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Equities
Canada’s main stock index slid at the start of trading Monday with weaker oil prices weighing on the energy sector. On Wall Street, indexes were treading water with the midweek policy announcement from the Federal Reserve in focus.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.44 points, or 0.17 per cent, at 20,726.56.
In the U.S., the Dow Jones Industrial Average rose 1.28 points at the open to 32,978.49.
The S&P 500 opened lower by 1.32 points, or 0.03 per cent, at 4,130.61, while the Nasdaq Composite dropped 2.95 points, or 0.02 per cent, to 12,331.69 at the opening bell.
Traders are now looking ahead to Wednesday’s policy announcement from the Federal Reserve. Markets have already priced in a half percentage point rate hike by the powerful central bank.
“Until we get through the FOMC, I do not see any change in the violent price action – which is why I am a bit nervous to see what the rest of Monday will bring when giant bears return the fore – I would rule out nothing,” Stephen Innes, managing partner with SPI Asset Management, said in an early note.
The Fed’s decision is due Wednesday afternoon. In addition to higher rates, markets are also watching for indications of how the Fed plans to unwind quantitative easing.
Earnings also continue to dominate. So far, about 275 companies in the S&P 500 have reported results. Pfizer, Starbucks and eBay are among the U.S. companies reporting this week.
Later in the week, Canadian investors will get results from grocery giant Loblaw with investors keeping an eye on how spiking inflation is affecting food prices.
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Canada will also get further comments from Bank of Canada officials this week. Senior Deputy Governor Carolyn Rogers will speak at event in Toronto on Tuesday and deputy governor Lawrence Schembri will speak on Thursday. Last month, the Bank of Canada hiked interest rates by a half percentage point and has warned Canadians to expect further increases as it looks to combat rising price pressures in the economy.
Overseas, the pan-European STOXX 600 was down 1.34 per cent by midday. Germany’s DAX fell 1.06 per cent and France’s CAC 40 lost 1.65 per cent.
In Asia, Japan’s Nikkei slid 0.11 per cent. Markets in Hong Kong were closed.
Commodities
Crude prices fell in early going in the wake of weak Chinese economic figures and continuing concerns about the impact of COVID-19 restrictions in the region.
The day range on Brent is US$103.58 to US$107.42. The range on West Texas Intermediate is US$101.02 to US$105.16.
Prices pulled back after figures released on the weekend showed that factory activity in China contracted for a second month to hit its lowest since early 2020. The decline comes as parts of the country face tough COVID-19 restrictions aimed at curbing the spread of the virus.
Monday’s declines were offset somewhat by reports that the EU is considering a ban on imports of Russian oil by the end of the year through a gradual phase-out.
“Oil remains supported as the EU appeared to progress on a Russian crude import ban,” SPI’s Stephen Innes said.
“But further gains will be limited to weaker oil demand prospects from China due to the continued expansion of lockdowns and mass testing across the region.”
In other commodities, gold prices fell, pressured by higher U.S. Treasury yields.
Spot gold was down 0.6 per cent at US$1,884.50 per ounce by early Monday morning. U.S. gold futures dropped 1.5 per cent to US$1,883.30.
Currencies
The Canadian dollar was weaker alongside fragile risk sentiment and lower crude prices while its U.S. counterpart held recent highs against a basket of currencies.
The day range on the loonie is 77.63 US cents to 77.89 US cents.
“Equity market volatility remains a drag on the CAD’s performance (the VIX is trading above 33) following the heavy losses for US stocks last week (and through April overall),” Shaun Osborne, chief FX strategist with Scotiabank, said.
“We think the CAD has some—fairly obvious—fundamental virtues, such as tightening BoC monetary policy and very resilient growth but those factors continue to be overshadowed by external factors (equity market vol) which may keep the USD better supported for the moment.”
The week’s big economic event comes Friday with the release of April jobs figures from Statistics Canada. Economists are forecasting a gain of about 40,000 positions for the month. Canada’s unemployment rate fell to a record low in March at 5.3 per cent as the economy generated 72,500 jobs.
On world markets, the U.S. dollar index was last 103.19, down marginally on the day. The index, which weighs the greenback against a selection of currencies, was up 5 per cent in April, according to figures from Reuters. The euro traded up 0.1 per cent at $1.0555.
In bonds, the yield on the U.S. 10-year note was up at 2.942 per cent in the predawn period.
More company news
EU antitrust regulators charged Apple on Monday with restricting rivals’ access to its NFC chip technology in a move that could result in a hefty fine for the iPhone maker and force it to open its mobile payment system to competitors. The European Commission said it had sent a charge sheet known as a statement of objections to Apple, detailing how the company had abused its dominant position in markets for mobile wallets on iOS devices. “We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple’s devices,” EU antitrust chief Margrethe Vestager said in a statement.
Economic news
(9:30 a.m. ET) S&P Global Manufacturing PMI for April.
(10 a.m. ET) U.S. ISM Manufacturing PMI for April.
(10 a.m. ET) U.S. construction spending for March.
With Reuters and The Canadian Press