Equities
Canada’s main stock index opened higher Monday with tech stocks adding upward pressure as traders look ahead to the Bank of Canada’s latest rate decision. On Wall Street, key indexes were also up with the S&P 500 again touching record levels.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 28.13 points, or 0.13 per cent, at 20,934.65.
In the U.S., the Dow Jones Industrial Average rose 55.75 points, or 0.15 per cent at the open, to 37,919.55.
The S&P 500 opened higher by 13.61 points, or 0.28 per cent, at 4,853.42, while the Nasdaq Composite gained 82.08 points, or 0.54 per cent, to 15,393.05 at the opening bell.
“This week sees the first of the so-called ‘magnificent seven’ stocks report, with Tesla earnings due after the bell on Wednesday,” Joshua Mahony, chief market analyst with Scope Markets, said.
“However, traders have been looking for clues elsewhere over the potential trajectory for AI stocks, with signs of strong demand at Supermicro computer (Cloud) and Taiwan Semiconductor (Chips) helping to lift expectations of how the big tech stocks will perform.”
On Wall Street, Microsoft and Netflix report on Tuesday. IBM releases earnings on Wednesday along with Tesla.
In Canada, the Bank of Canada makes its next policy decision on Wednesday morning. Markets are expecting the central bank to gain keep its key rate at 5 per cent, but will be watching for signals on timing of possible rate cuts later in the year.
The Globe’s Mark Rendell reports this morning that interest rate swap markets, which capture market expectations about monetary policy, put the odds of the first rate cut happening in April at around 60 per cent, according to Refinitiv data. Many Bay Street analysts, however, think it will be closer to the middle of the year, at the rate decision in June or July.
The European Central Bank and the Bank of Japan also make their next rate decisions this week.
On the corporate side, Canadian earnings season also gets underway this week with results due from Canadian National Railway on Tuesday. Canadian Pacific Kansas City will release its latest earnings on Jan. 30.
Elsewhere, The Globe’s Nicolas Van Praet reports that Gildan Activewear Inc. says the U.S. hedge fund that’s leading an activist shareholder campaign to replace its board of directors amassed a stake in the Canadian T-shirt maker illegally, undermining the legitimacy of its right to request a special meeting. The hedge fund counters that the claim is part of a series of “desperate and egregious” stunts by the Gildan board to entrench itself.
Overseas, the pan-European STOXX 600 was up 0.42 per cent in afternoon trading. Britain’s FTSE 100 added 0.04 per cent. Germany’s DAX and France’s CAC 40 gained 0.36 per cent and 0.34 per cent, respectively.
In Asia, Japan’s Nikkei rose 1.62 per cent. Hong Kong’s Hang Seng fell 2.27 per cent.
Commodities
Crude prices steadied after a weaker overnight period with geopolitical tensions and global economic uncertainty continuing to drive sentiment.
The day range on Brent was US$77.81 to US$78.89 in the early premarket period. The range on West Texas Intermediate was US$72.89 to US$73.57.
“This morning’s subdued re-open speaks volumes about current sentiment in the crude oil market despite ongoing geopolitical tensions in Europe and the Middle East,” IG analyst Tony Sycamore told Reuters.
Meanwhile, Reuters also reported that production at Libya’s Sharara oilfield restarted on the weekend, state oil company NOC said, after protesters ended a sit-in that had halted output since early January.
In other commodities, spot gold was down 0.4 per cent at $2,022.28 per ounce, as of early Monday morning. U.S. gold futures fell 0.3 per cent to $2,023.80.
Currencies
The Canadian dollar saw slight gains in early trading while its U.S. counterpart paused for breath against a group of world currencies.
The day range on the loonie was 74.27 US cents to 74.51 US cents, with the Canadian dollar sitting near the upper end of that spread in the predawn period. The loonie was down about 1.3 per cent against the greenback for the year to date as of early Monday morning.
“Firmer risk appetite — that record close for the S&P 500 — is helping lift the CAD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The CAD’s generally positive correlation with risk appetite (as defined by the S&P 500) is strengthening again, with the CAD’s correlation (measured on daily percent returns) with equities rising to 72%. This is the strongest relationship among the majors now so the influence — positive or negative — may continue to overshadow other factors for the moment.”
The U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.06 per cent at 103.23 in the early hours. The index was up nearly 1.9 per cent for the year so far.
The euro was down 0.06 per cent at US$1.0892. Britain’s pound was steady at US$1.2705.
In bonds, the yield on the U.S. 10-year note was lower at 4.115 per cent ahead of the North American opening bell.
More company news
Macy’s said on Sunday it had rejected Arkhouse Management and partner Brigade Capital Management’s US$5.8-billion proposal to take the department store operator private, citing concerns over deal financing and valuation. Like other legacy department store operators, Macy’s has struggled to compete against younger, online competitors or peers with smaller brick-and-mortar footprints. This has given Arkhouse, a real-estate-focused investing firm, and Brigade, a hedge fund, an opening to put pressure on Macy’s to explore a sale. -Reuters
The Globe’s Jameson Berkow reports Calgary-based Fuel retailer Parkland Corp. is being urged not to fight a multimillion-dollar legal battle with its largest shareholder and focus instead on refreshing the company’s board of directors. “It is becoming increasingly obvious that Parkland is at a crossroads,” New York-based hedge fund Engine Capital LP said in a letter to Parkland’s board on Monday. The board can either “continue to act in a self-serving manner by trying to entrench itself” or it can “begin working collaboratively,” Engine Capital said. “Engine is hereby putting the board on notice not to engage in wasteful litigation with its shareholders.”
Economic news
10 am ET: U.S. leading indicator
With Reuters and The Canadian Press
Terry Weber