Equities
Canada’s main stock index opened higher Monday helped by gains in energy and tech stocks. On Wall Street, key indexes also saw a modest advance as traders await the Federal Reserve’s rate decision later in the week and a slew of earnings from big corporate names.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 16.2 points, or 0.08 per cent, at 20,563.71. The index rose more than 1 per cent last week.
In the U.S., the Dow Jones Industrial Average rose 3.10 points, or 0.01 per cent, at the open to 35,230.79.
The S&P 500 opened higher by 7.05 points, or 0.16 per cent, at 4,543.39, while the Nasdaq Composite gained 48.83 points, or 0.35 per cent, to 14,081.63 at the opening bell.
This week, traders will have a close eye on interest rate news with a number of central banks including the Fed and the European Central Bank delivering policy announcements. Both of those banks are expected again hike borrowing costs by a quarter percentage point. Investors will be watching the Fed for signs that the current rate-hike cycle is nearing a conclusion. In Canada, the Bank of Canada releases the deliberations on its most recent meeting, when it increased rates by a quarter point, on Wednesday afternoon.
“Fed funds futures see a 96-per-cent chance that the [U.S.] central bank will deliver a quarter-point rate rise, bringing the target range to between 5.25 per cent and 5.50 per cent, almost a 22-year high,” OANDA senior analyst Ed Moya said.
“The Fed delivered 10 straight rate increases and then paused at the June FOMC meeting. The Fed is going to raise rates on Wednesday and seems poised to be noncommittal with what they will do in September.”
He noted U.S. economic data has been mixed with labour markets remaining strong while price pressures have been cooling, which should support Fed chair Jerome Powell’s case for a soft landing for the economy.
“This seems like it will be the last rate hike in the Fed’s tightening cycle, but we will have two more inflation reports before the Fed will need to commit that more rate hikes are no longer necessary,” Mr. Moya said.
Meanwhile, investors will get a slew of earnings from big corporate names on both sides of the border through the week.
In Canada, Canadian National Railway Co. will report its second-quarter results after the close trading on Tuesday, while Canadian Pacific Kansas City will report results after Thursday’s close. Rogers Communications Inc. reports Wednesday morning as does Loblaw Cos. Ltd. Teck Resources is scheduled to report Thursday morning.
On Wall Street, Alphabet, Meta, Intel, Microsoft, GE, AT&T, Boeing, Exxon Mobil, McDonald’s, Coca Cola, Ford and General Motors are all scheduled to report through the week.
“Earnings will be massive this week,” Mr. Moya said.
Overseas, the pan-European STOXX 600 was down 0.15 per cent by midday. Germany’s DAX slid 0.10 per cent while France’s CAC 40 fell 0.48 per cent. Britain’s FTSE 100 lost 0.22 per cent. A new survey released Monday showed euro zone business activity shrank much more than expected in July as demand in the bloc’s dominant services industry declined while factory output fell at the fastest pace since COVID-19 first took hold, according to Reuters.
In Asia, Japan’s Nikkei added 1.23 per cent. Hong Kong’s Hang Seng fell 2.13 per cent.
Commodities
Crude prices advanced in early trading after posting solid gains last week with traders awaiting central bank news in the days ahead.
The day range on Brent was US$80.42 to US$81.14 in the early premarket period. The range on West Texas Intermediate was US$76.44 to US$77.12.
Both benchmarks posted their fourth week of gains last week, with Brent rising 1.5 per cent and WTI advancing more than 2 per cent.
“Oil prices increased last week due to supply concerns while getting a helping hand from China,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“China’s demand is now surpassing expectations, helping the likelihood of a price overshoot. At the same time, the increased possibility of a U.S. soft landing and U.S. rig counts drifting modestly lower also supports the bullish thesis.”
Traders will be watch news from the Fed and ECB later in the week for signals about the future path of rates as well as an indication of how they see the economy developing.
In other commodities, spot gold was mostly unchanged at US$1,959.85 per ounce by early Monday morning. U.S. gold futures for August delivery fell 0.2 per cent to US$1,962.10.
Currencies
The Canadian dollar was higher while its U.S. counterpart saw modest gains against a basket of world currencies.
The day range on the loonie was 75.58 US cents to 75.81 US cents in the early premarket period. The Canadian dollar was up 0.06 per cent against its U.S. counterpart over the last five days as of early Monday morning.
“The CAD finds itself in the middle of the pack of major currencies so far on the session, continuing its run of ‘under the radar’ movement that has been largely tracking the overall trend in the USD,” Shaun Osborne, chief FX strategist with Scotibank, said.
“Data last week came in a little softer overall—with headline CPI down and Retail Sales weaker than forecast. GDP tracking suggests somewhat weaker than expected growth momentum in Q2 than the BoC’s upwardly revised projections in the last MPR. More information is needed before we get a full picture of the economy’s performance but if economic data are sliding, the conclusion will be that higher rates are having an impact and the CAD may find it harder to make progress ahead.”
There were no major Canadian economic releases due Monday. Later in the week, Canadian investors will get the Bank of Canada’s deliberations from its latest policy meeting as well as monthly GDP for May. Economists expect to see growth of about 0.3 per cent from April.
On world markets, the U.S. dollar index up 0.22 per cent at 101.3.
The euro fell 0.43 per cent to US$1.1076, according to figures from Reuters.
The pound was steady at US$1.2849, the Swiss franc softened to 0.8677 per U.S. dollar.
In bonds, the yield on the U.S. 10-year note was down at 3.813 per cent in the predawn period.
More company news
TC Energy said on Monday it has entered into an agreement to sell a 40-per-cent interest in its Columbia Gas Transmission and Columbia Gulf Transmission pipelines for $5.2-billion. Both the pipelines span more than 15,000 miles and deliver a substantial portion of daily U.S. natural gas demand, including about 20% of U.S. liquefied natural gas (LNG) export supply, according to TC Energy. -Reuters
American Airlines’ pilot union has indefinitely postponed the ratification vote for a tentative contract agreement, it said in a memo on Sunday. The voting will now take place “at a date and time to be determined”, the union said. American Airlines pilots were due to vote on Monday after the company on Friday raised the value of its contract offer to pilots by more than US$1-billion. The union had earlier warned that ratification was in jeopardy. -Reuters
Apple is asking suppliers to produce about 85 million units of the iPhone 15 this year, roughly in line with the year before, Bloomberg News said on Monday citing people familiar with the matter. The company is aiming to hold shipments steady despite a projected decline in the overall smartphone market, the report said, adding Apple is considering raising the price for Pro models. Apple did not immediately respond to a Reuters request for comment. -Reuters
Economic news
(8:30 a.m. ET) Canadian wholesale trade for June.
(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for June.
With Reuters and The Canadian Press