Equities
Canada’s main stock index opened lower Tuesday, weighed down by weakness in energy and materials shares. On Wall Street, key indexes saw a narrowly mixed start with positive sentiment from easing interest-rate concerns waning.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 117.6 points, or 0.6 per cent, at 19,626.34.
The Dow Jones Industrial Average fell 20.21 points, or 0.06 per cent, at the open to 34,075.65.
In the U.S., the S&P 500 opened higher by 0.23 points, or 0.01 per cent, at 4,366.21, while the Nasdaq Composite gained 37.01 points, or 0.27 per cent, to 13,555.79 at the opening bell.
“There are divergent opinions regarding whether last week’s risk rally is on sufficiently solid ground to extend into a Santa rally, or it would simply fade away,” Swissquote senior analyst Ipek Ozkardeskaya said.
“And it all depends on what matters the most for investors.”
She said easing rate concerns and falling yields are positive for stock valuations but signs of a slowing global economy and speculation that borrowing costs, while not likely to climb further, will remain higher for longer weigh on sentiment.
“Seasonally speaking, November and December are known to be good months for the S&P 500 stocks,” she said. “In the past, the S&P 500 stocks gained, on average, 1.8 per cent in November and 0.9 per cent in December. But this year, the picture is overshadowed by a lot of weak guidance and revenue warnings.”
On Tuesday, Canadian investors will get results from retailer Indigo Books & Music Inc.
After Monday’s close, MEG Energy said it earned $249-million or 86 cents a share in the third quarter, up from $156-million or 51 cents a year earlier. Revenue totalled $1.4-billion, down from $1.6-billion a year earlier.
On the economic side, Statistics Canada released international trade data for September.
The government agency said exports rose 2.7 per cent in September while imports advanced 1 per cent. As a results, Canada’s trade surplus widened to $2-billion from $949-million in August.
“The broad-based improvement in imports and exports suggest some resilience in domestic and international demand with key trading partners,” TD economist Marc Ercolao said.
“Additionally, the trade effects induced by shocks over the past quarter appear to have been reversed over the past two months.”
On Wall Street, WeWork sought U.S. bankruptcy protection on Monday, after its bets on companies using more of its office-sharing space soured. Reuters reported that WeWork said it has entered into a restructuring agreement with key stakeholders to drastically reduce its existing funded debt, and also intended to file recognition proceedings in Canada.
Overseas, the pan-European STOXX 600 was down 0.15 per cent in morning trading. Britain’s FTSE 100 slid 0.11 per cent. Germany’s DAX and France’s CAC 40 lost 0.21 per cent and 0.34 per cent, respectively.
In Asia, Japan’s Nikkei closed down 1.34 per cent. Hong Kong’s Hang Seng lost 1.65 per cent.
Commodities
Crude prices fell to their lowest levels in more than two months in early trading on the back of mixed economic data out of China.
The day range on Brent was US$83.22 to US$85.19 in the early premarket period. The range on West Texas Intermediate was US$78.94 to US$81.05. Both benchmarks were down more than 2 per cent in the predawn period and touched their lowest levels since August.
“The push-pull between propping up prices through OPEC’s production cuts and the impact of the Middle East powder keg premium vaporizing and a slowing global economy was on full display overnight,” Stephen Innes, managing partner with SPI Asset Management, said.
“After an OPEC production cut extension triggered some speculators to buy the dip, driving a modest 1-per-cent rally in oil, higher prices gave way to the economic reality and no broader Middle East conflagration.”
Sentiment was tempered early Tuesday by ongoing concerns about China’s economy.
Reuters reports this morning that, while China’s crude oil imports in October showed growth both year on year and month on month, its total exports contracted at a quicker pace than expected. Expectations of crude run reductions by China-based refiners between November and December could also limit oil demand and exacerbate price declines, the news agency said.
Later in the session, markets will get weekly U.S. inventory numbers from the American Petroleum Institute. More official numbers follow on Wednesday morning from the U.S. Energy Information Administration.
In other commodities, gold slid on a firmer U.S. dollar and falling safe-haven demand.
Spot gold fell 0.5 per cent to US$1,968.30 per ounce by early Tuesday morning, its lowest since Oct. 25. U.S. gold futures fell 0.7 per cent to US$1,974.20.
Currencies
The Canadian dollar was lower alongside weaker crude prices and uncertain risk sentiment while its U.S. counterpart firmed against a group of world currencies.
The day range on the loonie was 72.69 US cents to 73.07 US cents in the early premarket period.
On world markets, the U.S. dollar index, which weighs the greenback against a basked of currencies, rose 0.1 per cent to 105.38, after climbing 0.2 per cent on Monday, but remained not far from a nearly two-month low of 104.84 touched on Monday, according to figures from Reuters.
The index fell more than 1 per cent last week.
The euro was down 0.15 per cent at US$1.070, easing away from the eight-week high of US$1.0756 on Monday seen on Monday.
Australia’s dollar, meanwhile, slid after that country’s central bank raised interest rates by a quarter percentage point, but also suggested further increases may not be in the cards. The Australian dollar sank as much as 1.06 per cent to a low of US$0.642 and was last at US$0.6434, Reuters reported.
More company news
Crescent Point Energy Corp. has inked another blockbuster deal in the Canadian oil patch, solidifying its place as the dominant player in the Montney, one of North America’s largest unconventional petroleum plays. The Calgary-based oil and gas company announced Monday it will purchase Hammerhead Energy Inc., a Calgary-based energy company with assets in the Montney region of northwest Alberta, for a total of $2.55-billion, including approximately $455-million of Hammerhead’s net debt.
UBS Group reported a US$785-million loss in the third quarter after expenses tied to the Swiss bank’s takeover of Credit Suisse while signalling that its core wealth business is stabilizing. The loss was worse than the US$444-million loss attributed to shareholders that analysts had expected in a UBS poll, but inflows from customers exceeded analysts’ expectations. “We are executing on the integration of Credit Suisse at pace and have delivered underlying profitability for the group in the first full quarter since the acquisition,” said Chief Executive Sergio Ermotti. -Reuters
Uber Technologies forecast fourth-quarter gross bookings and adjusted core profit above market expectations on Tuesday, betting that the holiday season would boost demand for its ride-hailing and food-delivery services. After a bruising 2022, the dominant U.S. ride-hailing company has benefited from the return-to-office push by companies and resilient travel demand despite inflation. Uber expects adjusted core profit, a profitability measure watched by investors, between US$1.18-billion and US$1.24-billion. Analysts expected US$1.15-billion, LSEG data showed. -Reuters
Economic news
(8:30 a.m. ET) Canada’s merchandise trade balance for September.
(8:30 a.m. ET) U.S. goods and services trade deficit for September.
(11:30 a.m. ET) Bank of Canada Deputy Governor Sharon Kozicki gives the opening remarks at the John Kuszczak Memorial Lecture in Ottawa.
With Reuters and The Canadian Press
Terry Weber