Equities
Canada’s main stock index slid at the opening bell ahead of the midweek rate decision by the Bank of Canada. On Wall Street, key indexes also start slightly weaker with traders awaiting key inflation figures later in the week.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 24.09 points, or 0.12 per cent, at 19,806.95.
In the U.S., the Dow Jones Industrial Average fell 29.20 points, or 0.09 per cent, at the open to 33,705.68. The S&P 500 opened lower by 4.72 points, or 0.11 per cent, at 4,394.23, while the Nasdaq Composite dropped 15.34 points, or 0.11 per cent, to 13,645.37 at the opening bell.
For Canadian investors, the Bank of Canada rate decision on Wednesday is top of mind.
The Globe’s Mark Rendell reports, a month after surprising markets by restarting interest rate hikes, the Bank of Canada is widely expected to ratchet up borrowing costs again this week, despite the continuing decline in inflation and mixed signals about the strength of the economy.
On Friday, Statistics Canada reported that the Canadian economy added 60,000 new jobs last month, rebounding for a decline in hiring in May. Economists had been expecting a smaller 20,000 position increase in June. The jobless rate, however, rose to 5.4 per cent from 5.2 per cent as more people sought work.
“The latest round of Canadian economic data is unlikely to deter the Bank of Canada from hiking rates by 25 basis points as there is insufficient evidence of slowing consumer demand,” Alvin Tan, Asia FX strategist with RBC, said.
“However, the path for the overnight rate beyond the expected hike remains very uncertain. Although we expect this to be the last rate hike of the current cycle, risks will remain tilted to the upside until more concrete evidence of a slowdown appears.”
In the U.S., markets will get June inflation data with the release of the consumer price index for the month on Wednesday.
“U.S. inflation is expected to have fallen from 4 per cent to around 3 per cent in June, with a possibly uptick in the monthly data,” Swissquote senior analyst Ipek Ozkardeskaya said.
“But core inflation could prove stickier at around the 5-per-cent mark. In all cases, softening, and ideally softer-than-expected inflation figures carry the potential of pushing the Fed hawks back. That could give quick support to the U.S. stocks which ended the first week of July, and the first week of [the second half], in the negative.”
On the corporate side, earnings season gets underway with results Friday from U.S. banks including Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo on Friday. In Canada, MTY Food Group Inc. reports before markets open on Tuesday. Retailer Aritzia posts earnings after Tuesday’s close.
Overseas, the pan-European STOXX 600 was up 0.22 per cent by afternoon. Britain’s FTSE 100 added 0.36 per cent. Germany’s DAX and France’s CAC 40 gained 0.49 per cent and 0.63 per cent, respectively. Reuters reports that figures released Monday show China’s producer prices fell at their fastest pace in over seven years in June, while consumer prices teetered on the edge of deflation.
In Asia, Japan’s Nikkei finished down 0.61 per cent, marking five straight days of losses. Hong Kong’s Hang Seng added 0.62 per cent.
Commodities
Crude prices were down as traders await fresh economic data later in the week, although expected supply cuts from Saudi Arabia and Russia put a floor under losses.
The day range on Brent was US$77.55 to US$78.61 in the early premarket period. The range on West Texas Intermediate was US$72.97 to US$74. Both benchmarks added about 4 per cent last week.
“Oil supply cuts continue to support prices, while traders are keeping a close eye on the Chinese economic data and praying that demand will revive to a level that will give a boost to oil prices,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said in an early note.
“So far, it is very clear that there are more sellers in the market who find every opportunity to sell oil whenever they see that weaker fundamentals are emerging, and to counterbalance that, OPEC is left with no other choice but to cut oil supply more.”
He said prices are likely to consolidate while investors await Wednesday’s U.S. inflation data, looking for signs of easing price pressures.
In other commodities, spot gold was little changed at US$1,922.99 per ounce by early Monday morning. U.S. gold futures were down 0.2 per cent to US$1,928.10.
Currencies
The Canadian dollar was little changed while its U.S. counterpart recouped some lost ground against a basket of world currencies.
The day range on the loonie was 75.16 US cents to 75.40 US cents in the predawn period. The Canadian dollar is down about 0.25 per cent against its U.S. counterpart over the past five days, but up about 0.66 per cent over the last month.
On world markets, the U.S. dollar index, which tracks the greenback against a basket of major peers, was up 0.15 per cent at 102.44 after falling tumbled 0.87 per cent on Friday in the wake of weaker-than-forecast reading on U.S. hiring, according to figures from Reuters.
The euro was last down 0.14 per cent at US$1.0953 after a 0.7-per-cent gain on Friday. Britain’s pound slid 0.25 per cent to US$1.2809, having added 0.79 per cent the previous session to a 15-month high of US$1.2850, Reuters reported.
In bonds, the yield on the U.S. 10-year note was up slightly at 4.066 per cent ahead of the North American open.
More company news
Carl Icahn and banks have agreed to amend loan agreements that untie the billionaire’s personal loans from the trading price of Icahn Enterprises, the Wall Street Journal reported, months after short-seller Hindenburg’s criticism triggered a massive fall in the shares of his investment company. Shares of Icahn Enterprises soared 7.5% in premarket trading on Monday. They are down about 43% since the Hindenburg report came out in May. -Reuters
West Fraser Timber Co. Ltd. has signed a deal to sell its unbleached softwood kraft pulp mill in Hinton, Alta., to Mondi Group, an integrated packaging and paper company. Mondi says it is paying US$5-million for the mill and plans invest 400 million euros to expand the facility. It plans to add a 200,000-tonne-per-year kraft paper machine that it expects to be operational in the second half of 2027. -The Canadian Press
Economic news
(8:30 a.m. ET) Canadian building permits for May.
(10 a.m. ET) U.S. wholesale inventories for May.
With Reuters and The Canadian Press