Equity Markets
Canadian and U.S. stocks opened slightly lower on Tuesday as investors sought shelter in safe-haven assets such as gold amid mounting geopolitical tensions in Syria and North Korea. Investors continued to focus on events in the Middle East and the Korean Peninsula after Washington signalled it could take further action against the Syrian government if it again used chemical weapons.
The Toronto Stock Exchange's S&P/TSX composite index was down 0.23 per cent in early trading. In New York, the Dow Jones industrial average was down 0.13 per cent, the S&P 500 was down 0.19 per cent, and the Nasdaq composite was down 0.17 per cent
Global markets were mixed as investors sought refuge in gold and government bonds, while analysts held out little hope the holiday-shortened week would bring a significant turnaround for stocks.
"A lacklustre U.S. session and some weak performances overnight in Asia have done little to reassure investors, however, and there is a sense that, with two back-to-back shortened weeks, and the key earnings season now days away, the market will struggle to establish a clear direction," IG chief market analyst Chris Beauchamp said in a note. "Usually, holidays and low volumes tend to favour the buyers, but unlike Thanksgiving and Christmas there appears to be little basis for an 'Easter Bunny rally', if such a thing could ever exist."
In Asia, markets were mixed. Tokyo's Nikkei lost 0.3 per cent, and Hong Kong's Hang Seng 0.7 per cent. The Shanghai composite advanced 0.6 per cent. In Europe, London's FTSE 100 was up 0.7 per cent, and the Paris CAC 40 was up 0.05 per cent, though Germany's DAX was down 0.02 per cent.
Commodities
Crude futures pulled back from five-week highs early Tuesday as investors weighed the impact of rising U.S. production against continued concern about the political situation in the Middle East. Brent crude and U.S. West Texas Intermediate were both down less than half a percentage point in early going. Brent crude futures were trading at $55.78 (U.S.) a barrel, down 20 cents around 6:30 a.m. WTI was down 15 cents at $52.93, having hit a five-week high of $53.23 a barrel earlier.
"Crude oil extended gains to a five-week high amid geopolitical and supply concerns," Sue Trinh, head of Asia FX Strategy for RBC, said in a note. "On the geopolitical front, investors have been nervous over Russia/U.S posturing over Syria, while warnings from the White House press secretary to Syria to stop using barrel bombs against civilians has sparked concerns that President Trump may expand the criteria for action against Assad's regime and there are growing worries about the possibility of a similar U.S pivot against North Korea.
"On the supply side, the Kuwait Oil Minister said that global crude stocks could continue to drop in the next few months and Libya's largest oilfield experienced another shutdown."
Gold, meanwhile, hit its highest level since November as investors sought safe haven against a backdrop of geopolitical upset. Early on, U.S. gold futures rose 0.5 per cent to $1,259.50.
Currencies and bonds
The Canadian dollar was back above 75 cents (U.S.) tracking oil's recent gains. Wednesday's Bank of Canada decision will continue to be the focus for investors even though the possibility of a rate move remains remote at best. Instead, the focus will be on the central bank's monetary policy report and how it interprets recent strong economic reports.
"In our view, markets are prematurely pricing roughly one-in-four odds of a hike before the end of this year," Derek Holt, vice-president at Scotiabank Economics, said. "Governor (Stephen) Poloz has made it clear that he is in no hurry to raise rates, and we believe he would be more comfortable with a temporary overshoot of the inflation target than an undershoot. If GDP growth continues at the recent pace then all else [being] equal it may support a neutral-hawkish bias shift, but that's hardly clear and there are many other considerations."
The U.S. dollar was down against the yen in Asia early Tuesday. Geopolitical concerns also weighed on U.S. Treasury yields, balancing expectations of further interest rate hikes by the U.S. Federal Reserve this year. The U.S. benchmark 10-year yield fell to 2.340 per cent in Asian trading, from its U.S. close of 2.361 per cent on Monday, according to Reuters. The latest polls on the coming French presidential election – most recently showing far-left candidate Jean-Luc Melenchon making up ground against the pack – continued to affect yields in Europe. German yields fell below 0.20 per cent for the first time in more than five weeks. French yields rose to a one-week high.
Stocks set to see action
Shares of United Continental Holdings Inc. were down more than 2 per cent in premarket trading in the wake of widespread public outrage over a video of a passenger being dragged from an oversold United flight before it departed from Chicago O'Hare International Airport on Sunday. Public sentiment didn't improve after United chief executive officer Oscar Munoz circulated a letter among employees saying the passenger had 'defied' security officers.
Toshiba Corp.'s continuing difficulties were back in the headlines Tuesday after the 142-year-old conglomerate said it may not be able to continue as a going concern in the face of billions of dollars in losses. The disclosure came after the company reported a third-quarter operating loss of about $5.2-billion (U.S.). The company had missed two previous deadlines for reporting its latest financial results.
Shares of Whole Foods Market Inc. were up nearly 10 per cent in premarket trading after activist investors Jana Parnters LLC bought an 8.3-per-cent stake and suggested the company put itself on the block. In a filing, the investment firm said it would seek talks with management and push the company to look at strategic alternatives.
Western Digital's shares gained 2 per cent in premarket trading after analysts at JPMorgan upgraded the stock to "overweight" from "neutral" and raised the price target to $116 (U.S.) from $80.
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Economic News
Tuesday's economic calendar will offer little in the way of insight into the state of either the U.S. or Canadian economies. U.S. job openings are reported at 10 a.m. (ET).
With files from Reuters and Bloomberg