Equities
Canada’s main stock index gained at Monday’s opening bell, helped by an advance in financial and industrial stocks. On Wall Street, key indexes were also positive as markets await signals on the Federal Reserve’s plans for rates beyond its next meeting.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 61.1 points, or 0.32%, at 18,922.05.
The Dow Jones Industrial Average rose 104.76 points, or 0.34%, at the open to 31,187.32. The S&P 500 opened higher by 9.26 points, or 0.25%, at 3,762.01, while the Nasdaq Composite gained 7.35 points, or 0.07%, to 10,867.07 at the opening bell.
“The stock market has been getting hammered for several months as investors have numerous concerns,” AviTrade chief market analyst Naeem Aslam said in an early note. “However, one of those concerns has failed to materialize significantly, and that is the third quarter’s earnings.”
Monday's analyst upgrades and downgrades
He said traders went into the current reporting period fearing gloomy projections from companies However, he said, the situation with respect to earnings has helped bolster markets.
This week, markets get results from Google-parent Alphabet and Microsoft after Tuesday’s close. Facebook-parent Meta reports on Wednesday. Apple and Amazon both report on Friday.
In Canada, Shopify reports on Thursday while Air Canada reports on Friday.
Meanwhile, interest rates are front and centre with the Bank of Canada expected to deliver a big hike when it makes its next policy announcement on Wednesday morning.
The Globe’s Mark Rendell reports this morning that Governor Tiff Macklem has been unambiguous in recent weeks that interest rates need to keep rising to get prices under control. Markets are pricing in a high probability that he will announce another 75-basis-point rate increase on Wednesday, although some forecasters argue that a smaller 50-basis-point move is more likely.
Later in the week, markets also get a policy announcement from the European Central Bank. That central bank is also expected to deliver a big rate increase as it looks to combat high inflation.
Overseas, the pan-European STOXX 600 was up 1.61 per cent. Britain’s FTSE 100 advanced 0.47 per cent. Germany’s DAX and France’s CAC 40 were up 1.78 per cent and 2.12 per cent.
In Asia, Japan’s Nikkei finished up 0.31 per cent. Hong Kong’s Hang Seng sank 6.36 per cent. China’s delayed GDP report showed growth came in at 3.9 per cent in the third quarter, ahead of expectations. However, Swissquote senior analyst Ipek Ozkardeskaya said growth to day fell to 3 per cent, below the official target of 5.5 per cent.
“The gap is due to China’s impossible COVID zero mission, which has been confirmed and cemented with [President Xi Jinping’s] third term in office,” she said. “Appetite in Chinese stocks remain low; despite the rebound in major U.S. indices.”
Commodities
Oil prices fell in early going after new figures showed weaker demand in China, one of the world’s top crude consumers.
The day range on Brent was US$91.22 to US$94.27 in the early premarket period. The range on West Texas Intermediate was US$82.63 to US$85.85.
Reuters reported that, while China’s crude imports were higher than August, new figures showed September imports were down 2 per cent from the same month a year earlier. Traders have been closely watching the impact of China’s zero-COVID policy on demand in the country.
“The recent recovery in oil imports faltered in September,” ANZ analysts said in a note.
Gold prices, meanwhile, were also lower, weighed down by a firmer U.S. dollar.
Spot gold fell 0.4 per cent to US$1,650.77 per ounce early Monday morning. U.S. gold futures eased 0.1 per cent to US$1,653.80.
“U.S. yields could play in favour of gold if we really start seeing material easing in Fed expectations,” Swissquote senior analyst Ipek Ozkardeskaya said. “But the latter is data dependent.”
Reports last week suggested the Fed was likely to deliver another big rate hike at its next meeting before beginning the debate on when and how to begin pulling back on future increases.
Currencies
The Canadian dollar was weaker in early going on a decline in crude prices and tepid risk sentiment while its U.S. counterpart advanced against major world currencies.
The day range on the loonie was 72.74 US cents to 73.49 US cents in the predawn period.
Markets are awaiting the Bank of Canada policy decision on Wednesday followed by new GDP figures on Friday.
“The CAD is lower today but is holding up better than its commodity cousins, losing ‘only’ 0.6 per cent on the USD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“There is a big week ahead for the CAD. The BoC policy decision Wednesday includes an MPR update and will be followed by a press conference with Governor [Tiff] Macklem. A 75-basis-point hike is all but fully priced in now and the key issue for the CAD is what the Bank says about the policy outlook from here.”
On world markets, the U.S. dollar made gains against major currencies, with the euro down 0.3 per cent at US$0.9829, according to figures from Reuters.
Britain’s pound wavered on news former prime minister Boris Johnson had dropped out of running for British prime minister and was last up 0.1 per cent at US$1.1323, off an overnight high above US$1.14.
Japan’s yen was last at 149.22 per U.S. dollar, down nearly 1 per cent on the day against the greenback.
In bonds, the yield on the U.S. 10-year note was slightly lower at 4.192 early Monday morning.
More company news
South Africa’s Gold Fields on Monday talked up support for its proposed takeover of Canada’s Yamana Gold, with shareholders set to vote on the deal in four weeks’ time. “We are making good headway in all conversations,” Gold Fields CEO Chris Griffith said, adding that “the numbers are pointing in the right direction”. The transaction requires the approval of 75% of Gold Fields shareholders, and 66.67% of Yamana shareholders. -Reuters
Tesla has cut starter prices for its Model 3 and Model Y cars by as much as 9 per cent in China, reversing a trend of increases across the industry amid signs of softening demand in the world’s largest auto market. The price cuts, posted in listings on the electric vehicle (EV) giant’s China website on Monday, are the first by Tesla in China in 2022, and come after Tesla began offering limited incentives to buyers who opted for Tesla’s insurance last month. -Reuters
Economic news
(8:30 a.m. ET) Canada’s manufacturing sales for September.
(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for September.
With Reuters and The Canadian Press
Terry Weber