Equities
Canada’s main stock index opened higher Monday with improved gold and copper prices underpinning materials shares. On Wall Street, key indexes were also up at the opening bell as traders await a midweek reading on U.S. inflation.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 85.24 points, or 0.42 per cent, at 20,159.89.
In the U.S., the S&P 500 was 0.7-per-cent higher in early trading Monday, coming off its first losing week in the last three, according to early market figures from The Associated Press. The Dow was up 194 points and the Nasdaq composite was up 0.9 per cent.
Attention this week will be on U.S. inflation figures, due on Wednesday. The numbers come ahead of the Federal Reserve’s next rate decision on Sept. 20. Markets aren’t expecting a rate hike at that meeting but remain divided on whether the U.S. central bank will move again before year’s end.
“Our forecast calls for core [U.S.] CPI to rise 0.2 per cent month-over-month (or 4.3 per cent year-over-year), but headline CPI will accelerate to 0.5 per cent m/m (or 3.6 per cent y/y), driven by a rise in gasoline prices,” Alvin Tan, Asia FX strategist with RBC, said.
“However, with signs of a softening labour market backdrop, the bar remains high for the Fed to justify another rate hike. Indeed, the Fed has been sensitive to spikes in unemployment in past hiking cycles.”
Meanwhile, the European Central Bank makes its next rate decision on Thursday. Mr. Tan says RBC expects that decision to boil down to a 25-basis-point increase or nothing.
“In the previous meeting, the ECB deliberately changed its language to stress it’s ‘data dependency’ and in the most recent speeches prominent members have highlighted the deteriorating growth outlook,” Mr. Tan said.
“Despite the inflation picture being still unsatisfactory, we assume that the ECB will pause for the time being to further assess incoming data.”
In Canada, retail earnings will be in focus this week. Montreal-based Dollarama will release second-quarter results on Wednesday. The retail posted gains in first-quarter profit and sales as inflation-weary shoppers sought out lower-cost items.
Grocer Empire Co. Ltd. which owns Sobeys and Safeway and other banners, releases its latest results on Thursday morning.
In the U.S., Apple Inc. will hold its latest product launch on Tuesday. The company is widely expected to unveil its new range of iPhone 15 models among updates to other products in its line.
Apple stock took a hit last week on reports that China was limiting use of iPhones by government workers.
“Apple’s iPhone events typically generate significant buzz and anticipation, leading to a surge in sales,” said Nigel Green, CEO and founder of deVere Group, an independent financial advisory, asset management and fintech organization. “This in turn will boost stock prices for shareholders in the short-term.”
“However, we don’t expect it to be enough to recover its full stock market valuation which fell by more than 6 per cent, or almost $200-billion in two days last week.”
Overseas, the pan-European STOXX 600 was up 0.28 per cent by midday. Germany’s DAX added 0.34 per cent while France’s CAC 40 gained 0.38 per cent. Britain’s FTSE 100 was little changed.
In Asia, Japan’s Nikkei closed down 0.43 per cent. Hong Kong’s Hang Seng lost 0.58 per cent.
Commodities
Crude prices eased in early trading with concerns about China’s economic growth offsetting continued support from OPEC+ production curbs.
The day range on Brent was US$90.11 to US$90.83 in the early premarket period. The range on West Texas Intermediate was US$86.71 to US$87.49. Both benchmarks are coming off two consecutive weeks of gains.
“In early Asian trading, oil prices experienced a slight decline, primarily due to concerns about China’s economic situation,” Stephen Innes, managing partner with SPI Asset Management, said.
“This could dampen top-side expectations of fuel demand following an August domestic surge in product stock builds; hence, September China demand could falter a tad.”
However, he noted, Brent crude remained about the US$90 a barrel market, supported by supply cuts from Saudi Arabia and Russia.
Later this week, the International Energy Agency and the Organization of the Petroleum Exporting Countries are due to release their monthly reports, with markets watching for signals about how demand is holding up.
In other commodities, spot gold rose 0.5 per cent to US$1,927.09 per ounce by early Monday morning, while U.S. gold futures rose 0.4 per cent to US$1,950.80. A pullback in the U.S. dollar helped support prices.
Currencies
The Canadian dollar was up while its U.S. counterpart slid to near a one-week low ahead of this week’s U.S. inflation report.
The day range on the loonie was US$73.20 to 73.60 US cents in the early premarket period.
There were no major Canadian economic releases due Monday.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.26 per cent at 104.59, near an almost one-week low, according to figures from Reuters. The greenback is coming off its eighth consecutive week of gains.
Britain’s pound rose 0.4 per cent to US$1.2518 after hitting a three-month low last week. The euro advanced 0.3 per cent to US$1.0731. The euro saw its eight consecutive weekly loss last week against the U.S. currency.
In bonds, the yield on the U.S. 10-year note was modestly higher at 4.284 per cent in the predawn period.
More company news
J.M. Smucker said on Monday it will buy Twinkies-maker Hostess Brands in a US$5.6-billion deal, as major U.S. packaged food companies look to expand their brand portfolios with pandemic-era fortunes dwindling. In recent months, the U.S. packaged food industry has seen an uptick in mergers as most of the companies seek to improve volumes by rebranding portfolios after benefits from price hikes started wavering. -Reuters
Crescent Point Energy Corp. says it plans to spend $1.05-billion to $1.15-billion on development capital expenditures next year. Based on the plan, the company says it expects annual average production of 145,000 to 151,000 barrels of oil equivalent per day in 2024. The company says about 70 per cent of its 2024 budget is expected to be spent on its Kaybob Duvernay and Alberta Montney operations. The remaining portion of its capital budget will be spent on its long-cycle assets in Saskatchewan. -The Canadian Press
Grocery delivery service Instacart is looking to raise up to US$616-million along with selling stockholders in its initial public offering, a regulatory filing showed on Monday. The San Francisco-based company and its selling shareholders are offering 22 million shares priced between US$26 and US$28 apiece. Like SoftBank’s chip designer Arm and marketing automation firm Klaviyo, Instacart is expected to list its shares in September as part of a wave of high-profile names testing investor appetite for new listings. -Reuters
French lender Société Générale and asset manager Brookfield Corp plan to launch a private debt fund targeting total volume of 10 billion euros (US$10.73-billion) over the next four years, they announced on Monday. Initial seed funding, which will be directed towards the power, transportation and finance sectors among others, amounts to 2.5 billion euros, the companies said. The fund “will have a positive impact on the real economy”, SocGen Chief Executive Slawomir Krupa said in a press release. -Reuters
Tesla’s Dojo supercomputer could power a near US$600-billion jump in the automaker’s market value by boosting the adoption of robotaxis and its software services, Morgan Stanley analysts said. The electric-vehicle maker (EV) started production of the supercomputer used to train artificial intelligence (AI) models for self-driving cars in July and plans to spend more than US$1-billion on Dojo through next year. Dojo can open up new addressable markets that “extend well beyond selling vehicles at a fixed price,” Morgan Stanley analysts, led by Adam Jonas, said in a note on Sunday. -Reuters
With Reuters and The Canadian Press