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Canada’s main stock index fell at open on Monday, with energy stocks leading losses, as investors dumped riskier assets fearing a global economic slowdown.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 18.86 points, or 0.12 per cent, at 16,070.47.
Energy stocks were down 0.5 per cent with Seven Generations down 1.8 per cent, Prairiesky Royalty down 1.7 per cent and Gran Tierra Energy off 0.3 per cent.
Consumer discretionary stocks were off 0.15 per cent and financials were down 0.1 per cent.
Newmont Mining Corp. said Monday it intends to pay its shareholders a one-time dividend worth US$470-million after a number of large investors pushed for the giant miner to renegotiate terms of its takeover of Goldcorp Inc. Newmont shareholders who own stock as of April 17 will be entitled to US$0.88 per share. The dividend is payable only if shareholders on both sides approve Newmont’s US$10-billion takeover of Goldcorp. Newmont shares rose 1.4 per cent and Goldcorp U.S.-listed shares were up 2.2 per cent.
Emera Inc. stock rose 1.2 per cent after it announced it had signed a deal to sell its operations in Maine to Enmax Corp. in a deal valued at $1.8-billion, including debt. Emera Maine is headquartered in Bangor and serves 159,000 customers in the northern part of the state.
TransAlta Corp. says Brookfield Renewable Partners and its institutional partners have signed a $750-million deal to invest in the company’s hydro assets. Under the terms of the agreement, Brookfield will acquire exchangeable securities, which will be convertible into an equity ownership interest in TransAlta’s Alberta hydro assets. Brookfield will also purchase TransAlta common shares on the open market to increase its share ownership stake to 9 per cent. Shares of TransAlta were up 3.4 per cent and Brookfield shares were down 0.02 per cent.
U.S. stocks opened lower on Monday, weighed by technology shares, as investors worried about global growth fears even as a report showed that President Donald Trump’s campaign did not collude with Russia.
The Dow Jones Industrial Average fell 11.60 points, or 0.05 per cent, at the open to 25,490.72.
The S&P 500 opened lower by 4.70 points, or 0.17 per cent, at 2,796.01. The Nasdaq Composite dropped 23.68 points, or 0.31 per cent, to 7,618.98 at the opening bell.
S&P 500 futures initially rose on Sunday after Special Counsel Robert Mueller found no evidence of collusion, but the report left unresolved the issue of whether Trump obstructed justice by undermining the investigations that have dogged his presidency.
That followed the main indexes’ biggest one-day percentage declines since Jan. 3 on Friday, triggered by weak factory data from the United States, Europe and Japan that also caused the inversion of U.S. Treasury yield curve for the first time since 2007. An inverted yield curve is widely seen as a leading indicator of recession.
“Markets are not overcoming the concerns of the global economic climate and the fact that the 3-month treasury yields rose above that of the 10-year notes, creating an inversion,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
“The concerns of global growth, without a China-U.S. trade deal, will linger in the background and continue to weigh on markets.”
Top U.S. officials travel to Beijing for the latest round of high-level talks, which are scheduled to start on March 28.
Meanwhile, a survey from Germany, Europe’s largest economy, showed that business morale improved unexpectedly in March after six consecutive drops, boosting sentiment and helping yields on the 10-year bonds to move back above the three-month rates.
Apple Inc shares fell 1.3 per cent ahead of an event where the company is widely expected to launch its video streaming service. The event is scheduled to start at 1 p.m. ET.
Boeing Co rose 0.9 per cent after the planemaker said it will brief pilots and regulators this week on software and training updates for its 737 MAX aircraft, with Ethiopian Airlines and Qatar Airways also expressing confidence in the company despite a recent crash.
Akamai Technologies fell 5.2 per cent after a report brokerage Deutsche Bank had downgraded the stock to “sell” from “hold.”
Viacom Inc’s shares rose 6.8 per cent after company and AT&T Inc renewed their contract to continue carriage of Viacom’s services. AT&T shares slid 0.2 per cent.
Commodities
Oil prices were steady on Monday, with concerns of a sharp economic slowdown competing with support from tighter supply due to OPEC’s production cutbacks and U.S. sanctions on Iran and Venezuela.
Brent crude oil futures were down 7 cents, or 0.1 per cent, at US$66.96 per barrel, while U.S. West Texas Intermediate (WTI) futures were unchanged at US$59.04 per barrel.
