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Equities
Canada’s main stock index rallied early Monday after Friday’s sharp rout alongside a rebound in crude prices. On Wall Street, key indexes also jumped as investors brace for continued volatility while awaiting more information on the Omicron variant.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 141.63 points, or 0.67 per cent, at 21,267.53.
The Dow Jones Industrial Average rose 118.37 points, or 0.34 per cent, at the open to 35,017.71.
The S&P 500 opened higher by 34.13 points, or 0.74 per cent, at 4,628.75, while the Nasdaq Composite gained 227.77 points, or 1.47 per cent, to 15,719.42 at the opening bell.
On Friday, the World Health Organization labelled Omicron as a variant of concern and a number of countries moved quickly to impose travel restrictions designed to slow the spread. The WHO said it would take about two weeks to to determine the seriousness of the threat. Meanwhile, analysts cautioned that volatility is likely to continue.
“Despite the irresistible pull of buying-the-dip on tenuous early information on Omicron, we have just one negative Omicron headline away from going back to where we started,” OANDA senior analyst Jeffery Halley said.
“Expect plenty of headline-driven whipsaw price action this week.”
In this country, investors have a busy week ahead, with bank earnings starting on Tuesday. Bank of Nova Scotia reports Tuesday followed by Royal Bank and National Bank on Wednesday. CIBC and TD Bank report Thursday and Bank of Montreal delivers results on Friday. Investors are watching for financial institutions to announce dividend hikes after regulators lifted pandemic-related restrictions on payouts. Analysts are expecting the size of those increases to vary across the sector.
On the economic side, Statistics Canada will release third-quarter GDP figures on Tuesday and November jobs numbers on Friday. Statscan’s early estimated pegged the rate of growth in the third quarter at 1.9 per cent. On the labour front, Statscan reported the addition of 31,000 jobs in October as gains continued, but at a slower pace.
“RBC Economics is forecasting that November employment rose by another 40,000 jobs, led by further improvement in high-contact services sectors where the bulk of remaining labour market weakness remains,” Alvin Tan, Asia FX strategist, said. “This is expected to lower the unemployment rate to 6.6 per cent.”
On the corporate side, shares of Twitter Inc. jumped more than 3 per cent in early trading on reports that CEO Jack Dorsey will set down from his executive role.
Overseas, the pan-European STOXX 600 was up 1.19 per cent in early afternoon trading. Britain’s FTSE gained 1.38 per cent. Germany’s DAX and France’s CAC 40 rose 0.85 per cent and 1.15 per cent.
In Asia, Japan’s Nikkei fell 1.63 per cent. Hong Kong’s Hang Seng lost 0.95 per cent.
“Part of Asia’s [declines] could be a partial catch-up to the scale of the U.S. and European rout, but also their slower pandemic recovery, the scars of delta, and a much higher beta to world trade and the global recovery,” Mr. Halley said.
Commodities
Crude prices rallied after last week’s selloff with investors turning their attention to a meeting of OPEC+ members later in the week and their response to the Omicron variant.
The day range on Brent is US$72.41 to US$75.35. The range on West Texas Intermediate is US$69.20 to US$72.16. Brent fell by more than US$9 a barrel on Friday while WTI ended down more than US$10. Both were up roughly 5 per cent in the predawn period.
“I can’t help but feel that Friday’s lows were probably the bargain of the year if you were an oil buyer, speculative or physical,” OANDA’s Jeffery Halley said.
He said current events further muddy the picture for OPEC+ members, who meet late in the week. The group has resisted calls to increase production to head off high energy prices.
“OPEC+ has also repeatedly noted that a resurgent virus is one reason why they have been cautious about lifting production,” Mr. Halley said.
“Taken with increasing U.S. production, SPR [strategic petroleum reserve] releases, and now a potential Omicron roadblock to the global recovery, OPEC+ probably has all the excuses it needs to hit the pause button on increasing production in December and awaiting further virus clarity,” he said.
In other commodities, gold prices edged higher on Monday as concerns over the impact of the Omicron coronavirus variant offset a stronger U.S. dollar.
Spot gold rose 0.2 per cent to US$1,794.87 per ounce early Monday, while U.S. gold futures advanced 0.5per cent to US$1,794.20.
Currencies
The Canadian dollar was firmer alongside rebounding crude prices and improved global risk sentiment while the U.S. dollar edged up against world counterparts.
The day range on the loonie is 78.34 US cents to 78.62 US cents.
“The Canadian dollar strengthened through the Asian session amid the less pessimistic mood in markets but has traded in a narrow range since yesterday evening around the mid-figure mark,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Ontario has confirmed two omicron cases in Ottawa in persons who recently traveled to Nigeria, but Canada remains in relatively good standing to resist the spread of the more contagious variant with a high share of vaccinated adults (86% two doses, 89% one or more).”
There were no major Canadian economic releases due on Monday.
The U.S. dollar index, which had its biggest one-day drop since May on Friday, edged back higher and by early Monday was up 0.1 per cent on the day at 96.326, according to figures from Reuters.
While the greenback normally benefits as safe-haven currency, it lost altitude on Friday as investors speculated that the potential spread of a new variant could force the Federal Reserve to delay tightening policy.
The euro, which rose versus the U.S. dollar on Friday, was down around 0.4 per cent at US$1.12665.
Japan’s yen steadied and was up around 0.2 per cent on the day versus the U.S. dollar at 113.33 in early trading.
More company news
Vermilion Energy Inc. says it has signed a deal to increase its stake in the Corrib natural gas project off the coast of Ireland. Under an agreement with Equinor ASA, the Calgary-based company says it will pay $556 million for Equinor Energy Ireland Ltd., which owns a 36.5 per cent stake in Corrib. Vermilion says its operated interest in Corrib will increase to 56.5 per cent with the deal.
Walmart Inc said that Brett Biggs would step down from his role as the retailer’s chief financial officer next year.
Economic news
(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for October.
(10 a.m. ET) U.S. pending home sales for October.
(2 p.m. ET) Bank of Canada Governor Tiff Macklem makes opening remarks at the 2021 Symposium on Indigenous Economies (videoconference).
(3:05 p.m. ET) U.S. Fed Chair Jerome Powell makes opening remarks at New York Fed Innovation Event.
With Reuters and The Canadian Press
Terry Weber