Equities
Canada’s main stock index was treading water at the opening bell with weakness in commodity stocks offsetting investor relief over a U.S. debt deal.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up just 16.78 points, or 0.08 per cent, at 19,937.09.
Sentiment was helped early Monday by weekend news that U.S. President Joe Biden and House Leader Kevin McCarthy reached an agreement to address the U.S. debt limit, heading off an historic default. The agreement, which includes spending cuts, will suspend the US$31.4-trillion debt ceiling until Jan. 1, 2025. The agreement now moves to Congress for a vote.
“Right now, it’s all about convincing the ‘hard-core’ factions of both camps; the conservative Republicans and progressive Democrats to vote for the deal which still has an element of uncertainty,” OANDA senior analyst Kelvin Wong said.
In Canada, investors will get a reading on the health of the broader economy this week when Statistics Canada releases its report on March and first-quarter GDP on Wednesday morning.
Markets are expecting to see a modest contraction of 0.1 per cent in March and annual growth of 2.5 per cent for the first quarter.
“The monthly GDP release will be the final reading before the Bank of Canada’s June rate decision,” Elsa Lignos, global head of FX strategy with RBC, said.
“An increase in headline CPI in April and four months of exceptionally strong labour market data have increased the risk of an additional hike. However, softening monthly GDP could help solidify the Bank of Canada’s present stance of staying on the sidelines (for now).”
Later in the week, Wall Street will get May employment figures with the release of non-farm payrolls on Friday morning. Economists are expecting to see the addition of 195,000 jobs for the month with the jobless rate ticking up 0.1 per cent to 3.5 per cent.
Canada’s jobs report will be released the following week.
Overseas, the pan-European STOXX 600 fell 0.16 per cent in afternoon trading. Germany’s DAX was off 0.31 per cent and France’s CAC 40 dipped 0.31 per cent.
Markets in the U.K. were closed for a public holiday.
In Asia, Japan’s Nikkei finished up 1.03 per cent. Hong Kong’s Hang Seng lost 1.04 per cent.
Commodities
Crude prices gave up early gains even as the U.S. debt deal helped ease global market jitters, although trade was expected to be thinner as a result of market holidays in the U.S. and the U.K.
The day range on Brent was US$77.18 to US$77.75 in the early premarket period. The range on West Texas Intermediate was US$72.94 to US$73.55.
Both benchmarks gained about 1 per cent last week.
“We could see more gains as a relief rally gets under way in the broader financial markets when the U.S. comes back from the long Memorial Day weekend,” Vandana Hari, founder of oil market analysis provider Vanda Insights, said.
Sentiment was bolstered by the weekend deal to raise the U.S. debt ceiling. Traders are also now looking ahead to the June 4 meeting of the OPEC+ group.
Markets have been getting mixed signals about the group’s plans with Russia suggesting output is likely to remain unchanged while Saudi Arabia has hinted that a production cut is possible.
In other commodities, spot gold was little changed at US$1,946.84 per ounce, hovering near two-month lows hit on Friday. U.S. gold futures were up 0.1 per cent at US$1,946.40.
Currencies
The Canadian dollar edged higher amid improved risk sentiment while its U.S. counterpart pulled back against a group of world currencies.
The day range on the loonie was 73.40 US cents to 73.62 US cents in the early premarket period.
There were no major Canadian economic reports due on Monday.
On world markets, the dollar index, which measures the U.S. greenback against a basket of other major currencies, was slightly softer around 104.23 but not far from last week’s two-month peaks, according to figures from Reuters.
The euro was 0.1-per-cent lower around US$1.0722, while Britain’s pound was marginally weaker at US$1.2344.
More company news
Crescent Point Energy Corp. says it has resumed production at its operations that were shut in due to the Alberta wildfires. The company says that over the past week it has brought back on stream the full 45,000 barrels of oil equivalent per day of Kaybob Duvernay production that had been put on hold. It says no damage has occurred to the company’s assets.
Economic news
Alberta election
With Reuters and The Canadian Press
Terry Weber