Equities
Canada’s main stock index slid at Tuesday’s opening bell with energy and financial stocks under pressure. On Wall Street, key indexes were muted after three days of gains amid optimism that recent banking woes are fading.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 21.99 points, or 0.11 per cent, at 19,602.75.
In the U.S., the Dow Jones Industrial Average rose 2.77 points, or 0.01 per cent, at the open to 32,434.85.
The S&P 500 opened lower by 3.40 points, or 0.09 per cent, at 3,974.13, while the Nasdaq Composite dropped 16.07 points, or 0.14 per cent, to 11,752.76 at the opening bell.
“For now, the volatility index has taken another nose dive, but if we stop keeping our finger on the pulse, things can deteriorate fairly rapidly,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said in an early note.
“This is because what matters most is the monetary policy adopted by the Fed and the ECB. So far, we have not seen any significant shift in that, and what the policyholders believe and what the market players anticipate are quite distant.”
In Canada, the federal government delivers its budget this afternoon.
“Climate policy, and more specifically, Canada’s response to the massive U.S. Inflation Reduction Act, will headline the budget,” RBC chief currency strategist Adam Cole said.
“Though an overheating economy has pushed inflation higher, it has also boosted government revenues. Still, plans to return the budget to balance remain at best aspirational.”
The Globe reports this morning that Finance Minister Chrystia Freeland’s 2023 budget will announce plans to save about $7-billion over five years through cuts to federal travel and reduced outsourcing, with a particular focus on using fewer management consultants, according to a senior government official. As well, Tuesday’s federal budget will announce a clean-tech manufacturing tax credit aimed at encouraging the mining of critical minerals in Canada, a credit that will be worth more than $3-billion over five years, The Globe reports.
On Wall Street, a Reuters report suggests Walt Disney Co. began laying off 7,000 employees on Monday. The cuts were announced earlier this year. The company is looking to control costs and create a more ‘streamlined’ business, the news agency said.
In earnings, Vancouver-based Lululemon Athletica reports its latest results after the markets close.
Elsewhere, shares of Lundin Mining Corp were up more than 6 per cent in early trading in Toronto after the company said it would buy a majority stake in Chile’s Caserones copper mine for about $950-million to expand the Canadian miner’s exposure to the red metal crucial for the green energy transition.
Overseas, the pan-European STOXX 600 was off 0.19 per cent by midday. Britain’s FTSE 100 dipped 0.02 per cent. Germany’s DAX and France’s CAC 40 were down 0.02 per cent and 0.07 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.15 per cent. Hong Kong’s Hang Seng gained 1.11 per cent.
Commodities
Crude prices gained in early trading as risk sentiment in the broader markets steadied and demand signals out of china remained positive.
The day range on Brent was US$77.70 to US$78.78. The range on West Texas Intermediate was US$72.64 to US$73.52.
“It’s been a volatile few weeks for crude, caught up in the banking storm as investors are forced to scale back their expectations for the economy which, in turn, has weighed heavily on demand prospects,” OANDA senior analyst Craig Erlam said.
“But with sentiment slowly improving and yields inching cautiously higher, so too are oil prices.”
He said it may take time for the dust to settle and prices to fully reflect the new outlook after such a turbulent period " which should ensure volatility remains for now.”
Crude drew some support from signs of strengthening demand in China, one of the world’s top consumers of oil.
China’s crude oil imports are expected to rise 6.2 per cent in 2023 to 540 million tonnes, according to an annual forecast by a research unit of China National Petroleum Corp on Monday.
Meanwhile, traders will get the first of two weekly U.S. inventory reports later in the session with the release of fresh figures from the American Petroleum Institute. More official government figures will follow on Wednesday morning.
An early Reuters poll suggested crude stockpiles were likely to have risen about 200,000 barrels for the week.
In other commodities, gold prices pulled back as risk appetite improved.
Spot gold was down 0.1 per cent at US$1,955.60 per ounce early Tuesday morning. U.S. gold futures rose 0.1 per cent to US$1,956.60.
Currencies
The Canadian dollar turned higher while its U.S. counterpart also slid against a basket of world currencies as risk sentiment improved in the broader markets.
The day range on the loonie was 73.01 US cents to 73.36 US cents early Tuesday morning.
There were no major Canadian economic releases due Tuesday, aside from the release of the federal budget this afternoon.
On world markets, the U.S. dollar index - which gauges the currency against six peers - fell 0.19 per cent to 102.56, after a 0.26-per-cent drop on Monday, according to figures from Reuters.
The euro was last up 0.27 per cent at US$1.083. Britain’s pound was 0.31 per cent higher at US$1.233, just below a two-month high.
The risk-sensitive Australian dollar jumped in the wake of a better-than-expected reading on retail sales, climbing 0.56 per cent to US$0.669.
In bonds, the yield on the benchmark U.S. 10-year note was up at 3.562 per cent in the predawn period.
More company news
Crescent Point Energy Corp said on Tuesday it would acquire Spartan Delta Corp’s oil and gas assets in Alberta, for $1.7-billion to expand in the Monteny region, one of North America’s top shale plays. The deal would immediately add to its excess cash flow per share by 20%, the company said. The Canadian energy sector has seen a rise in deal-related activity over the past year as companies benefited from higher oil prices amid a supply crunch. -Reuters
Shoppers Drug Mart Inc. says it is moving away from its medical cannabis distribution business by transferring patients to another provider. The pharmacy chain did not say what is prompting the shift, but as part of the change, will begin sending patients to a new platform run by Toronto-based biopharmaceutical com pany Avicanna Inc. The move to Avicanna’s MyMedi.ca platform will start in early May, though customers will be able to continue placing orders through Shoppers’ website during the transition period. -The Canadian Press
The Globe’s Susan Krashinsky Robertson reports the new president and chief executive officer of Walmart Canada told Members of Parliament that his stores are not profiting from inflation – and that the company’s profits from food decreased last year – but declined to provide numbers to back up those assertions. Gonzalo Gebara’s appearance on Monday evening before the House of Commons committee on agriculture and agri-food followed another hearing earlier this month, during which MPs pressed the leaders of the largest Canadian-owned grocery chains to explain the rapidly rising cost of food and growing profits among retailers.
Alibaba Group Holding Ltd is planning to split its business into six main units covering e-commerce, media and the cloud, the company said on Tuesday, adding that each of the units will explore fundraising or initial public offerings. U.S.-listed shares of Alibaba rose 3.5% in trading before the bell. The six units will include Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group. -Reuters
U.S. highway safety regulators have opened yet another investigation into problems with Teslas, this time tied to complaints that the seat belts may not hold people in a crash. The investigation by the National Highway Traffic Safety Administration covers an estimated 50,000 Model X SUVs from the 2022 and 2023 model years. - The Associated Press
Lyft Inc’s shares rose before the bell on Tuesday as Wall Street cheered a management change at the ride-hailing firm that has struggled to shake off a pandemic slump in its business and ceded market share to bigger rival Uber. Lyft said on Monday co-founders Logan Green and John Zimmer would step down as CEO and president, respectively, handing the reins to David Risher who has been a board member since 2021. -Reuters
Economic news
Canada’s federal budget is released
(8:30 a.m. ET) U.S. goods trade deficit for February.
(8:30 a.m. ET) U.S. wholesale and retail inventories for February.
(9 a.m. ET) U.S. CoreLogic Case-Shiller Home Price Index (20 city) for January.
(9 a.m. ET) U.S. FHFA House Price Index for January.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for March.
(10 a.m. ET) U.S. Fed Vice Chair for Supervision Michael Barr testifies before the Senate Banking Committee.
With Reuters and The Canadian Press