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Equities
Canada’s main stock index opened higher Monday tracking spiking crude prices on suggestions that the U.S. and European allies could ban imports of Russian oil and gas. Wall Street’s key indexes saw a mixed start with continued inflation concerns linked to rising energy costs tempering sentiment.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 74.41 points, or 0.35%, at 21,476.84.
In the U.S., the Dow Jones Industrial Average fell 35.05 points, or 0.10 per cent, at the open to 33,579.75.
The S&P 500 opened lower by 1.86 points, or 0.04 per cent, at 4,327.01, while the Nasdaq Composite gained 14.93 points, or 0.11 per cent, to 13,328.36 at the opening bell.
“Cutting off the Russian oil will increase the positive pressure on oil prices and will likely send the price of a barrel above US$150 in the foreseeable future,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“The extended rally in oil and commodity prices will likely bring the European economies to ration consumption and weigh on the economic recovery and the corporate earnings in 2022.”
On Sunday, U.S. Secretary of State Antony Blinken said the United States and European allies are considering banning imports of Russian oil. Reuters reports that the White House coordinated with key Congressional committees moving forward with their own ban.
In response, West Texas Intermediate briefly topped US$130 a barrel while Brent touched its highest level since 2008.
Meanwhile, Canada’s Foreign Minister Melanie Joly said on Monday that Western nations will announce more sanctions against Russia.
“We have imposed with Romania through the EU very important, severe sanctions, and there will be more sanctions announced very soon,” She told a news conference in Romania, adding that G7 countries and the European Union were looking at further restrictions but didn’t elaborate.
On the corporate side, Netflix and American Express have joined the ranks of companies halting business in Russia. A Netflix spokesman told Reuters that the streaming giant has suspended service in the country. Last week, Netflix halted all future projects and acquisitions in Russia.
American Express Co said it was suspending all operations in Russia and Belarus.
“In light of Russia’s ongoing, unjustified attack on the people of Ukraine, American Express is suspending all operations in Russia,” the credit card company said in a statement on its website.
Early Monday, Levi Strauss & Co also said it is temporarily suspending commercial operations in Russia. In this country, convenience story operator Alimentation Couche-Tard Inc. announced it is suspending operations in Russia effective immediately.
In this country, a House of Commons committee is recommending against Rogers Communications Inc.’s proposed $26-billion takeover of Shaw Communications Inc. and urging the federal government to prioritize affordability as it reviews the deal.
A report from the industry and technology committee tabled on Friday said that if the merger goes forward, the government must ensure that all of the conditions attached are enforceable, The Globe’s Alexandra Posadzki reports.
Overseas, the pan-European STOXX 600 was down 0.66 per cent by midday after being off by more than 2 per cent earlier in the day. Britain’s FTSE 100 fell 0.22 per cent per cent. Germany’s DAX and France’s CAC 40 were off 0.96 per cent and 0.57 per cent. The European Central Bank makes its next policy decision on Thursday. Markets are increasingly expecting the central bank to wait until later in the year to begin hiking interest rates, despite rising inflationary pressures.
In Asia, Japan’s Nikkei ended down 2.94 per cent. Hong Kong’s Hang Seng lost 3.87 per cent.
Commodities
Crude prices spiked in early going on suggestions the U.S. and European allies could ban imports of Russian oil and gas.
The day range on Brent is US$122.79 to US$139.13. The range on West Texas Intermediate is US$121.33 to US$130.50.
“With oil buying at such extremes, both contracts have the potential to stage aggressive corrections lower at the first glimmer of some good news, no matter how tenuous,” OANDA senior analyst Jeffrey Halley said.
“Having met my stretch price target of US$130 a barrel, I am unsure where Brent crude goes from here,” he said in an early note. “All I know is that high prices are here to stay.”
Meanwhile, talks to revive Iran’s 2015 nuclear deal with world powers were mired in uncertainty on Sunday following Russia’s demands for a U.S. guarantee that the sanctions it faces over the Ukraine conflict will not hurt its trade with Tehran, according to Reuters.
In response to Russia’s demands, U.S. Secretary of State Antony Blinken said on Sunday that the sanctions imposed on Russia over its Ukraine invasion have nothing to do with a potential nuclear deal with Iran.
“Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long,” said Amrita Sen, co-founder of Energy Aspects, a think tank.
In other commodities, Gold prices hit $2,000 for the first time in more than a year as investors sought safer holdings amid intense market volatility.
Spot gold was up 1.1 per cent at US$1,990.20 per ounce, after scaling its highest since Aug. 19, 2020 at US$2,000.69 earlier in the session. U.S. gold futures rose 1.4 per cent to US$1,993.30.
“There is likely to be plenty of barrier option-related selling around the US$2000 region initially, making gains challenging initially,” Mr. Halley said.
“Additionally, gold appears to be following oil prices today, so if oil corrects lower again, the fast-money longs are likely to quickly retreat.”
Currencies
The Canadian dollar was relatively steady despite turbulent global markets.
The day range on the loonie is 78.38 US cents to 78.83 US cents.
“The CAD is trading moderately higher on the session as crude oil prices surge but the CAD’s pick up from higher energy prices remains very weak relative to its historical experience,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian releases on the domestic calendar for Monday. On Tuesday, markets will get February international trade numbers. The week’s big report comes Friday with the release of February jobs numbers. Economists are expecting to see a gain of about 125,000 positions for the month.
On world markets, the euro briefly sank below parity versus the Swiss franc for the first time in seven years and held at a 22-month low versus the U.S. dollar, according to figures from Reuters.
In early London trading on Monday, the euro was down as much as 0.5 per cent to US$1.0874, within striking distance of a low of US$1.0822 hit in Asia trade, its lowest since May 2020.
More company news
Vermilion Energy Inc. reported a fourth-quarter profit of $344.6-million compared with a loss of $57.7-million a year earlier, helped by higher oil and natural gas prices. The energy company, which suspended its dividend at the start of the COVID-19 pandemic, also announced it would pay a quarterly dividend of six cents per share. Vermilion says its profit for the final quarter 2021 amounted to $2.12 per share, up from a loss of 36 cents per share in the last three months of 2020.
Apple Inc will likely announce a new low-cost version of its iPhone SE with 5G capabilities at its annual spring product launch event on Tuesday, analysts say. The iPhone maker is also expected to launch a new version of the iPad Air and a high-end Mac Mini at the event.
Uber Technologies Inc raised its first-quarter profitability guidance on Monday, saying its mobility business was improving faster than expected, while customers continued ordering food deliveries at record numbers in February. Uber said in a filing it now expected adjusted earnings before interest, taxes, depreciation and amortization of US$130-million to US$150-million in the first three months of the year, up from US$100-million to US$130-million it previously projected. “Our mobility business is bouncing back from Omicron much faster than we expected,” Uber Chief Executive Dara Khosrowshahi said in a statement. He said consumers were eager to book rides for travel, commuting or nightlife.
Billionaire investor Ryan Cohen said he now owns nearly 10% of Bed Bath & Beyond and wants the housewares retailer to explore strategic alternatives that include a full sale of the company. Cohen, who co-founded online pet products retailer Chewy and is chairman of the board of videogame retailer GameStop Corp , criticized Bed Bath & Beyond, which is worth roughly $1.6 billion, for an “overly ambitious” strategy, for overpaying its top executives and failing to reverse market share losses. “We believe Bed Bath needs to narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating buybuy Baby, Inc and a full sale of the Company,” Cohen wrote to the company’s board of directors. Shares spiked more than 50 per cent in early trading.
Economic news
(3 p.m. ET) U.S. consumer credit for January.
With Reuters and The Canadian Press