Equities
Canada’s main stock index opened down in the first trading day of the year, with financial and technology stocks under pressure. Wall Street also saw a weaker start Tuesday with Apple shares lower on a brokerage downgrade.
At 9:36 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 49.81 points, or 0.24 per cent, at 20,908.63.
In the U.S., the Dow Jones Industrial Average fell 123.32 points, or 0.33 per cent, at the open to 37,566.22. The S&P 500 opened lower by 24.63 points, or 0.52 per cent, at 4,745.20, while the Nasdaq Composite dropped 137.65 points, or 0.92 per cent, to 14,873.70 at the opening bell.
The Dow, S&P 500 and Nasdaq all saw gains last year with the S&P climbing nearly 24 per cent over the course of 2023. The Nasdaq ended last year up more than 40 per cent while the Dow gained more than 13 per cent. Canada’s S&P/TSX Composite Index added about 8 per cent last year.
“The million-dollar question is what will happen [in 2024],” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“Of course, we don’t know, nobody knows, and our crystal balls completely missed the AI rally that marked 2023, yet the general expectation is a cool down in the technology rally, and a rebalancing between the big tech stocks.”
“The other thing is, the S&P500′s direction next year is unclear as the Federal Reserve is expected to start chopping the interest rates, with the first rate cut expected to happen as early as March with more than 85-per-cent probability,” she said.
In the past, she noted, the S&P 500 has risen after the first rate cut but the sustainability of the gains will depend on the underlying fundamentals.
“Lower rates are good for the S&P 500 valuations except when the economy enters recession within the next 12-months,” she said.
Key during this shortened trading week will be jobs figures for December in both Canada and the U.S. The numbers will be released on Friday morning.
In Canada, economists are looking for a gain in hiring of about 12,000 positions for the month, compared with nearly 25,000 in November. The unemployment rate is seen edging up to 5.9 per cent from 5.8 per cent.
In the U.S., economists are expecting to the addition of about 163,000 jobs in December, down from 199,000 the month before. The unemployment rate is expected to tick up to 3.9 per cent from 3.8 per cent.
On the corporate side, shares of Apple were down about 3 per cent shortly after the start of trading after Barclays downgraded the company on worries that demand for its devices will remain weak this year. Barclays is the second brokerage to have the equivalent of a “sell” rating on the stock, which now has its most number of bearish recommendations in at least two years, per LSEG data, Reuters reported Tuesday morning.
Overseas, the pan-European STOXX 600 was down 0.30 per cent by midday. Britain’s FTSE 100 slid 0.34 per cent. Germany’s DAX fell 0.30 per cent while France’s CAC 40 was off 0.50 per cent.
In Asia, markets in Japan were closed. Hong Kong’s Hang Seng fell 1.52 per cent.
Commodities
Crude prices choppy in early trading as uncertainty over the impact of clashes in the Red Sea continues.
The day range on Brent was US$77.39 to US$78.89 in the early premarket period. The range on West Texas Intermediate was US$71.63 to US$73.35.
Both benchmarks were up more than 2 per cent in the predawn period but saw the gains fade shortly after the North American opening bell.
Reuters reports that U.S. helicopters repelled an attack on Sunday by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea, sinking three Houthi ships, heightening geopolitical tensions in the region.
“The oil price may be affected by the escalation ... in the Red Sea over the weekend and the peak demand season during China’s Spring Festival,” said Leon Li, a Shanghai-based CMC Markets analyst said.
In other commodities, spot gold was up 0.6 per cent at US$2,074.01 per ounce by early Tuesday morning. U.S. gold futures also gained 0.6 per cent to US$2,083.00 per ounce.
“The short-term bullish trend in gold still remains intact above key support level of $2,017 per ounce,” OANDA senior analyst Kelvin Wong said.
Currencies
The Canadian dollar was weaker while its U.S. counterpart gained against a group of world currencies.
The day range on the loonie was 75.39 US cents to 75.60 US cents in the early premarket period. The Canadian dollar advanced about 3 per cent against the greenback over the past year.
“Note crude prices are sharply higher today on the back of Middle East tensions,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“But the CAD’s rally against the USD is also looking a bit stretched and may also be subject to some corrective losses in the next few weeks as the USD moves to work off an oversold condition.”
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.33 per cent at 101.67 by early Tuesday morning. The index lost more than 2 per cent in 2023.
The euro fell 0.38 per cent to US$1.1006 while Britain’s pound slid 0.14 per cent to US$1.1006.
In bonds, the yield on the U.S. 10-year note was higher at 3.95 per cent in the predawn period.
More company news
Tesla on Tuesday reported fourth-quarter deliveries ahead of analysts’ estimates after a push to deliver more Model 3 electric cars before some variants of the compact sedan lose federal tax credits in the new year under the Inflation Reduction Act (IRA). Tesla handed over 484,000 vehicles in the last three months of the year, compared with estimates of 473,253 units, according to 14 analysts polled by LSEG. -Reuters
China’s Alibaba Group said on Tuesday it had repurchased a total of 897.9 million of its shares for $9.5 billion during 2023. The shares were bought in both the U.S. and Hong Kong stock markets, the company said in a filing. -Reuters
Hydro One Ltd. says chief financial and regulatory officer Chris Lopez is stepping down on June 30 to pursue other opportunities. The company says it will now begin an internal and external search for his replacement. Hydro One says Lopez will remain in his position while the search for his replacement is underway. -The Canadian Press
Rivian Automotive posted a sequential fall in fourth-quarter deliveries on Tuesday, and missed market estimates, as tough competition and high interest rates affect demand for its electric vehicles. Shares of Rivian fell nearly 7% in pre-market trading. The company delivered 13,972 vehicles in the quarter to Dec. 31, 10% lower than the previous three months, and below estimates of 14,430, according to 13 analysts polled by Visible Alpha. Reuters
With Reuters and The Canadian Press
Terry Weber