Equities
Global stocks were mixed Tuesday morning as AI-linked U.S. stocks rose following bruising sell-offs. In Canada, markets responded to an unexpected acceleration in May inflation, as the loonie briefly rallied, the TSX declined and traders scaled back bets for a July rate cut.
In early Wall Street trading, the S&P 500 rose 0.17 per cent to 5,456.86 and the Nasdaq Composite added 0.42 per cent to 17,569.81. The Dow Jones Industrial Average fell 0.21 per cent, to 39,328.39.
The Toronto Stock Exchange’s S&P/TSX Composite Index opened 0.5 per cent lower at 21,738.96 after the hot inflation report.
Stocks fell in Europe, where France’s upcoming elections, set to begin this week, weighed on markets.
In Canada, investors were digesting data from Statistics Canada which showed the country’s inflation rate unexpectedly accelerated in last month, driven by higher service costs including rent and air transportation. The Consumer Price Index rose 2.9 per cent in May on a year-over-year basis, up from 2.7 per cent in April and higher than the 2.6 per cent analysts’ had expected.
Markets immediately responded to the inflation report by sending the Canadian dollar higher, while Canadian bond yields spiked as traders scaled back bets on the odds of another interest rate cut in July.
Canadian investors are also getting results from convenience store owner Alimentation Couche-Tard Inc. after the close.
On Wall Street, markets are watching earnings from shipping company FedEx Corp.
Analysts were eyeing shifts in the AI-related tech frenzy, reflected by moves in Nvidia’s blockbuster stock. Shares in the chipmaker were up more than 2 per cent after selling off in recent sessions.
“The question investors now need to ask is if the sell-off has gone far enough since the stock (Nvidia) is in correction territory, or if this is a structural shift lower, that will weigh on the major U.S. indices and allow other regions and indices to play catch up,” said Kathleen Brooks, research director at XTB.
Overseas, the pan-European STOXX 600 was down 0.33 per cent. Britain’s FTSE 100 lost 0.32 per cent, Germany’s DAX lagged by 1.12 per cent and France’s CAC 40 was also in the red at 0.80 per cent.
In Asia, Japan’s Nikkei closed up 0.95 per cent at 39,173.15, while Hong Kong’s Hang Seng gained 0.25 per cent, closing at 18,072.90.
Commodities
Oil prices edged lower on a stronger U.S. dollar, following a price rebound in recent weeks. Brent futures were at US$84.81 a barrel, down 0.40 per cent, and West Texas Intermediate (WTI) was down 0.37 per cent to US$81.32.
Losses were limited by escalating geopolitical tensions and hopes of improved demand this summer.
“The surge in oil prices was triggered by an optimistic demand outlook and reduced U.S. inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months,” said independent market analyst Tina Teng.
Spot gold was down 0.3 per cent at US$2,326.24 per ounce
Currencies and bonds
The Canadian dollar was down compared to its U.S. counterpart, after a brief rally following the inflation news.
The day range on the loonie was 0.7309 US cents to 73.37 US cents in the premarket period. The Canadian dollar was down about 0.13 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.28 per cent to 105.76.
The euro dropped by 0.37 per cent to US$1.0696. The British pound declined 0.06 per cent to US$1.2678.
In bonds, the yield on the U.S. 10-year note was up slightly at 4.247 per cent after the North American opening bell.
Economic news
Japan machine tool orders
(8:30 a.m. ET) The Consumer Price Index rose 2.9 per cent in May on a year-over-year basis, up from 2.7 per cent in April.
(8:30 a.m. ET) Canada’s manufacturing sales for May.
(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index (20 city) for April.
(9 a.m. ET) U.S. FHFA House Price Index for April. U.S. single-family home prices increased at a steady clip in April, but momentum could slow as higher borrowing costs weigh on demand for housing, contributing to a rise in supply.
With Reuters and The Canadian Press