Equities
Canada’s main stock index opened higher Monday with energy stocks tracking oil’s move higher in the wake of a surprise production cut by the OPEC+ group. On Wall Street, key indexes slid at the opening bell with inflation concerns raising questions about the Federal Reserve’s next move.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 101.88 points, or 0.51%, at 20,201.77.
In the U.S., the Dow Jones Industrial Average fell 28.37 points, or 0.09%, at the open to 33,245.78. The S&P 500 opened lower by 7.11 points, or 0.17%, at 4,102.20, while the Nasdaq Composite dropped 75.81 points, or 0.62%, to 12,146.09 at the opening bell.
“The OPEC+ decision gave a shake to global financial markets, as – obviously, higher oil prices revived the inflation worries and the interest rate hike bets,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“The U.S, 2 and 10-year yields ticked higher in Asia – whereas the yields had fallen on Friday on the back of softer-than-expected PCE and core PCE figures from the U.S.”
Over the weekend, the OPEC+ group blindsided markets with an announcement that it would cut output by about 1.16 million barrels a day. Crude prices jumped on the decision. Markets had widely expected OPEC+ to hold steady on production.
In Canada, investors will get the Bank of Canada’s business outlook and consumer expectations surveys just after the start of trading. The reports come ahead of the next BoC rate decision on April 12.
Later in the week, Canadian investors will get March employment numbers on Thursday morning. Markets are expecting to see a gain of about 15,000 new jobs for the month with the jobless rate edging up to 5.1 per cent.
“Wage growth will continue to be watched closely by the Bank of Canada - there have been some signs of moderation in average hourly earnings growth but pressure remains upward with labour demand still outpacing supply,” Alvin Tan, Asia FX strategist with RBC, said.
U.S. jobless numbers for March will be released on Friday. Canadian and U.S. markets have a four-day trading week with exchanges closed on Good Friday.
On the corporate side, Vancouver-based Teck Resources Ltd said on Monday that its board has unanimously rejected an unsolicited acquisition proposal from Glencore plc. In a release, Teck called the offer “opportunistic” and said it isn’t contemplating a sale of the company at this time.
Overseas, the pan-European STOXX 600 was up 0.01 per cent by midday. Britain’s FTSE 100 advanced 0.56 per cent. Germany’s DAX slid 0.09 per cent while France’s CAC 40 added 0.32 per cent.
In Asia, Japan’s Nikkei finished up 0.52 per cent. Hong Kong’s Hang Seng gained 0.04 per cent.
Commodities
Crude prices spiked in the wake of the surprise production cut by OPEC +.
The day range on Brent was US$83.50 to US$86.44 in the early premarket period. The range on West Texas Intermediate was US$79 to US$81.69.
In the predawn period, prices for both benchmarks were up more than 5 per cent. Brent hit its best level since January while WTI hit its highest in a month.
The White House was quick to criticize the move by OPEC+ amid concerns about consumer prices and inflationary pressures.
“It will take some time to see precisely where oil’s price recenters and how much this impacts global prices as demand concerns linger,” Stephen Innes, managing partner with SPI Asset Management, said.
“Still, this news is potentially more kindling that could intensify inflation fires after the energy slump was chiefly the key ameliorating factor this year.”
In other commodities, spot gold was down 0.6 per cent at US$1,956.89 per ounce early Monday morning, its lowest in nearly a week. U.S. gold futures shed 0.7 per cent to US$1,971.30.
Currencies
The Canadian dollar was higher, helped by rising crude prices, while its U.S. counterpart firmed against a group of currencies as inflation concerns raised questions about the Federal Reserve’s next move.
The day range on the loonie was 73.87 US cents to 74.20 US cents. The loonie has gained nearly 1 per cent over the past month.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.11 per cent at 102.62 early Monday morning.
Markets are now pricing in around a 70-per-cent probability of the Fed hiking rates by a quarter point in May, from around 50 per cent on Friday, according to figures from Reuters.
The euro, meanwhile, was down 0.1 per cent at US$1.0835, after hitting a one-week low of $1.0788 earlier in the session. The greenback rose 0.5 per cent to 133.57 Japanese yen, earlier hitting its highest level since March 17, Reuters reported.
Britain’s pound was at US$1.2317, down 0.1 per cent.
The Australian dollar was last up 0.1 per cent to US$0.6693 ahead of Tuesday’s rate decision by the Reserve Bank of Australia. Markets are expecting that central bank to hold steady after 10 consecutive hikes.
In bonds, the yield on the U.S. 10-year note was higher at 3.536 per cent ahead of the North American open.
More company news
Endeavor Group Holdings Inc, the parent of the popular UFC mixed martial arts franchise, said on Monday it will acquire entertainment firm World Wrestling Entertainment Inc in a deal valued at $9.3-billion. Endeavor said the deal represents a contribution price of about $106 per share for WWE, which is about 16 per cent higher than the stock’s Friday closing. Under the agreement, Endeavor shareholders will own 51 per cent of the combined company, while WWE shareholders would get 49 per cent.
McDonald’s Corp is temporarily closing its U.S. offices this week as it prepares to inform corporate employees about its layoffs as part of a broader company restructuring, the Wall Street Journal reported on Sunday. In an internal e-mail last week to U.S. employees and some international staff, McDonald’s asked them to work from home from Monday through Wednesday so it can deliver staffing decisions virtually, the report said. It is unclear how many employees will be laid off. -Reuters
Tesla Inc posted record quarterly vehicle deliveries, but quarter-on-quarter sales growth was modest despite price cuts as rising competition and a bleak economic outlook weighed. Tesla delivered 422,875 vehicles for the first three months of this year, up 4 per cent from the previous quarter. This was 36 per cent higher than a year ago. In January, Chief Executive Elon Musk said Tesla could achieve 2 million vehicle deliveries this year, up 52 per cent from last year. -Reuters
Economic news
(10 a.m. ET) U.S. ISM Manufacturing PMI for March.
(10 a.m. ET) U.S. construction spending for February.
(10:30 a.m. ET) Bank of Canada Business Outlook Survey and Survey of Consumer Expectations for Q1.
With Reuters and The Canadian Press