Equities
Canada’s main stock index opened marginally higher on Monday with inflation numbers due tomorrow and Teck shares gaining on reports of interest from several companies about a potential transaction. Wall Street’s key indexes were muted in early trading with focus turning to corporate earnings.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 7.07 points, or 0.03%, at 20,586.98.
In the U.S., the Dow Jones Industrial Average rose 43.99 points, or 0.13 per cent, at the open to 33,930.46.
The S&P 500 opened lower by 0.47 points, or 0.01 per cent, at 4,137.17, while the Nasdaq Composite dropped 15.23 points, or 0.13 per cent, to 12,108.23 at the opening bell.
“The first few [U.S.] banks are delivering a strong start to earnings season, reigniting soft landing calls, while large parts of Wall Street remain confident that the economy is recession bound as expectations remain that banking turmoil will persist,” OANDA senior analyst Ed Moya said.
“Fed rate cut bets for later in the year have steadily increased and that has kept the dollar under pressure.”
U.S. bank earnings continue this week, with results from Charles Schwab this morning followed by Bank of America on Tuesday and Morgan Stanley on Wednesday. Elsewhere, Netflix reports Tuesday afternoon and Tesla reports on Wednesday.
In Canada, investors will get results from grocer Metro Inc. on Wednesday. The results come as Canada’s big grocery chains face increased scrutiny amid high inflation and consumer costs.
On the economic side, Canada’s key event will be Tuesday with the release of March inflation figures. In February, the annual rate of inflation eased to 5.2 per cent, its lowest since early last year.
“RBC Economics expects March CPI to show a sharp deceleration to 4.1 per cent year-over-year,” Alvin Tan, Asia FX strategist with RBC, said.
“That would be a full percentage point down from February, and the lowest headline CPI reading since August 2021.”
He said much of the decline is coming from lower energy prices, but the breadth of price growth across other products and services has also been narrowing.
“By our count, a little more than half of the goods and services in the CPI basket were still seeing inflation above the BoC’s 1-per-cent to 3-per-cent target range over the three months ending in February, but that’s down from a peak of almost 90 per cent last year,” he said.
On the corporate side, The Globe’s Niall McGee reports Teck Resources Ltd. has been approached by Vale Ltd., Anglo American PLC and Freeport-McMoRan Inc., which are all interested in exploring transactions if a planned split of Canada’s biggest diversified mining company happens, according to two sources familiar with the discussions.
Teck shares were up more than 7 per cent in early trading in Toronto.
Overseas, the pan-European STOXX was flat. Britain’s FTSE 100 gained 0.15 per cent. Germany’s DAX lost 0.23 per cent while France’s CAC 40 slid 0.17 per cent.
In Asia, Japan’s Nikkei finished up 0.07 per cent. Hong Kong’s Hang Seng added 1.68 per cent.
Commodities
Crude prices were slightly weaker in early trading as markets await further signals on the health of the global economy.
The day range on Brent was US$85.64 to US$86.52 in the early premarket period. The range on West Texas Intermediate was US$81.84 to US$82.48.
“The oil price will be one to watch in the wake of the upcoming Chinese data,” Tim Waterer, chief market analyst at KCM Trade, said in an early note.
“The IEA (International Energy Agency) recently said that [it expects] global oil demand will hit new records in 2023, in part due to the Chinese recovery.”
That, along with the OPEC+ production cuts, illustrate the constructive developments on the oil price from both the demand-side and supply-side perspective, he said.
“While these recent developments have contributed to the elevated price of oil, the price could be facing some risk to the downside should the Chinese macro data miss the mark,” Mr. Waterer said.
China releases first-quarter GDP figures on Tuesday.
In other commodities, gold prices gained as the U.S. dollar steadied.
Spot gold was up 0.5 per cent at US$2,012.62 per ounce early Monday morning. U.S. gold futures rose 0.4 per cent to US$2,024.70.
Currencies
The Canadian dollar was little changed as traders await tomorrow’s key inflation figures. The U.S. dollar was also largely flat against a group of world currencies.
The day range on the loonie is 73.97 US cents to 74.95 US cents in the early premarket period. The Canadian dollar is up more than 2 per cent against the greenback over the past month.
March inflation figures are slated for release on Tuesday morning.
Meanwhile, the U.S. dollar index - which measures the currency against six major peers - was little changed at 101.64. It touched a one-year low of 100.78 on Friday before rebounding somewhat, Reuters reported.
The euro was roughly flat against the dollar on Monday at US$1.098 after touching a one-year high on Friday.
Britain’s pound slid 0.07 per cent to US$1.241, after hitting a 10-month high of US$1.255 on Friday, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was up slightly at 3.526 per cent.
More company news
Algonquin Power & Utilities Corp. says it has agreed with American Electric Power to terminate its deal to buy Kentucky Power Company and AEP Kentucky Transmission Co. Inc. AQN chief executive Arun Banskota says the company’s board of directors and management team decided that continuing with the transaction is not in the best interest of the company. He says they made the decision to cancel the deal, which was first announced in October 2021, “in light of the evolving macro environment.” -The Canadian Press
Merck & Co said on Sunday it will buy Prometheus Biosciences Inc for about US$10.8-billion, picking up a promising experimental treatment for ulcerative colitis and Crohn’s disease and building up its presence in immunology. Merck will pay US$200 per share for the California-based biotechnology company that specializes in treatments for autoimmune diseases. That represents a 75-per-cent premium to the US$114.01 closing price for Prometheus shares on Friday.
Economic news
(8:30 a.m. ET) Canadian wholesale trade for February.
(8:30 a.m. ET) Canadian international securities transactions for February.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for April.
(10 a.m. ET) U.S. NAHB Housing Market Index for April.
With Reuters and The Canadian Press