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Equities
Canada’s main stock index gained in early trading Tuesday as crude prices advanced on an expected ban of Russian imports by the United States. South of the border, Wall Street saw a mixed start with investor sentiment remaining fragile after the previous session’s rout.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 51.81 points, or 0.24 per cent, at 21,356.21.
In the U.S., the Dow Jones Industrial Average rose 67.79 points, or 0.21 per cent, at the open to 32,885.17.
The S&P 500 opened higher by 1.57 points, or 0.04 per cent, at 4,202.66, while the Nasdaq Composite dropped 30.93 points, or 0.24 per cent, to 12,800.04 at the opening bell.
“Disruptions to energy markets and the possibility of a geopolitical paradigm shift make for a highly unpredictable environment,” Stephen Innes, managing partner at SPI Asset Management, said.
“In many ways, given the length of time this has gone on with the possibility of all sides becoming further entrenched in their positions, the geopolitical situation seems likely to get worse before it gets better - although we should reach a point at which equities start to price in a light at the end of the tunnel before it becomes obvious,” he said in a note.
Sentiment took a big hit on Monday after the White House raised the possibility of a ban on Russian crude and gas imports, although the suggestion met with some resistance in Europe. Reports early Tuesday suggested the U.S. would go ahead with the ban on its own with an announcement likely later in the day. Russia has said it might close the main gas pipeline to Germany if the West takes action on crude over the invasion of Ukraine.
Russian troops were making advances in southern Ukraine early Tuesday but were stalled in some other regions, The Associated Press reports. Ukrainian officials were skeptical over a Russian plan for safe corridors to let civilians escape fighting.
In corporate news, Apple Inc.’s new product launch is scheduled for later in the day. Analysts are expecting the tech giant to announce a new low-cost version of its iPhone SE with 5G capabilities. The company is also expected to unveil a new version of the iPad Air and a high-end Mac Mini.
In this country, investors got January trade data ahead of the market open.
Statistics Canada says imports fell 7.4 per cent in January, with declines seen in nearly all product sections. Exports, meanwhile, slid 0.2 per cent. As a result, Canada’s trade balance went from a $1.6-billion deficit in December 2021 to a $2.6-billion surplus in January.
Overseas, the pan-European STOXX 600 rose 0.31 per cent by midday. Britain’s FTSE 100 edged up 0.32 per cent. Germany’s DAX and France’s CAC 40 gained 0.92 per cent and 0.57 per cent, respectively.
In Asia, Japan’s Nikkei dropped 1.71 per cent in the wake of Wall Street’s selloff in the previous session. Hong Kong’s Hang Seng lost 1.39 per cent.
Commodities
Crude prices continued to climb amid supply concerns on the prospect of a ban on Russian oil and gas imports by the U.S. and its European allies.
The day range on Brent is US$121.31 to US$127.99. The range on West Texas Intermediate is US$117.07 to US$123.34.
“Russian scaremongering around US$300 a barrel of oil may have also spooked Asian markets, but oil has given back some of its gains after Venezuela said the American visit was ‘cordial,’ and talk is coming out of Europe that they will not unilaterally ban Russian energy imports,” OAND senior analyst Jeffrey Halley said.
“The latter makes complete sense as the reality is, that 7.5 million barrels per day of Russian exports, or even part of it, cannot be replaced in an already tight international market.”
Reuters reports that a senior U.S. official, speaking on condition of anonymity, said on Monday that no final decision had been made but “it is likely (to be) just the U.S. if it happens.”
Later in the session, markets get the first of two weekly U.S. inventory reports with new numbers released by the American Petroleum Institute. More official numbers are due Wednesday morning from the U.S. Energy Information Administration.
Five analysts polled by Reuters estimated on average that U.S. crude stockpiles decreased by about 800,000 barrels in the week to March 4.
In other commodities, spot gold gained 1 per cent to US$2,014.40 per ounce, after climbing to US$2,020.47 earlier in the day, its highest since August 2020.
U.S. gold futures were up 1.2 per cent to US$2,020.50. Spot silver advanced 1 per cent to US$25.92.
Meanwhile, the London Metal Exchange (LME) halted nickel trading on Tuesday after prices doubled to a record $100,000 per tonne, fueled by a race to cover short positions after Western sanctions threatened supply from major producer Russia.
Currencies
The Canadian dollar was weaker as risk sentiment remains fragile and the U.S. dollar was flat against a group of world currencies.
The day range on the loonie is 77.88 US cents to 78.15 US cents.
On world markets, the U.S. dollar index was broadly flat on the day at 99.146.
The euro was trading near 22-month lows. The euro was last up 0.2 per cent at US$1.08795. On Monday the euro hit its lowest against the U.S. dollar since March 2020, touching US$1.08060.
More company news
Shell on Tuesday apologized for buying Russian crude oil last week and said it would withdraw completely from any involvement in Russian hydrocarbons over the country’s invasion of Ukraine. “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil ... was not the right one and we are sorry,” Shell Chief Executive Officer Ben van Beurden said. Shell bought a cargo of Russian crude oil from Swiss trader Trafigura in S&P Global Platts window loading from Baltic ports at a record low of dated Brent minus $28.50 a barrel, traders said on Friday.
Canadian packaging products maker Intertape Polymer Group Inc said on Tuesday it will be acquired by investment firm Clearlake Capital Group in a deal valued at US$2.6-billion, including debt.
Economic news
(8:30 a.m. ET) Canada’s merchandise trade balance for January.
(8:30 a.m. ET) U.S. goods and services trade deficit for January.
(10 a.m. ET) U.S. wholesale inventories for January.
With Reuters and The Canadian Press