Equities
Canada’s main stock index opened down Tuesday with materials stocks under pressure. On Wall Street, the Nasdaq and S&P 500 also saw early losses as weak economic news out of China tempered global sentiment.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 17.2 points, or 0.08 per cent, at 20,528.16.
In the U.S., the Dow Jones Industrial Average rose 5.51 points, or 0.02 per cent, at the open to 34,843.22.
The S&P 500 opened lower by 5.71 points, or 0.13 per cent, at 4,510.06, while the Nasdaq Composite dropped 37.27 points, or 0.27 per cent, to 13,994.54 at the opening bell.
In Canada, traders are now awaiting Wednesday morning’s rate decision from the Bank of Canada, with markets largely expecting the central bank to hold borrowing costs steady after GDP figures last week showed the economy contracted in the second quarter. The bank’s key rate is at 5 per cent after it resumed hiking in June and July after pausing earlier in the year.
“We expect the BoC to keep its options open in case more increases are necessary down the road,” Elsa Lignos, RBC’s global head of FX strategy, said.
“Broader price growth is still running above the BoC’s 2-per-cent inflation target despite slower headline CPI growth. But the BoC is more interested in where prices are going than where they’ve been. And softer economic growth numbers suggest headwinds from earlier interest rate hikes are gaining strength.”
This week’s rate decision will be followed by an economic progress report from BoC governor Tiff Macklem, delivered in a speech in Calgary on Thursday.
Later in the week, Canadian markets will also get August jobs figures from Statistics Canada.
On the corporate side, convenience store operator Alimentation Couche-Tard Inc. reports results on Wednesday while recreational vehicle maker BRP reports on Thursday.
Overseas, the pan-European STOXX 600 was up 0.04 per cent by midday. Germany’s DAX was flat while France’s CAC 40 was off 0.07 per cent. Britain’s FTSE 100 edged up 0.30 per cent.
In Asia, Japan’s Nikkei edged up 0.3 per cent. Hong Kong’s Hang Seng slumped 2.06 per cent. New figures released in China on Tuesday showed the country’s services sector grew at the slowest pace in eight months in August. The Caixin/S&P Global services purchasing managers’ index fell to 51.8 in August from 54.1 in July, the lowest reading since December. The 50-point mark separates expansion from contraction in activity.
Commodities
Crude prices turned higher just ahead of the North American opening bell as OPEC+ production curbs helped offset disappointing economic data out of China.
The day range on Brent was US$88.06 to US$89.11 in the early premarket period. The range on West Texas Intermediate was US$85.06 to US$86.14.
Figures out of China showed that country’s services sector grew at its slowest pace in eight months, igniting concerns about demand in one of the world’s biggest consumers of crude. However, that was offset somewhat by expectations that OPEC+ members will extend supply curbs.
Reuters reports Saudi Arabia will extend its voluntary cut of one million barrels per day for another three months until the end of December 2023, state news agency SPA said on Tuesday. Russia, meanwhile, will unveil a new OPEC+ supply cut deal this week, according to its deputy prime minister. Moscow has already announced it will cut exports by 300,000 barrels per day (bpd) in September.
“If expectations are correct, Russia and Saudi Arabia will likely be willing to lean in longer to the successful rally by extending production cuts through October,” Stephen Innex, managing partner with SPI Asset Management, said.
“So, the market is forced to hedge a potentially more aggressive OPEC+ price target ( +$90 Brent) as the critical moderately bullish risk.”
In other commodities, spot gold was down 0.1 per cent at US$1,936.19 per ounce by early Tuesday morning. U.S. gold futures fell 0.3 per cent to US$1,961.80.
Currencies
The Canadian dollar was down ahead of this week’s rate decision while the safe-haven appeal of the U.S. dollar boosted it against a group of world currencies amid global economic concerns.
The day range on the loonie was 73.14 US cents to 73.60 US cents in the predawn period.
On world markets, the U.S. dollar index, which weighs the greenback against six world currencies, gained 0.34 per cent to 104.59 early Tuesday morning.
The euro was down 0.45 per cent at US$1.0747, while sterling fell 0.6 per cent to US$1.2555, with both their lowest levels since mid June, according to figures from Reuters.
Australia’s dollar fell 1.46 per cent to US$0.6372 hurt after that country’s central bank left its benchmark cash rate unchanged for a third consecutive months.
In bonds, the yield on the U.S. 10-year note was higher at 4.216 per cent ahead of the North American open.
More company news
TFI International Inc. says it has signed a deal to acquire Vedder Transportation Group, which specializes in the tank truck transport of food grade liquids and dry bulk commodities. Financial terms of the deal were not immediately available. Vedder will join TFI International’s specialized truckload business segment.
Economic news
Japan, China and Euro zone services and composite PMI
(10 a.m. ET) U.S. factory orders for July.
With Reuters and The Canadian Press