Equities
Canada’s main stock index slid at Monday’s opening bell with bank stocks in focus as traders await results from the country’s biggest lenders in the days ahead. On Wall Street, key indexes were modestly lower ahead of a key reading on inflationary pressures in the U.S. economy later in the week.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.58 points, or 0.18 per cent, at 20,067.53.
In the U.S., the Dow Jones Industrial Average fell 13.71 points, or 0.04 per cent, at the open to 35,376.44.
The S&P 500 opened lower by 4.48 points, or 0.10 per cent, at 4,554.86, while the Nasdaq Composite dropped 11.55 points, or 0.08 per cent, to 14,239.31 at the opening bell.
Canadian investors will get earnings from the country’s biggest lenders this week, starting with Scotiabank on Tuesday. Royal Bank, TD Bank and CIBC all report on Thursday while BMO and National bank release fourth-quarter results on Friday.
The Globe’s Stefanie Marotta reports that the country’s big banks are expected to post weaker profits this year, wrapping up a fiscal year market by spiking expenses, rising capital requirements and higher provisions for potentially bad loans. Analysts expect earnings will drop between 3 per cent and 7 per cent year-over-year, hit by mounting costs, rising risks and tepid loan growth.
On the economic side, Canadian investors will also get GDP figures for September and the third quarter on Thursday. Statistics Canada’s early estimate suggested the economy contracted at an annualized rate of 0.1 per cent in the third quarter. November jobs numbers, meanwhile, are due on Friday. Both reports come ahead of the Bank of Canada’s Dec. 6 policy announcement. Last week, BoC Governor Tiff Macklem said borrowing costs may now be “restrictive enough” to get inflation under control.
In the U.S., markets will get a reading on the Federal Reserve’s preferred measure of inflation with the release of the PCE index on Thursday.
“The belief that the Federal Reserve is done hiking the interest rates, and the rapidly falling U.S. long-term yields are at the source of this optimism – especially after the latest CPI update in the U.S. printed a softer-than-expected number, suggesting that inflation in the US fell to 3.2 per cent last month,” Swissquote senior analyst Ipek Ozkardeskaya said.
“This week, investors will find out if the Fed’s favourite inflation gauge, the PCE index, tells the same story.”
She said the PCE index, which measures changes in consumer spending on typical goods and services, is expected to have fallen to 3.1 per cent in October from 3.4 per cent a month earlier. Core PCE is seen easing to 3.5 per cent from 3.7 per cent.
“Anything less than soothing could lead to some more correction in the U.S. long-term yields,” she said.
Overseas, the pan-European STOXX 600 was down 0.10 per cent by afternoon. Britain’s FTSE 100 fell 0.21 per cent. Germany’s DAX and France’s CAC 40 lost 0.13 per cent and 0.01 per cent, respectively.
In Asia, Japan’s Nikkei finished down 0.53 per cent. Hong Kong’s Hang Seng slid 0.20 per cent.
Commodities
Crude prices were down with traders awaiting the outcome of a delayed OPEC+ meeting on Thursday.
The day range on Brent was US$79.62 to US$80.80 in the early premarket period. The range on West Texas Intermediate was US$74.53 to US$75.72. Both benchmarks saw modest gains last week, their first in five weeks.
Markets are now awaiting the latest OPEC+ meeting, which had originally been scheduled for the past weekend. The delay in the meeting, reportedly due to disagreements for production targets for African members, resulted in a volatile week for prices. Reuters, citing four unnamed OPEC sources, reported on Friday that the group has moved closer to resolving those differences.
Markets are also anticipating that Saudi Arabia and Russia could continuer voluntary supply curbs into the new year.
“Attention [is] expected to be on the upcoming OPEC+ meeting and the possibility of further output cuts which could be announced at the end of the week with oil prices anchored close to their lows of last week, and on course for their second successive monthly decline,” Michael Hewson, chief market analyst with CMC Markets U.K., said in an early note.
In other commodities, gold touched its best level in six months early Monday, supported by a weaker U.S. dollar and expectations that U.S. interest rates have reached their peak for the current tightening cycle.
Spot gold was up 0.5 per cent at US$2,010.99 per ounce by early Monday morning, after hitting its highest since May 16. U.S. gold futures rose 0.4 per cent to US$2,011.70.
Currencies
The Canadian dollar was down modestly amid weaker crude prices and a pullback in risk sentiment while its U.S. counterpart dipped against a basket of currencies and was on track for its worst month in a year.
The day range on the loonie was 73.19 US cents to 73.41 US cents in the early premarket period. Over the past month, the Canadian dollar has gained about 1.3 per cent against the greenback but remains down more than 0.71 per cent for the year to date.
“With GDP and employment on deck this week, and the market sour on Canadian economic prospects (rightfully so), risks might still be skewed to a stronger loonie if the data surprise on high side or are in line with expectations,” Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.4 per cent at 103.36. The index is on track for a monthly loss of about 3 per cent, its worst performance in more than a year, according to Reuters.
Britain’s pound rose against the weaker U.S. dollar to a more than two-month high of US$1.2627, extending its gains from last week. The euro gained 0.1 per cent to US$1.0941, Reuters reported.
More company news
Suncor Energy said on Monday it has restarted the Terra Nova floating, production, storage and offloading vessel in Canada and production is expected to ramp up over the coming months. Terra Nova is an oilfield located offshore Newfoundland and Labrador. -Reuters
Flight attendant members at Air Transat have authorized a strike mandate, the Canadian Union of Public Employees (CUPE) said in a statement on Monday. The strike mandate was approved by a nearly unanimous vote of 99.8%, the union said. -Reuters
Canada’s First Quantum notified its intent to start arbitration against Panama, the Central American nation’s trade ministry said on Sunday, as the country’s top court considers annulling what opponents call an unfair copper contract. Panama’s government approved a contract for Canada’s First Quantum to operate the copper Cobre Panama mine on Oct. 20, providing a 20-year mining right with an option to extend for another 20 years to the miner, in return for $375 million in annual revenue to Panama. -Reuters
Economic news
U.S. new home sales for October (10 a.m. ET)
With Reuters and The Canadian Press
Terry Weber