Equities
Canada’s main stock index saw a muted start Tuesday even as rising crude prices helped underpin energy stocks. On Wall Street, key indexes were weaker at the opening bell with traders awaiting tomorrow’s reading on U.S. inflation for signals about the Federal Reserve’s future path on rates.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 3.01 points, or 0.01 per cent, at 20,179.75.
In the U.S., the Dow Jones Industrial Average fell 43.70 points, or 0.13 per cent, at the open to 34,620.02. The S&P 500 opened lower by 14.19 points, or 0.32 per cent, at 4,473.27, while the Nasdaq Composite dropped 58.96 points, or 0.42 per cent, to 13,858.94 at the opening bell.
Markets continue to await Wednesday’s U.S. inflation report, which comes ahead of the Federal Reserve’s Sept. 20 rate decision. Economists are forecasting the U.S. numbers to show the annual rate of core inflation fell to 4.3 per cent in August while headline inflation is seen ticking up to 3.6 per cent.
Markets are expecting the central bank to hold steady next week and have priced in about a 45-per-cent chance of an increase by the end of the year.
“The Federal Open Market Committee (FOMC) resumed its course of interest rate hikes in July to address the economy’s continued resilience,” Stephen Innex, managing partner with SPI Asset Management, said in an early note.
“However, the committee remains noncommittal about its future actions. Chair Powell noted that higher rates will hinge on forthcoming economic growth and inflation data. We believe these data points will reveal enough indications of moderation to dissuade further rate increases.”
In Canada, investors got earnings from retailer Roots Inc. ahead of the start of trading.
Roots posted a loss of $5.3-million or 13 cents a share in the latest quarter, compared with a loss of $3.2-million or 8 cents a year earlier. Second-quarter sales totalled $49.4-million, up 3.4 per cent from $47.8-million a year earlier.
On Wall Street, shares of Oracle were down about 13 per cent in early trading in New York after the software giant narrowly missed market forecasts in the first quarter and projected revenue in the current quarter below analysts’ expectations.
Later Tuesday, Apple will hold its latest product launch, where it is expected to reveal details of the new iPhone 15.
Overseas, the pan-European STOXX 600 slid 0.19 per cent, giving up early gains. Britain’s FTSE 100 added 0.32 per cent. Germany’s DAX and France’s CAC 40 slid 0.64 per cent and 0.38 per cent by midday.
In Asia, Japan’s Nikkei closed up 0.95 per cent, ending a three-day losing streak. Hong Kong’s Hang Seng slid 0.39 per cent.
Commodities
Crude prices were higher, with Brent continuing to trade above US$90 a barrel, as traders await key economic data later in the week.
The day range on Brent is US$90.52 to US$91.19 in the early premarket period. The range on West Texas Intermediate is US$87.22 to US$87.97.
Prices continue to be buoyed by voluntary production curbs through the rest of by Saudi Arabia and Russia.
“OPEC+ has basically guaranteed the oil market will remain tight for the rest of the year, which means any softening demand side headlines will only produce buying opportunities,” OANDA senior analyst Ed Moya said.
“Unless the global economy takes a severe turn for the worse, oil prices look like they are going to stay elevated.”
Later today, investors will get weekly U.S. inventory figures from the American Petroleum Institute. More official U.S. government numbers follow Wednesday morning from the Energy Information Administration.
Crude inventories were expected to have fallen by about 2 million barrels in the week to Sept. 8, according to a preliminary Reuters poll.
In other commodities, spot gold was down 0.1 per cent at US$1,919.29 per ounce by early Tuesday morning, while U.S. gold futures dipped 0.3 per cent to US$1,942.10.
Currencies
The Canadian dollar was down slightly in early trading while its U.S. counterpart firmed after seeing its biggest one-day drop against a group of world currencies since July during the previous session.
The day range on the loonie was 73.55 US cents to 73.69 US cents in the early premarket period. The loonie is down roughly 0.50 per cent against the greenback since the start of September.
“Absent any major domestic data releases, external drivers — the broader USD tone, risk appetite — will remain the key influences on short-term movement,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Choppy risk appetite and wider short-term yield spreads remain a block on a stronger CAD at the moment I think and are offsetting improvements in Canadian terms of trade over the past few months which might have otherwise given the CAD a bit more lift.”
There were no major Canadian economic releases due Tuesday.
The U.S. dollar index rose 0.2 per cent to 104.76, after falling 0.46 per cent in the previous session, its biggest one-day drop since July 13, according to figures from Reuters.
The euro fell 0.3 per cent to US$1.0718 after hitting a one-week high of US$1.0771 before Thursday’s European Central Bank policy announcement.
Britain’s pound was last down 0.2 per cent against the U.S. dollar at US$1.2479.
In bonds, the yield on the U.S. 10-year note was slightly lower at 4.284 per cent in the predawn period.
Economic news
(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for August.
With Reuters and The Canadian Press
Terry Weber