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Equities
Indexes on both sides of the border dropped at Tuesday’s opening bell after a hotter-than-expected reading on U.S. inflation renewed fears of more aggressive rate hikes by the Federal Reserve in months to come.
At 9:30 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was down 261.67 points, or 1.31 per cent, at 19,725.56.
In the U.S., the Dow Jones Industrial Average fell 374.84 points, or 1.16 per cent, at the open to 32,006.50.
The S&P 500 opened lower by 73.29 points, or 1.78 per cent, at 4,037.12, while the Nasdaq Composite dropped 357.60 points, or 2.92 per cent, to 11,908.81 at the opening bell.
Ahead of the North American open, new figures showed the annual rate of inflation in the United States in August was 8.3 per cent, down from 8.5 per cent in July but ahead of the 8.1-per-cent rate economists had been forecasting. Traders had been awaiting the report looking for indications about how aggressive the Federal Reserve will need to be on raising rates in the months ahead. Month-over-month, consumer prices were up 0.1 per cent in August following a flat reading a month earlier.
Excluding the volatile food and energy categories, so-called core prices jumped 0.6 per cent from July to August, also more than economists had been expecting.
“Core inflation was red hot in the U.S. in August, giving the Fed the green light for at least a 75-basis-point hike at its upcoming meeting,” CIBC economist Katherine Judge said.
“The 0.6-per-cent monthly advance in ex. food and energy prices was double the pace expected by the consensus and left annual core inflation at 6.3 per cent (vs. 6.1% expected), a four tick acceleration from the prior reading.”
Tuesday's small cap stocks to watch
The Fed makes is next policy decision on Sept. 21. Markets are expecting the central bank to raise rates by 75 basis points at that meeting. Canada’s August inflation figures are due next Tuesday.
In this country, investors got results from retailer Roots ahead of the start of trading. The company said total sales rose 22.9 per cent in the latest quarter to $47.8-million. Roots reported a net loss of $3.2-million or 8 cents a share in the second quarter compared with $1.2-million or 3 cents a year earlier. The company also said, excluding the impact of government subsidies and occupancy-related cost abatements that positively affected last year’s results, net loss improved by $2.5-million year-over-year.
Tuesday's analyst upgrades and downgrades
Overseas, the pan-European STOXX 600 was up 0.40 per cent by midday. Britain’s FTSE 100 fell 0.30 per cent. Germany’s Dax lost 0.27 per cent while France’s CAC 40 dropped 0.59 per cent.
In Asia, Japan’s Nikkei closed up 0.25 per cent. Hong Kong’s Hang Seng slid 0.18 per cent.
Commodities
Crude prices turned lower in a choppy session as economic concerns offset supply fears.
The day range on Brent was US$92.74 to US$94.31 in the predawn period. The range on West Texas Intermediate was US$86.63 to US$88.95.
Early Tuesday, OPEC maintained its 2022 and 2023 demand growth forecasts. Oil demand will rise by 3.1 million barrels per day (bpd) in 2022 and by 2.7 million bpd in 2023, unchanged from last month, the group said in a monthly report.
Later in the session, traders will get the first of two weekly U.S. inventory reports with new figures from the American Petroleum Institute. More official government numbers follow on Wednesday morning from the U.S. Energy Information Administration.
A Reuters poll suggests that analysts are expecting to see a fifth week of declines in U.S. crude inventories.
The news agency also reported that , in the United States, the Strategic Petroleum Reserve (SPR) fell 8.4 million barrels to 434.1 million barrels in the week ended Sept. 9, the lowest since October 1984.
In other commodities, gold prices were little changed.
Spot gold was steady at US$1,724.19 per ounce by early Tuesday morning. Prices had hit a two-week high of $1,734.99 on Monday.
U.S. gold futures were down 0.3% at $1,734.90.
Currencies
The Canadian dollar gave up early gains, slipping below 77 US cents.
The day range on the loonie is 76.64 US cents to 77.11 US cents. The loonie was last near the lower end of that spread after the release of the U.S. inflation figures.
There were no major Canadian economic reports on Tuesday’s calendar.
On world markets, the U.S. dollar index gained more than 1 per cent to 109.37 as traders weigh the latest U.S. economic data. The index, which weighs the greenback against a group of world currencies, had been lower during much of the early premarket period.
The euro, meanwhile, gave up early gains to gall 0.92 per cent to US$1.0029 after the release of the latest reading on U.S. inflation.
In bonds, the yield on the U.S. 10-year note turned higher at 3.425 per cent in the wake of the U.S. inflation figures.
More company news
A majority of Twitter Inc’s shareholders have voted in favor of the social media company’s $44 billion sale to Elon Musk, people familiar with the tally told Reuters. The deadline for the shareholder vote on the deal is Tuesday but enough investors had voted by Monday evening for the outcome to be certain, the sources said. - Reuters
Peloton Interactive Inc said co-founder John Foley would step down from his role as the fitness equipment maker’s executive chair “to start a new professional chapter”, effective Sept. 12. Foley, who co-founded Peloton in 2012 with four others, will be replaced by Karen Boone, who was elected to the company’s board in 2019. “Now it is time for me to start a new professional chapter. I have passion for building companies and creating great teams, and I am excited to do that again in a new space,” Foley said on Monday. - Reuters
Alphabet unit Google will face damages claims for up to 25 billion euros (US$25.4-billion) over its digital advertising practices in two suits to be filed in British and Dutch courts in the coming weeks by a law firm on behalf of publishers. Google’s adtech has recently drawn scrutiny from antitrust regulators following complaints from publishers. - Reuters
Economic news
(8:30 a.m. ET) U.S. CPI for August.
With Reuters and The Canadian Press
Terry Weber