Both crude oil price benchmarks closed down on the week since briefly hitting their highest since November 2018.
Concerns about a potential U.S. recession emerged Friday after cautious remarks by the U.S. Federal Reserve caused 10-year treasury yields to slip below the three-month rate for the first time since 2007.
“Oil prices are under pressure due to a combination of recession fears and gloomy market sentiment,” Commerzbank said.
“Oil market-specific reports, which point to tighter supply, are preventing prices from falling any more sharply,” the bank added, noting a decline in U.S. crude stocks and expenditure by U.S. shale firms.
Gold prices rose on Monday as investors’ appetite for riskier assets faded on concerns about a potential U.S. recession and decelerating global growth, increasing appeal for the bullion alongside yen and bonds.
Spot gold gained 0.3 per cent to US$1,316.40 per ounce, while U.S. gold futures also added 0.3 per cent to US$1,316.50 an ounce.
The metal last week posted its third consecutive weekly gain and rose 1 per cent, the most since the week ended Feb. 1.
Investors dumped shares and fled to the safety of bonds, while the Japanese yen hovered near a six-week high.
“Market is in a risk aversion mode. It seems that the data from Friday night, of U.S. and Europe, didn’t come as expected,” said Michael McCarthy, chief market strategist, CMC Markets.
Data on Friday showed that U.S. manufacturing activity unexpectedly cooled in March and businesses across the euro zone performed much worse than expected this month, fanning concerns on global growth.
“If data continues to be as weak as forecast then there is very good chance we could see significant higher gold prices,” McCarthy said, adding that the inversion of yield is a sign of concern.
Currencies and bonds
The Canadian dollar was down slightly, below the 74.5 cents US level as oil prices fell.
The U.S. dollar lost 0.10 per cent against a basket of currencies to around 96.5. It enjoyed no benefit from news that U.S. Attorney General William Barr had said U.S. Special Counsel Robert Mueller found no evidence of collusion between Russia and President Donald Trump’s election campaign team.
The dollar, with the highest yields in the G10, has been favoured by investors for many months. Last week saw “long” positions on the dollar hit a 2019 high, according to calculations by Reuters and data from the Commodity Futures Trading Commission.
The euro rose on Monday after a better-than-expected business confidence survey from Germany relieved markets of some of their economic growth worries and knocked the safe-haven yen off six-week highs to the dollar.
As the data lifted German 10-year yields back into positive territory and helped up European shares, the single currency also benefited, rising 0.2 per cent to a session-high of US$1.13230 , having traded flat earlier in the day and falling sharply on Friday after gloomy manufacturing PMI data.
Against the yen, the single currency surged 0.46 per cent to a high of 124.81, having traded as low as 123.90.
Stocks to watch
Dollarama Inc. is holding the line on prices in a move that is weighing on the retailer’s growth prospects. The Montreal-based dollar-store chain, which raised its highest prices to $4 from $3 a few years ago, is resisting price increases in an ultracompetitive market in which rivals also have kept a lid on price hikes. As a result, Dollarama last year was forced to cut back its same-store sales growth target to between 2.5 per cent and 3.5 per cent from its historic – and enviable – 4-per-cent to 5-per-cent annual forecasts.
British Columbia Investment Management Corp (BCI) and Van Eck International Investors on Friday joined a growing chorus of shareholders expressing concerns about elements of Newmont Mining’s $10-billion takeover of Goldcorp Inc.
U.S.-listed shares of Canopy Growth up 2 per cent in premarket trading. The cannabis producer received a licence from Health Canada for a production facility in Fredericton, N.B. The new facility is expected to increase its cannabis production by more than 5,000 kg annually and create more than 130 jobs at the Fredericton plant.
Apple Inc dipped 0.3 per cent ahead of an event where the company is widely expected to launch its video streaming service. The event is scheduled to start at 1 p.m. ET.
Akamai Technologies fell 3.8 per cent after a report brokerage Deutsche Bank downgraded the stock to “sell” from “hold.”
Viacom Inc’s shares rose 4 per cent after company and AT&T Inc renewed their contract to continue carriage of Viacom’s services.
Earnings include: 1933 Industries Inc.
Economic news
Japan reports its January all-industry activity index.
With files from Reuters