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Canada’s main stock index was flat down slightly after the open on Tuesday following its biggest daily surge in more than six weeks in the previous session, as losses in mining stocks hindered the index’s advance.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was off 6.47 points, or 0.04 per cent, at 16,221.59.
The real estate investment trust index was down 0.7 per cent with Canadian Apartment REIT down 3 per cent and Artis REIT down 2.25 per cent.
Technology stocks were off 0.6 per cent as Shopify fell 3.1 per cent and Kinaxis was down 1 per cent.
Financials were up 0.3 per cent and energy stocks gained 0.4 per cent.
Lending firm Callidus Capital fell nearly 19 per cent after it reported another deep quarterly loss on Monday and said its net worth had fallen below zero, due partly to the weak financial performance of a number of companies it has acquired.
U.S. stocks opened flat and then slid lower on Tuesday, pausing after a three-day surge on Wall Street as investors looked for more signs of strength in the economy in the wake of growth worries.
The Dow Jones Industrial Average fell 87.19 points, or 0.33 per cent, to 26,171.23.
The S&P 500 was down 2.91 points, or 0.1 per cent at 2,864.28. The Nasdaq Composite dropped 3.49 points, or 0.04 per cent , to 7,825.42.
A surprise rebound in China’s manufacturing data and better-than-expected U.S. numbers pushed the S&P 500 to near six-month highs on Monday. The benchmark index closed about 2 per cent below a record closing high it hit in late September.
“We had a pretty good rally yesterday and I think part of it was overdone,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“We’re still in this mixed economic data range where you’re really not going to see it driving [markets] one way or the other.”
Wall Street’s efforts to reclaim record levels have been hindered by trade uncertainties, the Federal Reserve’s plans to end monetary policy tightening and a chaotic Brexit.
In a warning signal, carmaker Ford Motor Co. is spending tens of millions of euros to prepare for a possible British exit from the European Union without a trade deal, its Europe chairman said.
World trade shrank by 0.3 per cent in the fourth quarter of 2018 and is likely to grow by 2.6 per cent this year, slower than the 3 per cent growth in 2018 and below a previous forecast of 3.7 per cent, the World Trade Organization (WTO) said.
The WTO said trade had been weighed down by new tariffs and retaliatory measures, weaker economic growth, volatility in financial markets and tighter monetary conditions in developed countries.
After a set of upbeat manufacturing data eased some of those worries on Monday, investors are awaiting more economic data to confirm the U.S. economy is on a strong footing.
A Commerce Department report on Tuesday showed new orders for key U.S.-made capital goods unexpectedly fell in February and shipments were unchanged.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.1 per cent. Economists polled by Reuters had forecast it to remain unchanged.
All eyes will be on the March employment numbers that are due on Friday.
Energy stocks will be in focus as oil hit a 2019 high of more than US$69 a barrel on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut.
Shares of drugstore chain Walgreens Boots Alliance Inc slid over 12 per cent after the company cut its 2019 profit growth forecast and reported a quarterly profit that missed Wall Street estimates.
Dow Inc. shares were up 1.6 per cent ahead of its stock market debut following spin off from DowDuPont. The stock is set to replace DowDuPont in the Dow Jones Industrial Average and Brighthouse Financial Inc in the S&P 500.
Ride-hailing company Lyft Inc’s shares were down 0.75 per cent after falling below their IPO price of US$72 in just its second day of trading on Monday.
Overseas, European stocks rose with Britain’s FTSE up 1.1 per cent, Germany’s DAX gained 0.6 per cent and France’s CAC added 0.4 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan ended up 0.2 per cent and at a seven-month high after also rallying more than one per cent in the previous session.
In Asia, Japan’s Nikkei fell 0.02 per cent, China’s Shanghai index was up 0.2 per cent and Hong Kong’s Hang Seng added 0.2 per cent.
Commodities
Oil hit a 2019 high above US$69 a barrel on Tuesday on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut, and as the market became less worried that demand may slow.
The United States is considering more sanctions against Iran, whose oil exports have been halved by existing measures, an official said. A key crude terminal in Venezuela, also under U.S. sanctions, has halted operations again.
Brent crude rose 10 cents to US$69.11 a barrel, having touched US$69.50, the highest since mid-November. U.S. crude was up 11 cents at US$61.70 after rising above US$62 for the first time since early November.
“The supply cuts have been there for a while but Venezuela is not improving,” said Olivier Jakob, analyst at Petromatrix. “That is taking a lot of oil away from the market.”
Further supply losses from Iran and Venezuela could widen an OPEC-led production cut that took effect in January, designed to prevent a price-sapping rise in inventories.
Supply from the Organization of the Petroleum Exporting Countries hit a four-year low in March, a Reuters survey found, because top exporter Saudi Arabia cut more than it had agreed to and due to the involuntary declines.
This week’s reports on U.S. supplies are expected to show crude inventories fell, a sign that the OPEC curbs are having the impact producers intended.
Six analysts polled by Reuters estimated, on average, that crude stocks fell by 1.2 million barrels in the week to March 29.
Gold prices steadied near their lowest in about four-weeks on Tuesday as robust economic data from the United States and China tempered concerns of a global slowdown, boosting the dollar and riskier assets.
Spot gold was up 0.1 per cent at US$1,288.53 per ounce, having touched its lowest since March 7 at US$1,284.76 earlier. U.S. gold futures fell about 0.2 per cent to US$1,292.30 an ounce.
“Gold continues to struggle with the bullishness we are seeing across the other sectors ... Today, the primary driver is the continuous strength of the dollar,” said Saxo Bank analyst Ole Hansen.
“[Global slowdown] concerns are most certainly easing. It’s too early to say they are gone but they have eased, and with that, also the need to have protection.”
World stocks hovered just under a six-month high, supported by strong manufacturing data from the United States and China, while the dollar index rose to a three-week high against a basket of rival currencies, making bullion expensive for holders of other currencies.
Indicating investor sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust , fell 1.5 per cent on Monday, their biggest one-day percentage decline in a month.
Currencies and bonds
The Canadian dollar was down slightly but trading above the 75 US cents mark, reacting to comments on Monday from Bank of Canada Governor Stephen Poloz “treading a careful line between repeating the 'transitory weakness’ mantra and expressing concern on weakening global growth and recognizing a weaker housing market,” said Adam Cole, chief currency strategist with RBC Europe Ltd.
“Questioned on whether the next BoC move would be a hike, Poloz repeated the line that the growth slowdown was likely to be temporary, but would not be drawn further. Monday’s close below 1.3337 opens the way to support at 1.3242, followed by the 200-day moving average at 1.3195 and a key support trendline at 1.3187. Meanwhile, resistance stands at 1.3347/1.3371 and 1.3468. There are no key Canadian data due until Friday’s employment report,” he said.
The dollar index, which measures the U.S. currency against a basket of rival currencies, rose as much as 0.3 percent to 97.430, a three-week high, helped by a rally in U.S. stocks on Monday and the more positive U.S. data.
The 10-year Treasury yield was down slightly at 2.479 per cent and the Canada 10-year bond yield was down at 1.682 per cent
Stocks to watch
Australian cobalt developer Jervois Mining on Tuesday said it would buy out Canada-based Ecobalt Solutions Inc., for $57.6-million, to expand its geographical footprint into the United States.
Earnings include: Blackbird Energy Inc.; EXFO Inc.; Novagold Resources Inc.; Walgreens Boots Alliance Inc.
Economic news
(8:30 a.m. ET) U.S. durable goods orders for February. The Street is projecting a decline of 1.7 per cent from January.
Also: Canada and U.S. auto sales for March.
With files from Reuters