Equities
Canada’s main stock index slid at Monday’s opening bell, hit by weakness in utilities and communication services stocks. On Wall Street, key indexes were also weaker as traders await the midweek rate announcement from the Federal Reserve.
Just after the opening bell, the Toronto Stock Exchange’s S&P/TSX composite index was down 10.97 points, or 0.06 per cent, at 19,460.22.
In the U.S., the Dow Jones Industrial Average fell 107.53 points, or 0.33 per cent, at the open to 32,754.27.
The S&P 500 opened lower by 19.21 points, or 0.49 per cent, at 3,881.85, while the Nasdaq Composite dropped 74.02 points, or 0.67 per cent, to 11,028.43 at the opening bell.
The week’s headline event comes Wednesday afternoon when the Federal Reserve makes its latest rate decision. Markets are widely expecting the powerful U.S. central bank to deliver an outsized rate hike.
“Now the big question regarding this week’s most important event is not if the Fed will increase the interest rate by 75 basis points,” AviTrade chief market analyst Naeem Aslam said in an early note.
“Still, it is about the future path of the interest rate and the trajectory of the interest rate presented by the Fed. The reality is that chances are thin that we will see another interest rate hike of the same magnitude from the Fed, at least this year.”
He said that leaves traders parsing the Fed’s statement this week looking for clues about the magnitude of hikes in the months ahead.
Monday's analyst upgrades and downgrades
In addition to the Fed, the Bank of England also delivers its next rate decision later in the week and is also expected to hike rates as it looks to battle inflation.
In Canada, earnings move to the forefront with results due from a host of big corporate names.
Canada Goose, Cenovus Energy, Suncor Energy and Sun Life all report on Wednesday. RioCan Real Estate Investment Trust, Lightspeed Commerce Inc., BCE Inc., Restaurant Brands International Inc. and Bombardier Inc. report Thursday, while Enbridge Inc. and SNC-Lavalin Group Inc. are on Friday.
Friday will see the release of October jobs numbers from Statistics Canada. Markets are expecting to see the addition of about 10,000 jobs for the month with the unemployment rate ticking up to 5.3 per cent. In September the economy added 21,000 jobs. U.S. jobs numbers are due the same day.
A day earlier, Finance Minister Chrystia Freeland will deliver the government’s fall economic statement on Thursday after the close of financial markets.
Overseas, the pan-European STOXX 600 was down 0.04 per cent by midday. Britain’s FTSE 100 slid edged up 0.11 per cent. Germany’s DAX added 0.12 per cent while France’s CAC 40 fell 0.27 per cent.
In Asia, Japan’s Nikkei rose 1.78 per cent to hit its best level since late September. Hong Kong’s Hang Seng lost 1.18 per cent.
Commodities
Crude prices were weaker in early going amid disappointing factory activity figures out of China and continuing concerns about the impact of COVID-19 restrictions in the country.
The day range on Brent was US$94.52 to US$96.47 in the early premarket period. The range on West Texas Intermediate was US$86.75 to US$88.65. Both benchmark were still on track for their first monthly gains since the spring with Brent up more than 7 per cent in October while WTI has risen more than 9 per cent.
“The purchasing managers’ index (PMI) data contracting adds to the post-China congress party blues for oil markets. It is not difficult to draw a straight line from weaker PMIs to China’s COVID-zero policy,” Stephen Innes, managing partner at SPI Asset Management, said.
“So long as COVID-zero remains entrenched, it will continue to thwart oil bulls.”
In other commodities, gold prices were little changed ahead of Wednesday’s Fed decision.
Spot gold was flat at US$1,641.67 per ounce in the early premarket period, and down 1 per cent for the month.
U.S. gold futures were steady at US$1,645.70.
“The bullish case for gold is improving as financial markets begin to grow optimistic that the Fed will begin the deliberation of a slower pace of tightening,” OANDA senior analyst Ed Moya said.
“Gold could be on the verge of a major breakout if the FOMC decision is supported by the nonfarm payroll report at the end of the week.”
Currencies
The Canadian dollar was weaker while the U.S. dollar edged higher as markets await signals from the Fed about rate hike plans in the coming months.
The day range on the loonie was 73.20 US cents to 73.53 US cents in the predawn period.
“The bounce in risk sentiment with stocks higher and bond yields lower has give the loonie a lift,” Benjamin Reitzes, managing director, Canadian rates & macro strategist with BMO, said. “To start the week the C$ is on the defensive with risk under pressure and the US$ rallying.”
There were no major Canadian economic reports due Monday.
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, rose 0.1 per cent to 110.92, pushing away from a one-month low of 109.53 hit last week, according to figures from Reuters.
The pound and the euro each declined more than 0.2 per cent against the U.S. dollar.
Britain’s pound was last down 0.26 per cent at US$1.1584, but was on track for a monthly gain of nearly 4 per cent, Reuters reports.
The euro fell 0.25 per cent to US$0.9943, but was also headed for a monthly gain of over 1 per cent.
In bonds, the yield on the U.S. 10-year note edged higher to 4.067 per cent in the predawn period.
More company news
The Globe’s Tim Kiladze and James Bradshaw report the field of contenders to acquire HSBC Bank Canada is narrowing, with at least two major Canadian banks now out of the running. National Bank of Canada is no longer in the auction for the Canadian arm of Britain-based HSBC Holdings Inc., according to two sources familiar with the process. Canadian Imperial Bank of Commerce is also out of the process, said a third source with direct knowledge of the bank’s position.
Cargojet Inc. reported a third-quarter profit of $83.4 million compared with a loss a year ago as its revenue grew more than 20 per cent. The company says its net income amounted to $4.77 per diluted share for the quarter ended Sept. 30. The result compared with a net loss of $12.9-million or 74 cents per diluted share in the same quarter last year. Revenue totalled $232.7-million, up from $189.5-million in the third quarter of 2021.
U.S. industrial firm Emerson Electric Co is selling a majority stake in its climate-technologies unit to Blackstone Inc, in a deal that would value the unit at $14-billion including debt, the Wall Street Journal reported on Monday. The deal, expected to be announced later in the day, would give Blackstone a 55% stake in the unit, according to the report, citing executives. Emerson would retain a 45-per-cent stake. -Reuters
Economic news
Euro zone real GDP and CPI
Germany retail sales
With Reuters and The Canadian Press
Terry Weber