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Equities
Canada’s main stock index rebounded early Tuesday helped by gains in mining stocks although fragile sentiment continues to weigh on markets. On Wall Street, key indexes also bounced higher after three days of selling with traders awaiting fresh inflation numbers later in the week.
At 9:44 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 170.89 points, or 0.85 per cent, at 20,170.58, snapping a three-day losing streak.
In the U.S., the Dow Jones Industrial Average rose 258.4 points, or 0.80 per cent, at the open to 32504.09. The S&P 500 rose 43.9 points, or 1.10 per cent, at the open to 4035.18, while the Nasdaq Composite rose 277.1 points, or 2.38 per cent, to 11900.343 at the opening bell.
Markets are now awaiting the release Wednesday morning of new inflation figures from the United States, hoping for signs that price pressures are cresting and giving the Federal Reserve reason to be less hawkish on rates. Sentiment has been under pressure amid concerns that a slowing economy in China on the back of strict COVID-19 restrictions could send ripples through the global economy at the same time that central banks are hiking rates to head off spiking inflationary pressures.
“Market jitters remain high amid a combo of geopolitical risks and economic headwinds that are working to slow global growth,” Bank of Montreal economist Priscilla Thiagamoorthy said.
“The Federal Reserve’s semi-annual financial stability report, published on Monday, pointed to worsening liquidity conditions in key financial markets amid heightened risks from the war in Ukraine, interest rate hikes and inflation running at multi-decade highs. Still, some Fed officials have noted signs of easing supply chain challenges that should help cool inflation.”
In this country, Suncor Energy holds its annual meeting on Tuesday after releasing its latest results after yesterday’s closing bell.
In releasing its earnings, Suncor Energy Inc. reported the highest quarterly dividend in the company’s history on Monday. That move came as the energy giant faces pressure from a U.S.-based activist investor for significant structural change. Suncor declared a quarterly dividend of 47 cents per common share payable June 24 to shareholders of record as of June 3.
On Tuesday morning, George Weston Ltd. reported results. Intact Financial will release its latest earnings after the close of trading.
Weston hiked its quarterly dividend 10 per cent to 66 cents from 60 cents.
George Weston Ltd. raised its dividend by 10 per cent as it reported a profit attributable to shareholders in its latest quarter compared with a loss a year ago. The move came as the company reported a first-quarter profit available to common shareholders from continuing operations of $363-million or $2.45 per diluted share compared with a loss of $62-million or 41 cents per diluted share a year ago. Revenue for the quarter ended March 26 totalled $12.41-billion, up from $12.02-billion in the same quarter last year.
On Wall Street, shares of Peloton Interactive were down 14 per cent in early trading after the exercise equipment company said third-quarter revenue fell 23.6 per cent to US$964.3-million from US$1.6-billion a year ago.
Overseas, the pan-European STOXX 600 rose 1.10 per cent. Britain’s FTSE 100 gained 0.74 per cent. Germany’s DAX and France’s CAC 40 were up 1.57 per cent and 1.09 per cent, respectively.
In Asia, Hong Kong’s Hang Seng closed down 1.84 per cent after a weak handoff from Wall Street. Japan’s Nikkei fell 0.58 per cent.
Commodities
Crude prices remained choppy with the combination of concern over COVID-19 lockdowns in China and broader economic risks tempering sentiment.
The day range on Brent is US$103.19 to US$106.96. The range on West Texas Intermediate is US$100.44 to US$104.16. Both benchmarks lost more than 5 per cent on Monday, marking the biggest daily declines since March.
“Oil prices were more spooked by the broader commodity meltdown than expected,” Stephen Innes, managing partner with SPI Investments, said.
Crude prices got a lift last week after the European Commission proposed a phased embargo on Russian crude. However, Reuters reports that a new version is now being drafted after pressure from several members for requests for exemptions and concessions.
Later Tuesday, markets will get the first of two weekly U.S. inventory reports with new numbers from the American Petroleum Institute. More official figures follow from the U.S. Energy Information Administration on Wednesday. Analysts are expecting to see a decline in crude stocks.
In other commodities, gold prices bounced in early going as the U.S. dollar pulls back from recent two-decade highs.
Spot gold was up 0.3 per cent at US$1,859.00 per ounce early Tuesday morning. U.S. gold futures were little changed at US$1,859.00.
“The rally is anemic though and if the U.S. dollar regains its mojo later today, gold could make a decisive test of the bottom of its recent range,” OANDA senior analyst Jeffrey Halley said.
Currencies
The Canadian dollar was slightly firmer, helped by improved risk sentiment in the broader markets, after hitting its lowest level in 17 months against the U.S. dollar during the previous session.
The day range on the loonie is 76.70 US cents to 77.01 US cents.
There were no major Canadian economic releases on Tuesday’s calendar.
“The CAD has little opportunity to escape from the influence of the risk backdrop for now, with no domestic data on tap over the remainder of the week,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.
On world markets, the U.S. dollar index, which measures the greenback against six peers dropped nearly 0.2 per cent to 103.57, having risen as high as 104.19 overnight, a fresh 20-year peak, according to figures from Reuters.
“USD has drifted lower overnight as equity futures are rebounding from yesterday’s sharp losses and bond yields are well below yesterday’s high,” RBC chief currency strategist Adam Cole said.
Other commodities currencies also saw early gains after hitting two-year lows this week. The Australian dollar edged higher in the early morning period, after falling to its weakest since 2020. The Norwegian krone rose 0.26 per cent to 9.6345 krones per U.S. dollar, after falling to its lowest since June 2020.
Elsewhere, the euro was flat against the greenback at US$1.0563. Britain’s pound rose 0.1 per cent to US$1.2340.
In bonds, the yield on the benchmark U.S. 10-year note was lower at 3.024 per cent in the predawn period.
More company news
The Globe’s Alexandra Posadzki reports that Canada’s competition watchdog says the proposed takeover of Shaw Communications by cable giant Rogers has already reduced competition in the wireless market. In an application to stop the merger of the country’s two largest cable networks, the Competition Bureau said Shaw Communications Inc. has stopped competing for mobile phone business ahead of the planned $26-billion takeover by Rogers Communications Inc.
Bausch Health Companies Inc. reported a loss of US$69-million or 19 US cents a share in its latest quarter compared with a loss of US$610-million or US$1.71 a share a year earlier when it took a goodwill impairment charge in its Ortho Dermatologics business. Revenue for the quarter totalled US$1.92-billion, down from US$2.03-billion in the same quarter last year.
Norwegian Cruise Line Holdings Ltd missed Wall Street estimates for quarterly revenue, as people’s travel plans were hampered due to a resurgence in COVID-19 infections and Russia’s invasion of Ukraine. The cruise operator’s revenue rose to US$521.9-million in the first quarter from US$3.1-million a year earlier, but missed analysts’ average estimate of US$737.5-million, according to IBES data from Refinitiv.
Economic news
(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.
With Reuters and The Canadian Press