Equities
Canada’s main stock index opened higher Tuesday with energy and materials stocks helped by gains in crude and metals prices.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 33.12 points, or 0.16 per cent, at 20,188.41.
U.S. markets are closed for the July 4 holiday after managing modest gains in an abbreviated session on Monday. Canada’s S&P/TSX Composite Index was closed Monday. The index rallied 3.8 per cent last week.
“With price pressures becoming less worrying, inflation expectations have taken a step back in driving cross-asset prices compared to market expectations for growth,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“However, U.S. index price action is starting to suggest investors are turning cautious against dismissing the risk of higher rates eventually weighing on equities.”
Late this week, investors in both Canada and the United States will get employment figures. Both report June hiring data on Friday.
“After a slight hiccup the prior month, we expect job creation [in Canada] to have resumed in June,” National Bank economists said.
“But an expected gain of 20,000 may not be enough to prevent a further rise in the unemployment rate in a context where the labour force is growing at a strong pace. Indeed, we expect the jobless rate to increase from 5.2 per cent to 5.3 per cent, assuming that the participation rate rises by a tenth to 65.6 per cent.”
The report comes ahead of the July 12 rate decision by the Bank of Canada. Last month, the central bank surprised markets by hiking rates after moving to the sidelines early in the year. Economists are divided on whether another rate hike is likely this month.
In the U.S., economists are expecting jobs growth to slow to 225,000 from May’s 339,000. The jobless rate is expected to tick down to 3.6 per cent.
Ahead of those reports, markets will get the minutes from the most recent Federal Reserve meeting on Wednesday. Canadian investors will get housing data this week with Vancouver and Calgary home sales due today followed by figures for Toronto on Thursday.
Overseas, the pan-European STOXX 600 was up 0.26 per cent by late morning. Britain’s FTSE 100 rose 0.16 per cent. Germany’s DAX slid 0.17 per cent and France’s CAC 40 lost 0.02 per cent.
In Asia, Japan’s Nikkei ended down 0.98 per cent. Hong Kong’s Hang Seng rose 0.57 per cent. Early Tuesday, Australia’s central bank held interest rates steady.
Commodities
Crude prices were up after Saudi Arabia and Russia said they would extend supply cuts into August although economic worries put a ceiling on the advance.
The day range on Brent was US$74.74 to US$75.40 in the early premarket period. The range on West Texas Intermediate was US$69.90 to US$70.54.
Earlier this week, Saudi Arabia said it would extend its voluntary output cut of 1 million barrels per day (bpd) to August, while Russia and Algeria volunteered to lower their output and export levels for August by 500,000 bpd and 20,000 bpd respectively, Reuters reported.
On Monday, crude prices initially rallied on the news but ultimately pulled back as global economic concerns continue to weigh on sentiment.
“That the market rallied only a little over 1% on the announcements, before giving it back, suggests traders don’t view [Monday’s] decisions as a game-changer or even unexpected, when it comes to Saudi Arabia,” OAND senior analyst Craig Erlam said.
“Brent crude continues to trade in the same range, roughly between $72-$77 at this point and only a break of either of these levels will suggest something has fundamentally shifted.”
In other commodities, gold prices edged up with weaker economic data fuelling expectations that the Federal Reserve could change course on interest rates.
Spot gold rose 0.3 per cent to US$1,927.40 per ounce by early Tuesday morning.
U.S. gold futures added 0.3 per cent to $1,935.20.
Currencies
The Canadian dollar saw modest early gains while its U.S. counterpart was treading water against major currencies.
The day range on the loonie was 75.42 US cents to 75.60 US cents in the early premarket period. The Canadian dollar is up about 1.2 per cent over the past month and is up more than 2 per cent for the year to date.
On world markets, the U.S. dollar index, which tracks the greenback against six major peers, was also little changed at 103.
The euro was down 0.13 per cent against the U.S. dollar at US$1.09, while Britain’s pound was roughly flat at US$1.269, according to figures from Reuters.
The Australian dollar was up 0.13 per cent at US$0.668 after the Reserve Bank of Australia kept interest rates unchanged, saying it needs time to assess the impact of past increases.
More company news
Meta is poised to unveil a new app that appears to mimic Twitter in a direct challenge to the social media platform owned by Elon Musk. A listing for the app, called Threads, appeared on Apple’s App Store, indicating it would debut as early as Thursday. It is billed as a “text-based conversation app” that is linked to Instagram, according to the listing, which teased a Twitter-like microblogging experience. “Threads is where communities come together to discuss everything from the topics you care about today to what’ll be trending tomorrow,” it said. -The Associated Press
Paramount Resources Ltd. says it expects its average sales volumes for the first half of 2023 will come in below its earlier guidance as it works to restore the last of the production that was put on hold due to the Alberta wildfires. The company says average sales volumes for the first half 2023 are expected to be about 92,500 barrels of oil equivalent per day (boepd). The figure is down from its previous guidance of between 96,000 to 101,000 boepd for the first half of this year. -The Canadian Press
Economic news
(930 am ET) Canada S&P Global Manufacturing PMI
U.S. markets closed for holiday
With Reuters and The Canadian Press