Canada’s main stock index opened down Monday on weakness in tech and health-care stocks. On Wall Street, key indexes also started lower as traders look ahead to the midweek rate announcement from the Federal Reserve.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 50.83 points, or 0.25 per cent, at 20,571.51.
In the U.S., the S&P 500 opened lower by 5.19 points, or 0.12 per cent, at 4,445.13, while the Nasdaq Composite dropped 38.38 points, or 0.28 per cent, to 13,669.96 at the opening bell.
The Dow Jones Industrial Average fell 5.95 points, or 0.02%, at the open to 34,612.29.
This week attention will be focused on the Fed policy announcement, due Wednesday afternoon. Markets are expecting the central bank to again hold interest rates steady, but will be looking for signals about where the Fed goes from there.
“Our U.S. rates strategist sees virtually no risk of a Fed hike, and doesn’t expect any meaningful changes to the statement either,” Alvin Tan, Asia FX strategist with RBC, said.
“Moreover, it also seems like an extremely easy decision to pause while letting the 2023 dots keep the optionality for another hike alive.”
In Canada, the week’s key economic release comes Tuesday morning with August inflation figures from Statistics Canada. In July, the annual rate of inflation rose to 3.3 per cent. That was off highs seen over the last year but still above the 2.8 per cent annual rate reported in June.
Mr. Tan said RBC expects higher energy price to push Canada’s annual rate of inflation utp to 3.7 per cent in August.
“Grocery prices will remain high, but the pace of growth has been edging lower,” he said. “And mortgage interest costs will continue to drive a disproportionate share of overall price growth. Having said that, the BoC is more concerned about where price growth is going rather than where it’s been.”
On the corporate side, the auto sector remains in focus. Talks between Unifor and the big three auto makers expire on Monday at 11:59 p.m. The union is negotiating with Ford Motor Co. in an effort to reach an agreement that can be used as a blueprint for workers at General Motors and Stellantis. In the U.S., United Auto Workers members are continuing targetted strikes against select plants operated by the big three.
Overseas, the pan-European STOXX 600 was down 1.02 per cent by afternoon. Britain’s FTSE 100 was off 0.63 per cent. Germany’s DAX and France’s CAC 40 slid 0.87 per cent and 1.33 per cent in morning trading.
In Asia, Hong Kong’s Hang Seng slid 1.39 per cent. Markets in Japan were closed.
Crude prices were up for a third consecutive session in early trading with supply concerns continuing to underpin sentiment.
The day range on Brent was US$93.93 to US$94.78 in the early premarket period. The range on West Texas Intermediate was US$90.86 to US$91.70. Both benchmarks have seen three straight weekly gains and have hit their best levels since November in recent sessions.
“It seems like prices will easily find a home above the US$90-a-barrel level, which means the focus might shift to the demand outlook from the world’s two largest economies,” OANDA senior analyst Edward Moya said.
Recent output curbs by OPEC+ members Saudi Arabia and Russia have bolstered prices, reigniting concerns about inflationary pressures. Traders will be watching policy announcements this week from major central banks, including the Fed and the Bank of England, for signs of renewed worries about price pressures.
Meanwhile, the World Petroleum Conference kicks off in Calgary on Monday and runs until Thursday. The conference brings together executives and government officials from oil-producing countries about the world.
The event, which has not been held in Canada since 2000, will count among its attendees heavyweights such as Exxon Mobil CEO Darren Woods, Repsol CEO Josu Jon Imaz and Amin Nasser, the CEO of Saudi Aramco, the world’s largest oil company, The Canadian Press reports.
In other commodities, gold prices touched their best level in a week early Monday morning. Spot gold gained 0.3 per cent to US$1,928.79 per ounce. U.S. gold futures were up 0.2 per cent at US$1,949.80.
The Canadian dollar was up while its U.S. counterpart continued to trade near six-month highs early Monday morning.
The day range on the loonie was 73.86 US cents to 74.10 US cents in the early premarket period. The Canadian dollar has gained about 0.51 per cent against its U.S. counterpart over the past five days.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was relatively steady around 105.28 in the predawn period.
The index rose for its ninth straight week last week as the U.S. economy continued to show strength. It touched 104.53 on Thursday, its highest since the middle of March, according to Reuters.
The euro was essentially flat against the greenback at US$1.0658.
In bonds, the yield on the U.S. 10-year note was higher at 4.345 per cent ahead of the North American opening bell.
More company news
Indigo Books & Music Inc. says founder Heather Reisman has returned to the retailer as chief executive officer. She fills the void left by the abrupt resignation of Peter Ruis from the top job earlier this month. Reisman had served as chief executive until last year, when Ruis took over, and retired from the Indigo board last month. -The Canadian Press
The Globe’s Andrew Willis reports Bank of Montreal is exiting a segment of the auto loan business dominated by two rivals, a move at the country’s third-largest lender that reflects a drive to cut costs and limit exposure to one consumer debt sector. On Friday, BMO told dealerships it is winding down its retail auto finance unit, which provides loans to car and truck buyers that are arranged in showrooms, by the dealers’ sales teams.
Saudi Arabia is in early talks with U.S. electric automaker Tesla to set up a manufacturing facility in the kingdom, the Wall Street Journal reported on Monday, citing sources familiar with the matter. Saudi Arabia has been wooing Tesla with the right to purchase certain quantities of metals and minerals the company needs for its electric vehicles from countries, including the Democratic Republic of Congo, the report said. -Reuters
With Reuters and The Canadian Press