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Equities
Canada’s main stock index edged higher early Monday helped by stronger commodities prices. On Wall Street, key indexes slipped as rising Treasury yields temper market sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 11.17 points, or 0.06 per cent, at 21,866.87.
In the U.S., the Dow Jones Industrial Average fell 39.74 points, or 0.12 per cent, at the open to 34,411.49. The S&P 500 opened lower by 6.96 points, or 0.16 per cent, at 4,385.63, while the Nasdaq Composite dropped 31.69 points, or 0.24 per cent, to 13,319.39 at the opening bell.
“The TSX continues to hold up well in this environment, with a lot of exposure to what works in an inflationary and rising-rate environment,” BMO senior economist Robert Kavcic said in a recent note.
“Energy has clearly helped, but telecom has been in favour thanks to reliable dividend growth, while utilities and REITs (where you would worry about rate sensitivity) have been stellar because their ability to pass on price/rent increases and grow payouts,” he said.
On Wall Street, earnings will continue to dominate with investors keeping an eye on guidance provided by companies amid spiking inflationary pressures. Early Monday, U.S. investors got results from Bank of America. Later in the week, earnings are due from Johnson & Johnson, Procter and Gamble , Netflix and Tesla among others.
Bank of America declined in the latest quarter but still beat profit forecasts helped by growth in its consumer lending business. Profit applicable to common shareholders fell nearly 13 per cent to $6.6-billion, or 80 US cents per share, for the quarter ended March 31 from US$7.56-billion, or 86 US cents per share, a year earlier. Analysts on average had expected a profit of 75 US cents per share, according to the IBES estimate from Refinitiv.
In this country, inflation will also be at the forefront after the Bank of Canada hiked interest rates by half a percentage point last week. Statistics Canada releases its reading on consumer prices in March on Wednesday.
In February, the annual rate of inflation hit 5.7 per cent, its highest since 1991. It was also the second consecutive month that the rate rose above 5 per cent. For March, economists are expecting to see a monthly increase in the consumer price index of 1 per cent, pushing the annual rate of inflation to 6.2 per cent.
“Soaring gasoline prices are expected to account for almost a quarter of the increase — and half of the price rise from February as energy surged higher on the Russian invasion of Ukraine,” RBC chief currency strategist Adam Cole said.
“Home buying costs (realtor and broker fees, etc) have accounted for another 20 per cent of the increase.”
On the corporate side, Canadian earnings get rolling with results due Wednesday from Rogers Communications and grocer Metro on Thursday.
Overseas, most major European markets remained closed on Monday for the Easter weekend.
In Asia, Japan’s Nikkei lost 1.08 per cent. The Shanghai Composite Index lost 0.49 per cent. Early Monday, China reported faster-than-expected GDP growth in the first quarter although the cost of COVID-19 lockdowns were beginning to become evident.
Commodities
Crude prices turned higher as outages in Libya added to heightened supply concerns amid the Ukraine-Russia conflict.
The day range on Brent is US$110.71 to US$113.80. The range on West Texas Intermediate is US$106.00 to US$108.55. Early in a choppy session, Brent touched its best level since late March before pulling back.
Reuters reports that Libya’s National Oil Corp on Monday warned “a painful wave of closures” had begun hitting its facilities and declared force majeure at Al-Sharara oilfield and other sites.
“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said Jeffrey Halley, analyst at brokerage OANDA.
Early Monday, China posted better-than-forecast first quarter GDP growth, but the report also showed some weakness in the final month as COVID-19 lockdowns took hold. Figures also showed China refined 2 per cent less crude in March compared with the same month a year ago, according to Reuters.
In other commodities, gold prices hit their highest since mid-March as investors sough safer holdings.
Spot gold was up 0.8 per cent at US$1,989.65 per ounce by early Monday, hitting its highest since March 11. U.S. gold futures were up 0.9 per cent at $1,993.40.
Currencies
The Canadian dollar was weaker alongside wavering crude prices and uncertain global sentiment while its U.S. counterpart held near a two-year high against the euro.
The day range on the loonie is 79.09 US cents to 79.32 US cents.
There were no major Canadian economic releases on Monday’s calendar. Investors are now bracing for Wednesday’s March inflation figures.
On world markets, trading remained thin with many jurisdictions overseas remaining closed for the holiday weekend.
Overnight, the U.S. dollar remained near a two-year high against the euro, buoyed by recent hawkish comments from Fed officials.
The euro was flat around US$1.08, just off last week’s low of US$1.0758, a level unseen since April 2020, according to figures from Reuters.
The yen fell nearly 2 per cent against the greenback last week. It was the sixth week of losses against the U.S. dollar. The yen is now 10 per cent below where it was at the beginning of last month, Reuters reports.
In bonds, the yield on the U.S. 10-year note was 2.8354 per cent at midmorning, after hitting 2.884 per cent earlier on Monday, the highest since Dec. 2018.
More company news
Twitter Inc shares gained more than 2 per cent in premarket trading after the company adopted a ‘poison pill’ on to limit Elon Musk’s ability to raise his stake in the social media platform, as a buyout firm emerged to challenge his US$43-billion bid for the company. Thoma Bravo, a technology-focused private equity firm that had more than $103 billion in assets under management as of the end of December, has informed Twitter that it is exploring the possibility of putting together a bid, people familiar with the matter told Reuters.
Johnson & Johnson said on Monday it had agreed to pay US$99-million to settle opioid-related claims by the state of West Virginia and its subdivisions. The settlement is not an admission of liability or wrongdoing, J&J said.
Economic news
(10 a.m. ET) U.S. NAHB Housing Market Index for April.
With Reuters and The Canadian Press