Equities
Canada’s main stock index opened lower Monday with energy shares weighed down by weaker crude prices. U.S. markets were closed.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 25.92 points, or 0.12 per cent, at 20,964.3.
“Today the U.S. is off for Martin Luther King Day which means markets in Europe could well be more subdued than normal, and so far this year there hasn’t been that much to get particularly excited about anyway,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“The markets already know that the Federal Reserve is done when it comes to further rate increases, and currently have six 25-basis-point rate cuts priced in for this year. That seems rather a lot and is more than the three the Fed have in their dot plot projections.”
Canadian investors will be looking ahead to the release of December inflation numbers on Tuesday morning. Markets are expecting a monthly decrease in the consumer price index of 0.3 per cent, while the annual rate of inflation for December is seen coming in at 3.4 per cent, compared with 3.1 per cent in November.
“We’re a tick above consensus at -0.2 per cent and 3.5 per cent year-over-year, as the broader trend of slowing inflation looks to have temporarily reversed in December,” Benjamin Reitzes, BMO’s managing director for Canadian rates and macro strategist, said,
“The sluggish slowing is a key reason why the Bank of Canada isn’t willing to entertain rate cut talk just yet,” he said in an early note.
On Monday morning, investors got a snapshot of the country’s housing market with the release of December existing home sales by the Canadian Real Estate Association.
CREA said national home sales rose 8.7 per cent month-over-month in December and were up 3.7 per cent on an annual basis. The MLS Home Price Index fell by 0.8 per cent month-over-month but was still up 0.7 per cent year-over-year, the association said.
Later, the Bank of Canada releases its business outlook survey and survey of consumer expectations for the fourth quarter. That report is scheduled for release at 10:30 a.m. ET.
Overseas, the pan-European STOXX 600 was down 0.22 per cent in morning trading. Britain’s FTSE 100 slid 0.11 per cent. Germany’s DAX and France’s CAC 40 lost 0.24 per cent and 0.30 per cent, respectively.
In Asia, Japan’s Nikkei added 0.91 per cent. Hong Kong’s Hang Seng slid 0.17 per cent.
Commodities
Crude prices were choppy in early trading amid uncertainty over Middle East supply after strikes by U.S. and British forces to stop Houthi militia from attacking ships in the Red Sea.
The day range on Brent was US$77.56 to US$78.65 in the early premarket period. The range on West Texas Intermediate was US$72.04 to US$72.93.
Reuters reported that crude prices gained about 2 per cent last week after U.S. and British forces launched dozens of air strikes against Houthi forces in retaliation for months of attacks on Red Sea shipping that the Iran-backed fighters cast as a response to war in Gaza.
“The risks are tilted to the upside as conflict news continues to flow in this Monday,” Swissquote senior analyst Ipek Ozkardeskaya said.
“[British Prime Minister] Rishi Sunak will address Parliament as his government is ready to intensify strikes on Houthi targets. Yet there is a strong barricade into the US$74/75-per-barrel level in the U.S. crude and near US$80-per-barrel level in Brent, as the rising global supply, increasing competition to OPEC and the globally weak economic outlook weigh heavier and convince the bears to sell every geopolitically supported rallies.”
In other commodities, spot gold was up 0.3 per cent at US$2,055.30 per ounce, by early Monday morning, after seeing its biggest daily gain since December on Friday. U.S. gold futures rose 0.4 per cent to US$2,059.20.
Currencies
The Canadian dollar was weaker in early trading while its U.S. counterpart edged higher against a group of world currencies.
The day range on the loonie was 74.48 US cents to 74.73 US cents in the early premarket period.
The U.S. dollar index, which weighs the greenback against a basket of world currencies was up 0.21 per cent at 102.62.
Elsewhere, the euro was down 0.16 per cent at US$1.0934 by early Monday morning. Britain’s pound fell 0.29 per cent to US$1.2716.
More company news
Private equity firm Persistence Capital Partners has signed a definitive agreement to buy the stake in Neighbourly Pharmacy Inc. that it does not already own and take the company private. The deal will see PCP, which already owns about a 50 per cent interest in the network of independent pharmacies, pay $18.50 per share for a total of $415 million for the shares it does not already own. -The Canadian Press
Economic news
(8:30 a.m. ET) Canadian manufacturing sales and orders for November.
(8:30 a.m. ET) Canadian wholesale trade for November.
(9 a.m. ET) Canadian existing home sales for December.
(9 a.m. ET) Canada’s MLS Home Price Index for December.
(10:30 a.m. ET) Bank of Canada’s Business Outlook Survey and Survey of Consumer Expectations for Q4.
With Reuters and The Canadian Press