Canada’s main stock index opened marginally higher on Monday as strong gold prices pushed up mining stocks, helping counter weakness in the energy and technology sectors.
In the opening minutes of trading, the Toronto Stock Exchange’s S&P/TSX composite index was up 5.71 points, or 0.03%, at 21,277.56.
Wall Street’s main indexes opened higher as well, after a week of volatile trading spurred on by mixed quarterly results from big technology companies.
The Dow Jones Industrial Average rose 18.64 points, or 0.05%, at the open to 35,108.38. The S&P 500 opened higher by 5.22 points, or 0.12%, at 4,505.75, while the Nasdaq Composite gained 20.78 points, or 0.15%, to 14,118.79 at the opening bell.
Among stocks seeing action is Peloton, which was up about 25% on reports of interest from potential buyers including e-commerce giant Amazon.
Shares in Spirit Airlines jumped 13% early trading after Frontier said it was buying the budget airline in a US$2.9 billion cash-and-stock deal that will create the fifth largest carrier in the U.S.. The deal is expected to face scrutiny from anti-trust regulators.
The tech-heavy Nasdaq had a volatile start to February after Facebook owner Meta Platforms lost US$200 billion from its market value on disappointing results last week, while Amazon.com Inc gained just as much on plans of hiking its Prime subscription rate.
Of the 278 companies in the S&P 500 that have posted earnings as of Friday, 78.4% reported above analysts’ expectations, according to Refinitiv.
An unexpectedly strong U.S. jobs report last week raised concerns about aggressive policy tightening by the Federal Reserve ahead of key inflation data for January that is due on Thursday.
Markets are now pricing in a one-in-three chance the Fed might hike by a full 50 basis points in March and the prospect of rates reaching 1.5% by year end.
Despite the earnings-driven seesaw in technology stocks, all three major stock indexes and the TSX ended their first week of February higher.
Market liquidity, or how easily investors can buy or sell a security without affecting its price, in U.S. stocks has fallen to levels last seen during the COVID-19 selloff two years ago, adding to volatility in an already-nervous market.
“This week the attention will shift from corporate earnings to macroeconomic data, more specifically to latest US consumer price index that could have advanced to 7.3% in the US in January, commented Ipek Ozkardeskaya, senior analyst with Swissquote. “Fear of a stronger inflation will likely keep the investor appetite limited until the data release.”
European stocks are steady this morning, though Italian stocks dropped 1.34%. Britain’s FTSE gained 0.3%. Modest moves were also seen in Asia overnight.
Equities
Commodities
Oil prices fell as much as $1 as signs of progress in U.S.-Iran nuclear talks that could lead to removal of U.S. sanctions on Iranian oil sales offset concerns about tight supplies.
U.S. President Joe Biden’s administration on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects, as the talks on the 2015 international nuclear deal enter the final stretch.
Although the sanctions relief will have limited impacts on Iran’s struggling economy, they were perceived by the markets as positive signal that both sides are determined to reach a deal.
Iran could quickly export millions of barrels of crude and help drive down red-hot oil prices if U.S. sanctions are lifted. It seems Iran has been moving oil into place to prepare for the eventual resumption of its exports.
Meanwhile, aluminum prices scaled a four-month peak on Monday as worries about supplies from top producer China and deficits in Europe and the United States were reinforced by sliding stocks.
Benchmark aluminum on the London Metal Exchange traded up 1.2% at $3,110.5 a tonne in official rings, after hitting its highest since Oct. 19 at $3,135 earlier in the session, up 20% since mid-December last year.
Analysts say Chinese authorities aiming to cut pollution during the Winter Olympics are limiting output at energy-heavy aluminum smelters.
“There are few signs of Chinese supply coming back quickly,” said ING analyst Wenyu Yao. “Inventories are low and falling.”
The threat of sanctions against Russia, if it invades Ukraine, could also hit global supplies as Rusal, the world’s largest aluminum producer outside China accounts for around 6% of global supplies.
Currencies and bonds
The Canadian dollar has been picking up strength this morning against the greenback, despite some weakness in U.S. crude and copper prices. The loonie was down sharply last week and traders may be repositioning in the belief the move was overdone.
“In effect, crude prices are still very supportive for the CAD and current levels suggest there is still some modest, unrealized upside potential in the CAD at the moment,” Scotiabank forex strategists said in a note this morning. “At the very least, firm commodity prices generally imply some cushioning for the CAD against broader USD gains.”
Forex traders will have a limited number of catalysts this week - there’s limited Canadian economic data. But Bank of Canada Governor Tiff Macklem will be speaking on Wednesday.
Treasury yields are mixed but mostly higher along the curve this morning,
Other corporate news
Hasbro Inc gained 2.2% in premarket trading after beating analysts’ estimates for quarterly revenue, bolstered by a rebound in the toymaker’s television production business and demand for its collectible card game “Magic: The Gathering.”
Frozen and refrigerated food maker Tyson Foods Inc rose 0.8% ahead of its results later in the day.
Other earnings today include: Amgen Inc.; PrairieSky Royalty Ltd.; TFI International Inc.; TMX Group Ltd.; United Corporations Ltd.
Economic news
(3 p.m. ET) U.S. consumer credit for December.
With files from Reuters