Equities
Canada’s main stock index was treading water at Monday’s opening bell while U.S. indexes saw modest gains as trader’s await tomorrow’s U.S. inflation figures.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 4.46 points, or 0.02 per cent, at 20,616.58.
In the U.S., the Dow Jones Industrial Average rose 18.12 points, or 0.05 per cent, at the open to 33,887.39.
The S&P 500 opened higher by 6.16 points, or 0.15 per cent, at 4,096.62, while the Nasdaq Composite gained 40.97 points, or 0.35 per cent, to 11,759.09 at the opening bell.
This week, the latest reading on U.S. inflation will be key for markets. The report is due tomorrow.
“Disinflation trends will get tested here and we could potentially have a major turning point with Wall Street’s expectations on how high the Fed will have to take interest rates,” OANDA senior analyst Craig Erlam said.
The report is expected to show that headline CPI rose 0.5 per cent on a monthly basis in January, following a 0.1-per-cent decline the month before. The annual rate of inflation in the U.S. is seen easing to 6.2 per cent from 6.5 per cent, Mr. Erlam said.
“If pricing pressures come in hotter-than-expected, this could be an inflation reckoning report that might drive Fed rate hike expectations above 5.25 per cent,” he said.
Canada’s January inflation report is due next week.
Later this week, investors will hear from Bank of Canada deputy governor Paul Beaudry. He will speak in Edmonton on Thursday on the importance of the central bank’s inflation target. The central bank has raised interest rates at its last eight meeting, looking to tame price pressures. At its most recent meeting in January, the bank raised borrowing costs by a quarter percentage point and signalled a conditional pause in further moves.
On the corporate side, Canadian investors will get quarterly results from Algoma Steel after markets close on Monday. Later in the week, TC Energy and Shopify are scheduled to release earnings reports.
On Wall Street, Coca-Cola, Cisco and Marriott are among the companies reporting results this week.
Overseas, the pan-European STOXX 600 was up 0.61 per cent by midday. Britain’s FTSE 100 advanced 0.48 per cent. Germany’s DAX and France’s CAC 40 gained 0.45 per cent and 0.85 per cent, respectively.
In Asia, Japan’s Nikkei finished down 0.88 per cent. The Japanese government is expected to formally appoint economist and former policy board member Kazuo Ueda as the next governor of the Bank of Japan on Tuesday. Hong Kong’s Hang Seng lost 0.12 per cent.
Commodities
Crude prices were down in early trading with the demand picture coming into focus as traders await the U.S. inflation figures later in the week.
The day range on Brent was US$85.10 to US$86.64 in the early premarket period. The range on West Texas Intermediate was US$78.45 to US$80.
Both benchmarks were down about 1 per cent ahead of the North American open. Both rose more than 8 per cent last week, buoyed by news that Russia would cut production in response to price caps from the West.
Traders are waiting for Tuesday’s U.S. inflation numbers, hoping for clarity on where the Federal Reserve is headed on interest rates.
“Crude prices are softening as energy traders anticipate a potentially weakening crude demand outlook as a pivotal inflation report could force the Fed to tighten policy much more aggressively,” OANDA senior analyst Ed Moya said.
“This week could deliver a make or break moment in how bad of a recession Wall Street prices in,” he said.
Prices saw further downward pressure from news of the resumption of Azerbaijani oil exports on Sunday at Turkey’s Ceyhan terminal.
Reuters reports that the terminal had been damaged in the devastating earthquakes that hit Turkey and Syria last week. It is the storage and loading point for pipelines which carry oil from Azerbaijan and Iraq.
In other commodities, gold prices slid as the U.S. dollar edged higher.
Spot gold was down 0.3 per cent at US$1,859.86 per ounce early Monday morning. U.S. gold futures inched 0.1-per-cent lower to US$1,873.60.
Currencies
The Canadian dollar was slightly lower while its U.S. counterpart edged up against a group of currencies.
The day range on the loonie was 74.69 US cents to 74.94 US cents in the early premarket period.
“Without higher commodity prices or stronger domestic data/higher interest rates (or a generally weaker USD if, for example, U.S. CPI comes in much softer than expected), it may be hard for the CAD to gain on the USD for the moment,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic releases due Monday. Investors will get a flash estimate on factory sales as well as comments from the Bank of Canada later in the week.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, went as high as 103.8 in early trading, not far off its best level since early January, according to figures from Reuters.
The euro and pound were both steady on the day against the dollar, with the European common currency at US$1.0685 and sterling at US$1.206, Reuters reported.
In bonds, the yield on the U.S. 10-year note was down slightly at 3.736 per cent ahead of the North American opening bell.
More company news
B2Gold Corp said on Monday it would buy Sabina Gold & Silver Corp in a deal valued at $1.1-billion, in a move that is likely to boost the Canadian gold miner’s portfolio. B2Gold will pay $1.87 per Sabina share, which represents an 18% premium to Sabina’s last close. -Reuters
Ritchie Bros. Auctioneers Inc. says it expects its fourth-quarter profit to come in between US$42-million and US$45-million. In its preliminary results for the quarter ended Dec. 31, the company, which keeps its books in U.S. dollars, says it expects total revenue of about US$444-million. For the full year, Ritchie Bros. says it expects net income between US$317-million and US$320-million. Total revenue for the year is expected to be about US$1.7-billion. -The Canadian Press
Dye & Durham Ltd. reported a net loss of $34.8-million in its latest quarter as its revenue edged down three per cent compared with a year ago. The legal software company says the loss amounted to 52 cents per diluted share for the quarter ended Dec. 31. The result compared with a net loss of $4-million or six cents per diluted share a year earlier. Revenue in what was the second quarter of the company’s financial year totalled $106.7-million, down from $109.6-million a year earlier. -The Canadian Press
Economic news
(8:30 a.m. ET) Canadian construction investment for December.
With Reuters and The Canadian Press
Terry Weber