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Equities
Canada’s main stock index edged higher at Monday’s opening bell, helped by strength in resource shares. On Wall Street, key indexes started in the red with weaker-than-forecast economic data out of China weighing on the global outlook.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 12.05 points, or 0.06 per cent, at 20,111.86.
The Dow Jones Industrial Average fell 44.51 points, or 0.14 per cent, at the open to 32,152.15.
The S&P 500 opened lower by 10.87 points, or 0.27 per cent, at 4,013.02, while the Nasdaq Composite dropped 77.86 points, or 0.66 per cent, to 11,727.14 at the opening bell.
“As far as this week is concerned, while last week’s Friday rebound was welcome, one can’t help feeling that it is no more than a bear market rally, particularly where U.S. markets are concerned,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“The Nasdaq 100 is still down 24 per cent year to date, the S&P 500, down 15 per cent and the DAX is down 11 per cent, while the FTSE100 is flat on the year.”
Global sentiment took a hit early Monday after China reported that April retail sales fell roughly 11 per cent in April from a year earlier, far more than analysts had predicted. Meanwhile, China’s factory production fell 2.9 per cent from a year earlier.
In Canada, investors got a fresh look at the state of the housing market amid rising borrowing costs on Monday morning, with new figures released by the Canadian Real Estate Association.
CREA said national home sales fell by 12.6 per cent on a monthly basis in April. Actual (not seasonally adjusted) monthly activity came in 25.7 per cent below the monthly record set in 2021. The number of newly listed properties was down 2.2 per cent month-over-month. The MLS Home Price Index slid 0.6 per cent month-over-month but was still up more than 23 per cent from year-ago levels.
Separately, Canada Mortgage and Housing Corp. said the seasonally adjusted annualized rate of housing starts was 267,330 units in April, above analyst predictions of 246,000 and a revised 248,389 units in March.
Later in the week, Statistics Canada will release April inflation figures. Economists expect the annual rate of inflation in this country to tick higher to 6.8 per cent from March’s 6.7 per cent. The March figure market the fastest pace since early 1991. The numbers are due Wednesday morning.
On Wall Street, the retail sector is in focus this week with results due from some of the biggest U.S. retailers. Among those reporting later in the week will be Home Depot and Walmart.
Overseas, the pan-European STOXX 600 was down 0.28 per cent by midday. Britain’s FTSE 100 was little changed. Germany’s DAX slid 0.72 per cent and France’s CAC was up 0.28 per cent.
In Asia, Japan’s Nikkei closed up 0.45 per cent. Hong Kong’s Hang Seng added 0.26 per cent.
Commodities
Crude prices put in a choppy session after last week’s gains even as supply concerns continue to dominate.
The day range on Brent is US$108.84 to US$112.70. The range on West Texas Intermediate is US$108.11 to US$111.71.
“Volatility in energy markets won’t be easing as the demand outlook faces great uncertainty with record gasoline prices, a close eye on China’s COVID situation, refining capacity concerns, and as the EU nations struggle on making progress with a ban on Russian oil,” OANDA senior analyst Ed Moya said.
“Iran nuclear talks are also approaching a critical juncture, with expectations somewhat pessimistic that a revival is imminent.”
On Friday both benchmarks jumped about 4 per cent.
The European Union continues to work toward an agreement to gradually phase out Russian oil, despite concerns from some members about the economic impact.
Meanwhile, OPEC+ producers have been undershooting previously agreed plans for output increases due to under-investment in oilfields in some OPEC members and, more recently, losses in Russian output, according to a Reuters report.
Sentiment took a hit after new figures out of China showed that country’s retail sales fell 11.1 per cent in April from year-earlier levels, far more than analysts had been forecasting. Traders are concerned that COVID-19 measures in China will broadside crude demand.
In other commodities, gold prices continued to be squeezed by a strong U.S. dollar.
Spot gold fell 0.8 per cent to US$1,797.82 per ounce by early Monday morning. U.S. gold futures dropped 0.6 per cent to $1,797.40. Earlier in the session, gold prices dropped 1.4 per cent to their lowest level since Jan. 31. Prices saw a fourth consecutive weekly drop last week.
Currencies
The Canadian dollar was weaker as faltering sentiment on the back of a decline in China’s retail sales hit riskier currencies and supported the U.S. dollar.
The day range on the loonie is 77.03 US cents to 77.56 US cents.
Investors are awaiting the release Wednesday of the latest Canadian inflation figures, looking for signs that price pressures are stabilizing.
On world markets, the U.S. dollar index was at 104.57, having briefly crossed the 105 level on Friday, its highest since December 2002, after six successive weeks of gains, according to figures from Reuters.
The euro was at US$1.0395 on Monday morning, slightly lower, and only just above the US$1.0354 level it hit on Thursday, its lowest since early 2017.
Meanwhile, the Australian dollar fell 0.68 per cent after news that China’s retail sales fell 11.1 per cent in April from a year earlier weighed on risk-sensitive currencies.
In bonds, the yield on the benchmark U.S. 10-year now was down slightly at 2.924 per cent in the predawn period.
More company news
McDonald’s Corp said on Monday it had initiated a process to sell its business in Russia after 30 years of operating its restaurants in the country, following Moscow’s invasion of Ukraine. In March, McDonald’s closed all its restaurants in Russia including its iconic Pushkin Square location. As part of the exit, the company expects to record a non-cash charge of about $1.2 billion to $1.4 billion.
JetBlue Airways Corp said it has commenced an all-cash, fully financed tender offer to acquire all of the outstanding shares of Spirit Airlines Inc for US$30 per share.
Economic news
(8:30 a.m. ET) Canada’s CPI for April.
(8:30 a.m. ET) U.S. housing starts (and revisions) for April.
(8:30 a.m. ET) U.S. building permits for April.
Also: G7 meetings of finance ministers and central bank governors (through Friday).
With Reuters and The Canadian Press
Terry Weber