Equities
Wall Street futures edged higher after a winning week with rate optimism continuing to buoy sentiment despite some emerging uncertainty. Major European markets were mixed. TSX futures were up.
In the early premarket period, Dow, S&P and Nasdaq futures were all above water. All three saw gains last week, pushing the latest rally into its seventh week. Canada’s S&P/TSX Composite Index fell more than 1 per cent during Friday’s session but still managed a weekly advance of nearly 1 per cent.
Canada’s main stock index advanced at Monday’s opening bell, helped by gains in energy and materials stocks. On Wall Street, key indexes were also positive in early trading as investors look ahead to economic data due later in the week.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 106.76 points, or 0.52 per cent, at 20,635.91.
In the U.S., the Dow Jones Industrial Average rose 34.98 points, or 0.12 per cent, at the open to 37,352.14.
The S&P 500 opened higher by 12.39 points, or 0.24 per cent, at 4,731.58, while the Nasdaq Composite gained 0.20 points, or 0.13 per cent, to 14,835.02 at the opening bell.
“A surprisingly dovish outlook from Fed Chair [Jerome] Powell seemingly set off the starting pistol for a year-end ‘Santa rally’, pushing the Dow, DAX, and CAC into record highs,” Joshua Mahony, chief market analyst with Scope Markets, said.
“However, Friday’s comments from Fed member [John] Williams have brought markets back down to earth, warning that the Fed were in fact yet to even discuss rate cuts.”
He said, with markets now pricing in the first of 2024′s expected rate cuts to start in March, “we are seeing market confidence weaken as traders await greater clarity to clear up the current confusion.”
In Canada, investors will get November inflation figures on Tuesday morning, when Statistics Canada releases the consumer price index for the month.
“The drop in gasoline prices may translate into a no-change print for the headline index before seasonal adjustment,” National Bank economists said in a note.
“If we’re right, the 12-month rate of inflation should come down from 3.1 per cent to a 5-month low of 3 per cent.”
On Friday, Bank of Canada Governor Tiff Macklem said inflation could be ‘getting close to’ the bank’s target by the end of next year and that bank officials are becoming more confident that rates don’t need to rise further to bring price pressures under control.
Later in the week, Canadian markets will also get October retail sales as well as a reading on monthly GDP for October. On Wall Street, the Federal Reserve’s preferred measure of inflation is due Friday morning with the release of the personal consumption expenditure data for November.
On the corporate side, BlackBerry reports results after the close of trading on Wednesday.
Elsewhere, The Globe’s Alexandra Posadzki reports that a new competitive front is emerging in Canada’s home-internet business. A recent promotional offer from Rogers Communications Inc. on fixed-wireless home internet has telecom analysts watching for signs that the service could become more popular in Canada – and possibly erode the sector’s profitability. Fixed wireless refers to the provision of home-internet service via wireless airwaves. Instead of receiving their internet service via fibre-optic, coaxial cable or copper wires connected to their homes, customers have receivers that pick up wireless signals from nearby cell towers.
Overseas, the pan-European STOXX 600 was down 0.09 per cent by midday. Britain’s FTSE 100 gained 0.66 per cent. Germany’s DAX and France’s CAC 40 fell 0.42 per cent and 0.33 per cent, respectively.
In Asia, Japan’s Nikkei slid 0.64 per cent. Hong Kong’s Hang Seng lost 0.97 per cent.
Commodities
Crude prices turned higher in early trading after posting a modest weekly gain following seven weeks of declines.
The day range on Brent was US$76.10 to US$77.46 in the early premarket period. The range on West Texas Intermediate was US$70.97 to US$72.29.
Prices drew some support from geopolitical concerns after attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruptions. Reuters reports shipping firms, including the world’s biggest container shipping line MSC and A.P. Moller-Maersk, said over the weekend that they would avoid the Suez Canal as Houthi militants in Yemen stepped up their assaults on commercial vessels in the Red Sea. BP said Monday it has also temporarily paused all transits through the Red Sea.
Crude was also underpinned by news on Sunday that Russia would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, the news agency said.
“With the time of year suggesting the onset of range trading, oil prices may remain relatively stable unless geopolitical tensions in the Middle East escalate,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
In other commodities, spot gold was up 0.3 per cent at US$2,023.47 per ounce by early Monday morning. U.S. gold futures rose 0.1 per cent at US$2,037.70.
Currencies
The Canadian dollar was slightly firmer while its U.S. counterpart extended last week’s losses against a group of world currencies.
The day range on the loonie was 74.64 US cents to 74.83 US cents in the early premarket period. The Canadian dollar has gained more than 2 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the currency against a group of world rivals, was down 0.08 per cent at 102.47 early Monday morning. The index lost about 1.3 per cent last week.
Elsewhere, the euro was up 0.18 per cent at US$1.0915. Britain’s pound was down 0.08 per cent at US$1.2673.
In bonds, the yield on the U.S. 10-year note was lower at 3.90 per cent ahead of the North American opening bell.
More company news
U.S. Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialization, is being acquired by Nippon Steel in an all-cash deal valued at approximately US$14.1-billion. The transaction is worth about US$14.9-billion when including the assumption of debt. The deal’s announcement comes several months after U.S. Steel rejected a US$7.3-billion buyout proposal from rival Cleveland Cliffs. U.S. Steel received the offer in August and said at the time that it was reviewing “strategic alternatives” after receiving several unsolicited offers. -The Associated Press
The Globe’s Nicolas Van Praet reports that the turmoil now engulfing Gildan Activewear Inc. was triggered by an ultimatum the clothing maker’s former CEO gave to the board seeking its approval to do two to three multibillion-dollar acquisitions outside the company’s core manufacturing business, says a Gildan director. Glenn Chamandy made the ultimatum at a Gildan board meeting on Oct. 31, director Luc Jobin told The Globe and Mail in an interview Sunday. He said the board was averse to the idea of making the takeovers without greater certainty they could be accomplished, which became tied to the issue of chief executive officer succession at the company and eventually led to the CEO’s ouster last week.
Adobe on Monday shelved its US$20-billion cash-and-stock deal for cloud-based designer platform Figma, pointing to “no clear path” for approvals from antitrust regulators in the European Union and the UK. Britain’s competition watchdog earlier said on Monday that Adobe would not propose remedies to resolve regulatory concerns regarding the buyout. -Reuters
Economic news
(8:30 a.m. ET) Canadian construction investment for October.
(8:30 a.m. ET) Canada’s new housing price index for November.
(10 a.m. ET) U.S. NAHB Housing Index for December.
With Reuters and The Canadian Press
Terry Weber