Equities
Canada’s main stock index opened down Tuesday with tech shares under pressure as traders weigh a hotter-than-forecast reading on inflation. On Wall Street, key indexes were also weaker ahead of tomorrow’s rate decision from the Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 59.52 points, or 0.29 per cent, at 20,433.31.
The Dow Jones Industrial Average fell 52.46 points, or 0.15 per cent, at the open to 34,571.84. The S&P 500 opened lower by 8.12 points, or 0.18 per cent, at 4,445.41, while the Nasdaq Composite dropped 60.79 points, or 0.44 per cent, to 13,649.44 at the opening bell.
Statistics Canada said early Tuesday that the country’s annual rate of inflation rose to 4.0 per cent in August, from 3.3 per cent a month earlier. The increase came amid higher gasoline costs. Economists polled by Reuters had forecast an annual rate in August of 3.8 per cent. On a monthly basis, the consumer price index rose 0.4 per cent versus an expected gain of 0.3 per cent.
The August annual rate of inflation is the highest since April.
“For the third quarter as a whole, inflation is running well ahead of the 3.3-per-cent forecast from the Bank of Canada’s July MPR, albeit partly because that projection was based on WTI oil prices of US$75 a barrel which is well below current levels,” CIBC senior economist Andrew Grantham said.
“The bank will therefore have some tough decisions to make at upcoming meetings.”
In the U.S., the Federal Reserve begins its two-day meeting on Tuesday, which will culminate in Wednesday’s policy announcement. Markets are expecting the central bank to hold steady but will listening closely to comments from Fed chair Jerome Powell about future moves after a strong run of U.S. economic data.
On the corporate side, The Globe’s Eric Atkins reports this morning that Unifor union negotiators extended their midnight strike deadline for 24 hours after receiving a last-minute offer from Ford Motor Co. Unifor announced the extension at 1:38 a.m. ET on Tuesday after receiving what it called a “substantive offer” from Ford. Talks continued through the early morning hours on Tuesday. The extension pushes back the strike deadline to Tuesday at midnight.
Overseas, Britain’s FTSE 100 was up 0.10 per cent by midday. Germany’s DAX slid 0.12 per cent and France’s CAC 40 gained 0.20 per cent.
In Asia, Japan’s Nikkei fell 0.87 per cent. Hong Kong’s Hang Seng added 0.37 per cent.
Commodities
Crude prices were up for a fourth session and sat near 10-month highs with supply concerns continuing to dominate.
The day range on Brent was US$94.48 to US$95.33 in the early premarket period. The range on West Texas Intermediate was US$92.18 to US$92.95.
“This oil rally has been relentless and I’m not seeing any signs of exhaustion yet,” OANDA senior analyst Ed Moya said.
“A 15-per-cent rally in the space of around three weeks to trade at levels not seen since last November and not far from triple figures, it’s been an impressive move and there could be more to come.”
Supply worries remain a driving factor after Saudi Arabia and Russia extended voluntary output curbs through to the end of the year. As well, the U.S. Energy Information Administration said Monday U.S. oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day in October, exacerbating supply concerns, Reuters reported. That would mark three months of declines in a row.
Later Tuesday, markets will get weekly inventory data from the American Petroleum Institute. More official government figures follow on Wednesday morning.
In other commodities, spot gold was down 0.1 per cent at US$1,930.39 per ounce by early Tuesday morning, but hovered near its highest since Sept. 5 hit earlier in the session. U.S. gold futures edged down 0.1 per cent to US$1,951.60.
Currencies
The Canadian dollar was higher while its U.S. counterpart pulled back somewhat but still held not far from its best levels in six months.
The day range on the loonie was 74.09 US cents to 74.39 US cents in the early premarket period. The loonie was up 0.75 per cent against the U.S. dollar over the past five days as of early Tuesday morning.
“G10 currencies have traded in extremely tight ranges overnight,” RBC chief currency strategist Adam Cole said.
On world markets, the U.S. dollar index was down 0.10 per cent at 105.10 in the predawn period. Last week, the index touched its highest level in six months and continues to trade not far from that level.
The euro, meanwhile, rose by as much as 0.4 per cent at one point on Monday to nudge at US$1.07 and, by Tuesday, had retained most of those gains, trading flat on the day at US$1.069, according to figures from Reuters.
Japan’s yen hit a 10-month low of 147.95 per U.S. dollar last week and by Tuesday, was not far off that mark, flat on the day at 147.63, Reuters reported. The Bank of Japan holds its next policy meeting later this week.
In bonds, the yield on the U.S. 10-year note was flat at 4.319 per cent ahead of the North American opening bell.
More company news
Maplebear Inc, the parent of grocery delivery app Instacart, disclosed on Monday it fetched a US$9.9-billion fully diluted valuation after pricing its initial public offering (IPO) at the top of its indicated range. The valuation is a fraction of the US$39-billion value that investors assigned to Instacart in a private fundraising round in March 2021, at the height of the COVID-19 pandemic which pushed consumers to order groceries at home. The IPO was priced at US$30 per share after the company marketed it with a range of US$28 to US$30 per share. That range had been revised upwards from US$26 to US$28 per share, following strong investor demand. -Reuters
Economic news
830 am ET: Canadian consumer price index for August.
830 am ET: Canadian household credit for July
830 am ET: U.S. housing starts and building permits.
145 pm ET: BoC Deputy Governor Sharon Kozicki speaks at the University of Regina
With Reuters and The Canadian Press