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Equities
Canada’s main stock index fell in early trading Monday, weighed down by declines in energy and mining shares. On Wall Street, key indexes also fell at the opening bell as U.S. Treasury yields rose and growth concerns persist.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 301.23 points, or 1.46%, at 20,332.05.
In the U.S., the Dow Jones Industrial Average fell 214.2 points, or 0.65%, at the open to 32685.17. The S&P 500 fell 42.1 points, or 1.02%, at the open to 4081.27, while the Nasdaq Composite dropped 221.6 points, or 1.82%, to 11923.029 at the opening bell.
“This week the main focus on a macro basis will be on whether U.S. inflation is showing any signs of plateauing with the release of US CPI and PPI for April on Wednesday and Thursday,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“Any sign that this is the case could offer some respite to investors who are becoming increasingly anxious about how persistent this trend of rising inflation will last.”
Last week, the U.S. Federal Reserve raised interest rates by half a percentage point and offered temporary relief to markets by suggesting an even bigger hike isn’t on the table at the moment. Markets rallied on the news but quickly again turned volatile on inflation concerns, fears over economic growth in China and the continued suggestion that the Fed is likely to continue with 50-basis-point increases in coming meetings.
In Canada, the Globe’s Andrew Willis and Alexandra Posadzki report Rogers is scrambling to rescue its $26-billion takeover of Shaw by lining up a suitable buyer for Shaw’s wireless carrier Freedom Mobile after Canada’s competition watchdog vowed to take steps to block the merger of the country’s two largest cable networks. The Competition Bureau notified Rogers Communications Inc. on Friday that it plans to oppose the Toronto telecom giant’s takeover of Calgary-based Shaw Communications Inc.
Rogers shares were down 5 per cent in morning trading in Toronto, while Shaw stock was off more than 9 per cent.
In earnings, Canadian markets will get results from Suncor Energy after the close of trading. The earnings come as the energy giant faces pressure from U.S.-based activist investor Elliott Investment Management for changes to shore up the company’s performance.
RioCan Real Estate Investment Trust will also release its first-quarter financial results after the market close on Monday. Later in the week, Canadian Tire reports results on Thursday and Cineplex reports on Friday.
Overseas, the pan-European STOXX 600 fell 2.14 per cent by afternoon. Britain’s FTSE 100 was down 2.12 per cent. Germany’s DAX and France’s CAC 40 slid 1.78 per cent and 1.68 per cent, respectively.
In Asia, Japan’s Nikkei closed down 2.53 per cent. Markets in Hong Kong were closed.
Commodities
Crude prices were weaker in choppy trading as concerns about China’s economic growth temper sentiment while supply fears provide support.
The day range on Brent is US$110.61 to US$113.20. The day range on West Texas Intermediate is US$107.94 to US$110.49.
“A proposed G7 ban on Russian oil imports has had zero impact on oil markets today, with China nerves taking precedence,” OANDA senior analyst Jeffrey Halley said.
“Nevertheless, it seems inevitable that both the EU and Japan will be competing for more non-Russia supplies in the future, and this is underpinning prices.”
Last week, the EU outlined a proposal for a phased embargo on Russian crude. That was followed was by a pledge by G7 nations on Sunday to ban or phase out Russian oil imports.
Meanwhile, Reuters reports that crude imports by China, the world’s biggest oil importer, rose almost 7 per cent in April on an annual basis, although imports for the first four months of the year fell by nearly 5 per cent.
In other commodities, gold prices fell as the U.S. dollar hit two-decade highs.
Spot gold was down 0.7 per cent at US$1,870.70 per ounce, as of early Monday morning, while U.S. gold futures slipped 0.8 per cent to US$1,867.90.
“There are some constructive notes in gold’s recent price action,” Mr. Halley said in a note.
“It is holding up remarkably well versus a rampant US dollar and a US yield curve where a lot of it starts with three in yield terms. It actually managed to rise slightly on Friday equities fell and the U.S. dollar rose.”
Currencies
The Canadian dollar was weaker alongside fragile global risk sentiment while its U.S. counterpart hit two-decade highs against a basket of world currencies.
The day range on the loonie is 77.21 US cents to 77.54 US cents.
“Risk-off sentiment is dominating in Asia trading following fresh closing lows of the year in major U.S. equity indices on Friday,” Alvin Tan, Asia FX strategist with RBC, said.
The economic calendar in Canada is light this week but Bank of Canada deputy governor Toni Gravelle is scheduled to give a speech on commodity price shocks and the impact on growth and inflation in Canada to the Association des économistes québécois on Thursday.
On global markets, the U.S. dollar topped 104.19 for the first time since July 2002, extending its almost 9-per-cent rise this year, according to figures from Reuters. The rise came as U.S. Treasury yields continue to rise. Early Monday morning, yields on ten-year benchmark note touched 3.18 per cent for the first time since Nov 2018.
Elsewhere, the Australian dollar fell 1 per cent to US$0.6999, its lowest since February. Britain’s pound and the New Zealand dollar hit 22-month lows, while the euro and yen were barely above recent lows, Reuters reports.
More company news
EU industry chief Thierry Breton will meet Tesla Inc boss Elon Musk in Texas on Monday to discuss global supply chain issues and the bloc’s newly agreed rules requiring tech giants to do more to police online content, Breton’s spokesman said. The meeting comes weeks after the world’s richest man clinched a deal to buy social media company Twitter Inc for $44-billion in cash.
Uber Technologies Inc. will scale back hiring and reduce expenditure on its marketing and incentive activities, CNBC reported on Monday, citing a letter from Chief Executive Officer Dara Khosrowshahi. The ride-hailing company becomes the latest to rein in costs to have a lean investment model, after Facebook-owner Meta Platforms Inc said last week it would slow down the growth of its work force. Khosrowshahi said Uber’s change in strategy was a necessary response to the “seismic shift” in investor sentiment, according to the CNBC report.
Economic news
(8:30 a.m. ET) Canadian building permits for March.
(10 a.m. ET) U.S. wholesale inventories for March.
With Reuters and The Canadian Press