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Equities

Canada’s main stock index started Monday’s session little changed with gains in energy and tech shares offset by weakness in materials stock as traders look ahead to Wednesday’s Bank of Canada rate decision. On Wall Street, key indexes were positive with a heavy week of earnings on the horizon.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 9 points, or 0.04 per cent, at 20,494.21.

In the U.S., the Dow Jones Industrial Average rose 64.07 points, or 0.19 per cent, at the open to 33,439.56. The S&P 500 opened higher by 5.53 points, or 0.14 per cent, at 3,978.14, while the Nasdaq Composite rose 31.51 points, or 0.28 per cent, to 11,171.94 at the opening bell.

“This is likely to be one of the busier earnings weeks with some major names scheduled to report,” OANDA senior analyst Craig Erlam said.

“It hasn’t been a great start and disappointing results last week, particularly in financials, took the wind out of the sails of the new year rally. There’s a more downbeat tone to earnings season now, with a particular focus on layoff announcements.”

In this country, traders are awaiting Wednesday’s Bank of Canada interest rate decision.

The Globe’s Mark Rendell reports the Bank of Canada is widely expected to deliver a final quarter-point interest rate increase on Wednesday before pausing its historic monetary policy tightening cycle. Central bank officials signalled in December that they were nearing the end of their inflation-fighting campaign, in which they increased borrowing costs seven consecutive times last year.

The U.S. Federal Reserve, meanwhile, makes its next policy decision the following week and is also widely expected to raise rates by a quarter percentage point.

Monday's analyst upgrades and downgrades

On the corporate side, Canadian earnings begin to hit their strike this week with results due from grocer Metro Inc. and rail company Canadian National Railway on Tuesday.

South of the border, Microsoft, Tesla and IBM are among the big names delivering results through the week.

Overseas, the pan-European STOXX 600 was up 0.27 per cent by midday. Britain’s FTSE 100 was up 0.37 per cent. Germany’s DAX and France’s CAC 40 gained 0.09 per cent and 0.20 per cent.

In Asia, Japan’s Nikkei gained 1.33 per cent. Many other markets in the region were closed for the Lunar New Year holiday.

Commodities

Crude prices edged higher, supported by optimism over demand in the wake of China’s reopening.

The day range on Brent was US$86.92 to US$88.19 in the early premarket period. The range on West Texas Intermediate was US$81.05 to US$82.11.

Last week Brent rose 2.8 per cent, while WTI advanced 1.8 per cent.

“Crude oil posted its second straight week of gains on Friday, as the Chinese reopening story and prospects of higher global demand, and around 1-million-barrels-per-day gap between supply and demand outweighed the recession fears,” Swissquote senior analyst Ipek Ozkardeskaya said.

International Energy Agency head Fatih Birol on Friday said energy markets could tighten this year if the Chinese economy rebounds the way financial institutions expect, according to Reuters.

In other commodities, gold prices slid ahead of U.S. economic data due later in the week, including the fourth-quarter GDP report on Thursday.

Spot gold fell 0.2 per cent to US$1,922.58 per ounce by early Monday morning. It climbed to its highest since April 2022 on Friday. U.S. gold futures also eased 0.2 per cent to US$1,924.10.

Currencies

The Canadian dollar was stronger ahead of this week’s Bank of Canada rate decision while its U.S. counterpart slid against a basket of currencies.

The day range on the loonie was 74.66 US cents to 74.96 US cents in the predawn period.

There were no major Canadian economic releases due on Monday with focus squarely on Wednesday morning’s interest rate announcement from the central bank.

“Market pricing for this week’s BoC decision is somewhere between zero and 25 basis points, but skewed toward the latter and a majority of economists also expect a 25-basis-point move, RBC’s included,” RBC chief currency strategist Adam Cole said.

“This hike is expected to be the last in the current cycle. Though broader inflation trends are still running above the Bank of Canada’s 1 per cent to 3 per cent target range, they’ve already shown clear signs of losing steam.”

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.2 per cent at 101.73 in early trading, not far off the eight-month low of 101.510, according to figures from Reuters.

Elsewhere, the euro reached US$1.0927, breaking the recent peak of $1.08875, to trade at its highest level since April last year, Reuters reported.

The gains came after European Central Bank governing council member Klaas Knot suggested interest rates would rise by 50 basis points in both February and March and continue climbing in the months after.

More company news

Canada’s Ritchie Bros Auctioneers will increase cash payout for IAA Inc shareholders to US$12.80 per share from US$10 as part of the deal to buy the U.S.-based company, the Wall Street Journal reported on Monday. -Reuters

Activist investor Elliott Management Corp has made a multi-billion dollar investment in cloud-based software firm Salesforce Inc, according to people familiar with the matter. It is unclear what Elliott, one of the world’s most prominent activist investors, is pushing for at Salesforce. “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” Jesse Cohn, managing partner at Elliott told Reuters. -Reuters

Music streaming firm Spotify Technology SA plans to cut 6% of its workforce, the company said on Monday, a move that will add to a glut of layoffs in the technology sector as companies prepare for a possible recession. Tech companies are facing a demand downturn after two years of pandemic-driven growth during which they had hired aggressively. That has led the likes of Meta Platforms Inc to Microsoft Corp to shed thousands of jobs. Sweden-based Spotify has seen advertisers pull back on spending, mirroring a trend seen at Meta and Google parent Alphabet Inc, as rapid interest rate hikes and the fallout from the Russia-Ukraine war pressure the economy.

Economic news

(10 a.m. ET) U.S. leading indicator for December.

With Reuters and The Canadian Press