Equities
Canada’s main stock index opened down Tuesday with tech and financial stocks seeing early weakness. On Wall Street, key indexes were also lower with traders looking for fresh U.S. inflation data later in the week to offer clues about the timing of potential rate cuts this year.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 85.28 points, or 0.4 per cent, at 20,989.63.
In the U.S., the Dow Jones Industrial Average fell 159.46 points, or 0.42%, at the open to 37,523.55.
The S&P 500 opened lower by 21.61 points, or 0.45%, at 4,741.93, while the Nasdaq Composite dropped 99.64 points, or 0.67%, to 14,744.13 at the opening bell.
“With growth and inflation remaining subdued, the emerging picture suggests a Federal Reserve that is normalizing and likely to cut rates this year, possibly as soon as March or May if inflation cooperates,” Stephen Innes, managing partner with SPI Asset Management, said.
“The critical debate now revolves around the pace and intensity of this follow-through. Thursday’s U.S. CPI report is anticipated to be crucial in providing further insights. Still, the market’s reaction to consensus or slightly below prints remains uncertain, especially with softer inflation whisper numbers circulating.”
On Tuesday, Canadian investors got international trade data for November.
Statistics Canada says imports increased 1.9 per cent in November, while exports were down 0.6 per cent. As a result, the country’s trade surplus with the world narrowed to $1.6-billion from $3.2-billion in October. November marked a fourth consecutive monthly trade surplus, the agency said.
“Looking ahead, Canada’s trade balance should swing back into deficit territory as auto imports normalize following U.S. strike impacts, while demand for Canadian exports will be limited by high interest rates globally,” CIBC economist Katherine Judge said.
On the corporate side, The Globe’s Irene Galea reports this morning that Stantec Inc. has acquired Morrison Hershfield, a Markham-based engineering firm with 22 offices across North America, boosting its Canadian workforce by 1,150 employees and doubling its transportation presence in Ontario. The companies did not disclose the financial terms of the deal. The acquisition is subject to various court and regulatory approvals.
Elsewhere, The Globe’s Bill Curry and Adam Radwanski report federal officials are planning to meet this week with Honda representatives about the possibility of the Japanese automaker building an electric-vehicle factory in Canada, adding another name to the list of manufacturers Ottawa is courting as part of a multibillion-dollar effort to transform the domestic auto industry ahead of a shift away from fossil fuels.
Overseas, the pan-European STOXX 600 was down 0.44 per cent by midday. Britain’s FTSE 100 lost 0.17 per cent. Germany’s DAX slid 0.55 per cent while France’s CAC 40 lost 0.59 per cent. New figures released early Tuesday showed Germany’s industrial production fell in November by 0.7 per cent compared to the previous month. Analysts polled by Reuters had predicted a 0.2-per-cent rise.
In Asia, Japan’s Nikkei advanced 1.16 per cent. Hong Kong’s Hang Seng fell 0.21 per cent.
Commodities
Crude prices were higher, recouping some of the previous session’s sharp losses.
The day range on Brent was US$79.95 to US$77.44 in the predawn period. The range on West Texas Intermediate was US$70.47 to US$72. Brent lost about 3 per cent on Monday while WTI fell about 4 per cent after Saudi Arabia announced price cuts over the weekend.
“As oil prices have been one of the major contributors to inflation, their inability to rebound soothes inflation worries, keeping the Federal Reserve (Fed) doves in charge of the market – and that’s somewhat positive for the stock valuations,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
The Israel-Hamas war continues to impact prices. The Israeli military has said its fight against Hamas will continue through 2024, sparking concerns in the market that Middle East supply could be affected if the conflict grows into a regional crisis, Reuters reported. U.S. Secretary of State Antony Blinken arrived in Tel Aviv late on Monday to brief Israeli officials on his two days of talks with Arab leaders on ending the war, the news agency said.
Prices gains, however, have been tempered by a survey last week showing rising OPEC output in December as well as a move by Saudi Arabia to cut the February official selling price of its Arab Light crude to Asia.
In other commodities, gold prices edged higher.
Spot gold was up 0.4 per cent at US$2,035.06 per ounce, as early Tuesday morning, after hitting its lowest level since Dec. 18 on Monday. U.S. gold futures rose 0.4 per cent to US$2,041.20 per ounce.
Currencies
The Canadian dollar saw modest early losses while its U.S. counterpart was relatively steady against world currencies as markets await key U.S. inflation figures later in the week.
The day range on the loonie was 74.79 US cents to 74.96 US cents early Tuesday morning. Year-to-date, the loonie was down about 0.80 per cent against the greenback.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.12 per cent at 102.33 in the predawn period. Traders are waiting for Thursday’s U.S. inflation numbers, looking for clues about the timing of potential rate cuts by the Federal Reserve this year.
The euro slid 0.12 per cent to US$1.0939. Britain’s pound was off 0.18 per cent at US$1.2725.
In bonds, the yield on the U.S. 10-year note was up at 4.051 per cent ahead of the North American opening bell.
More company news
Tilray Brands Inc. reported a net loss of US$46.2-million in its latest quarter as its revenue rose 34 per cent compared with a year ago. The cannabis company, which keeps its books in U.S. dollars, says the loss amounted to 7 US cents per diluted share for the quarter ended Nov. 30. The result compared with a loss of US$61.6-million or 11 US cents per diluted share a year earlier. -The Canadian Press
Boeing’s latest 737 MAX crisis deepened on Monday after United Airlines said it had found loose bolts on multiple grounded MAX 9 aircraft, raising new concerns among industry experts about how its best-selling jet family is manufactured. U.S. regulators grounded 171 MAX 9 planes after a panel blew off an Alaska Airlines-operated flight not long after taking off from a Portland, Oregon, airport on Friday, forcing pilots to scramble to land the plane safely. United, one of the two U.S. carriers that fly this Boeing model with the panels, said its own preliminary checks found bolts that needed tightening on several panels. That disclosure heightened concerns about the production process of the MAX 9 jets that have been grounded. -Reuters
Economic news
(8:30 a.m. ET) Canada’s merchandise trade balance for November.
(8:30 a.m. ET) Canadian building permits for November.
(8:30 a.m. ET) U.S. goods and services trade balance for November.
With Reuters and The Canadian Press
Terry Weber