Equities
Canada’s main stock index opened down Tuesday with energy stocks under pressure from lower crude prices. On Wall Street, key indexes advanced in early trading as markets await a vote on the weekend debt ceiling deal.
At 9:30 a.m. ET the Toronto Stock Index fell 48.87 points, or 0.24 per cent, to 19,919.08.
In the U.S., the Dow Jones Industrial Average rose 10.31 points, or 0.03 per cent, at the open to 33,103.65. The S&P 500 opened higher by 21.26 points, or 0.51 per cent, at 4,226.71, while the Nasdaq Composite gained 133.41 points, or 1.03 per cent, to 13,109.10 at the opening bell.
Markets are now awaiting the next move after U.S. President Joe Biden and House Speaker Kevin McCarthy struck a tentative weekend agreement to suspend the U.S. debt ceiling and avoid an historic default. A key test comes Tuesday afternoon when the House Rules Committee is set to consider the package and vote on sending it to the full House for a vote expected Wednesday. As expected, a number of hard right Republicans have said they will vote against the deal. Some progressives have balked at the inclusion of new work requirements in two government assistance programs, according to The Associated Press.
“The deal, which lays out a plan to suspend the debt ceiling beyond the date of the next U.S. election until Jan. 1 2025, will now need to get agreement from lawmakers on both sides of the political divide to pass into law,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“That could well be the hardest part given that on the margins every vote is needed which means partisan interests on either side could well derail or delay a positive outcome.”
In Canada, The Globe reports a proposed merger of Canada’s Viterra Ltd. and U.S. rival Bunge Ltd. is moving ahead with the support of two of Canada’s biggest pension funds, which would emerge as shareholders in the new agribusiness company. Two sources close to the talks said a deal should be announced within weeks and would create one of the world’s biggest handlers of grains and oilseeds, with the reach and heft to compete with industry leaders Cargill Inc. and Arch-Daniels-Midland Co., both based in the U.S. Midwest agriculture belt.
Elsewhere, HP Inc. is scheduled to report results after the close of trading. In Canada, Canopy Growth is scheduled to release quarterly earnings although Bloomberg has reported that the cannabis company may not file those documents as it prioritizes refiling its 2022 reports. Canopy Growth said earlier this month that it will refile three of its past quarterly financial statements after uncovering “material misstatements” linked to its BioSteel business.
Overseas, the pan-European STOXX 600 was little changed by midday. Britain’s FTSE 100 slid 0.49 per cent. Germany’s DAX gained 0.49 per cent. France’s CAC 40 fell 0.37 per cent.
In Asia, Japan’s Nikkei finished up 0.30 per cent. Hong Kong’s Hang Seng added 0.24 per cent, ending a four-day losing streak.
Commodities
Crude prices were down as traders await a vote on the U.S. debt deal and look ahead to next week’s OPEC+ meeting.
The day range on Brent was US$75.68 to US$77.57 in the early premarket period. The range on West Texas Intermediate was US$71.42 to US$73.55.
“Oil markets continue to experience highly choppy price action, driven this week by Fed uncertainty, low liquidity and confusing messages from OPEC+ members about new output cuts, which have spread uncertainty in oil markets and left traders doing little more than betting yes or no on a production cut heading into the June 4 OPEC meeting,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
Saudi Arabia has hinted that output cuts are possible at next week’s meeting, although Russia has suggested that production is likely to remain unchanged.
“Russian oil is the biggest wild card in the oil market supply purview,” Mr. Innes said.,
“While OPEC could remain highly compliant with its threat to cut, the ongoing dynamic concerning Russian supply is a bearish risk for oil.”
In other commodities, spot gold was down 0.3 per cent at US$1,937.99 per ounce by early Tuesday morning, hitting its lowest since March 17. U.S. gold futures dipped 0.4 per cent to US$1,936.80.
Currencies
The Canadian dollar was relatively steady in early trading while its U.S. counterpart hit its highest in more than two months against a group of world currencies in the wake of the tentative deal on the U.S. debt ceiling.
The day range on the loonie was 73.48 US cents to 73.70 US cents. The Canadian dollar was up about 0.33 per cent against the U.S. dollar over the past month by early Tuesday morning.
There were no major Canadian economic reports due Tuesday.
On world markets, the U.S. dollar index, which measures the U.S. currency against six major peers, rose 0.2 per cent to 104.51, its highest in 10 weeks, according to figures from Reuters.
“President Biden and Speaker McCarthy were reportedly hard at work yesterday lobbying lawmakers to support the debt ceiling bill, which will be coming up to a House vote on Wednesday,” Alvin Tan, Asia FX strategist with RBC, said.
“The general indication is that the bill should ultimately pass with bipartisan support, though there remains the risk that it might not pass in the first vote.”
The euro was down 0.28 per cent at $1.0674 early Tuesday morning, while Britain’s pound slid 0.13 per cent to US$1.2345.
More company news
Resolute Forest Products Inc., a subsidiary of Domtar Corp. and a part of the Paper Excellence Group, has signed a deal to sell its pulp and paper mill in Thunder Bay, Ont., to an affiliate of U.S. company Atlas Holdings. Financial terms of the deal were not immediately available. The sale of the mill is a requirement under an agreement between Domtar and the Competition Bureau in connection to the company’s acquisition of Resolute, which will continue to operate its sawmills and woodlands operations in northwestern Ontario. -The Canadian Press
Nvidia Corp breached US$1-trillion in market capitalization on Tuesday, making it the first chipmaker to join the trillion-dollar club. The gaming and AI chip company, whose shares rose 4.2% in early trading on Tuesday, was valued at US$1-trillion. Taiwan Semiconductor Manufacturing Co Ltd is the next largest chipmaker globally, valued at about US$535-billion. -Reuters
Economic news
(9 a.m. ET) U.S. S&P Corelogic Case-Shiller Home Price Index (20 city) for March.
(9 a.m. ET) U.S. FHFA Home Price Index for March.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for May.
(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity for May.
With Reuters and The Canadian Press
Terry Weber