Equities
Canada’s main stock index opened up Monday with mining stocks buoying sentiment. On Wall Street, key indexes were muted as traders weigh developments in the U.S. banking sector and look ahead to the midweek rate decision by the Federal Reserve.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 66.31 points, or 0.32%, at 20,702.85.
In the U.S., the Dow Jones Industrial Average rose 18.65 points, or 0.05 per cent, at the open to 34,116.81. The S&P 500 opened lower by 2.69 points, or 0.06 per cent, at 4,166.79, while the Nasdaq Composite dropped 16.54 points, or 0.14 per cent, to 12,210.05 at the opening bell.
“Despite the latest banking drama, the Federal Reserve is expected to raise the rates when it meets this week by another 25 basis points,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“But note that a 25-basis-point hike from the Fed will likely have the impact of a bigger hike if the credit conditions in the U.S. continue tightening because of the ongoing stress in U.S. regional banks,” she said.
The Fed begins its two-day meeting tomorrow and delivers its rate decision on Wednesday afternoon. The European Central Bank makes its next policy decision on Thursday.
Early Monday, the U.S. Federal Deposit Insurance Corp. said JPMorgan Chase Bank will take over all deposits and most of the assets of troubled First Republic Bank. The FDIC said California regulators had closed First Republic and appointed it as receiver. JPMorgan Chase will assume “all of the deposits and substantially all of the assets of First Republic Bank,” it said in a statement.
“The FRC drama, and the inevitable outcome, has seemingly been broadly priced in by now,” Ms. Ozkardeskaya said.
JPMorgan shares were up more than 2 per cent in early trading in New York. First Republic stock was down more than 40 per cent in premarket trading before the shares were halted.
In this country, earnings season kicks into gear with results from grocery giant Loblaw Co. Ltd. on Wednesday. Telecoms BCE and Telus Corp. release results on Thursday.
On the economic side, April jobs figures are due on both sides of the border on Friday.
In March, the Canadian economy added 35,000 positions while the jobless rate came in at 5 per cent. Economists are expecting the April report to show about 20,000 new jobs were created last month.
Overseas, markets in much of Europe were closed for a public holiday.
In Asia, Japan’s Nikkei finished up 0.92 per cent. Many other Asian markets were also closed on Monday.
Commodities
Crude prices fell in early trading, hit by economic concerns ahead of an expected Fed rate hike later in the week and weak manufacturing data out of China.
The day range on Brent was US$80.33 to US$78.58 in the early premarket period. The range on West Texas Intermediate was US$76.78 to US$75.01.
“Distillate markets have sold off sharply in recent months, so questions about global activity and demand are being raised, especially given the cyclical and potentially leading nature of industrial-driven distillate demand versus the lagging and consumer-driven gasoline and petrochemical markets,” Stephen Innes, managing partner with SPI Asset Management, said.
Traders are widely expecting the Fed to hike interest rates again by a quarter percentage point on Wednesday, raising concerns about the potential impact on demand in a slowing economy.
Meanwhile, China’s manufacturing purchasing managers’ index (PMI) declined to 49.2 from 51.9 in March, slipping below the 50-point mark that separates expansion and contraction in activity on a monthly basis, Reuters reported.
In other commodities, spot gold fell 0.5 per cent to US$1,980.78 per ounce by early Monday morning. U.S. gold futures shed 0.5 per cent to US$1,989.20.
Currencies
The Canadian dollar was slightly weaker early Monday while its U.S. counterpart advanced ahead of this week’s U.S. interest rate announcement.
The day range on the loonie was 73.23 US cents to 73.89 US cents in the early premarket period. The Canadian dollar has fallen nearly 1 per cent against the greenback over the past month.
There were no major Canadian economic releases due Monday.
On world markets, the U.S. dollar index was up 0.25 per cent at 101.91 in early trading.
Currency markets were relatively quiet on the international scene with many regions closed for public holidays.
The Japanese yen slid 0.2 per cent to 136.67 per U.S. dollar on Monday, extending its post-BOJ slump, Reuters reported.
The Bank of Japan on Friday held steady on its monetary policy, sending the yen 1.7-per-cent lower in the biggest daily decline since February.
In bonds, the yield on the U.S. 10-year note was higher at 3.467 per cent early Monday morning.
More company news
Pipeline operator Enbridge Inc said on Monday it would acquire Aitken Creek natural gas storage facility in British Columbia (B.C.) from FortisBC Holdings Inc for $400-million. Aitken Creek Storage is an underground reservoir located in the Montney area, one of Canada’s most attractive oil regions. -Reuters
Air cargo company Cargojet Inc. reported a first-quarter profit of $30.5-million as its revenue edged lower to start the year. Cargojet chief executive Ajay Virmani says the company is not immune to softening industry trends as well as the macro factors of slower economic growth, higher interest rates and persistent inflation. The company says its profit amounted to $1.67 per diluted share for the quarter ended March 31 compared with a loss of $56.4-million or $3.26 per diluted share a year earlier. -The Canadian Press
Norwegian Cruise Line Holdings Ltd raised its full-year profit forecast on Monday, betting on higher pricing and pent-up demand from wealthy customers. The company expects full-year adjusted profit of 75 cents per share, compared with its earlier forecast of about 70 cents per share. -Reuters
Economic news
(10 a.m. ET) U.S. ISM manufacturing PMI for April.
(10 a.m. ET) U.S. construction spending for March. The Street is estimating a month-over-month increase of 0.1 per cent.
With Reuters, The Associated Press and The Canadian Press