.

U.S. gold futures fell 0.4 per cent to US$1,648.70.

Currencies

The Canadian dollar was down amid weak risk sentiment, while its U.S. counterpart continued to hold near its best levels in two decades against a basket of currencies.

The day range on the loonie early Monday morning was 73.32 US cents to 73.74 US cents.

There were no major Canadian economic releases on Monday’s calendar.

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, reached 114.58 for the first time since May 2002 before easing to 113.16, just a touch firmer on the day, according to figures from Reuters.

Elsewhere, Britain’s pound grabbed headlines, falling nearly 5 per cent at one point in the session to hit a record low of US$1.0327, before stabilizing around US$1.0699 in early trading in London.

The euro, meanwhile, also touched a fresh 20-year low of US$0.9528.

In bonds, the yield on the U.S. 10-year note edged higher at 3.777 per cent in the predawn period.

Economic news

(8:30 a.m. ET) Canadian wholesale trade for August.

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for August.

(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity for September.

With Reuters and The Canadian Press