Equities
Markets fell on Tuesday as investors eyed U.S. trade talks and an upcoming central bank rate announcement, and reacted to political instability in Germany after the country’s conservative leader unexpectedly failed to form government.
Wall Street opened lower while the TSX opened flat.
The Dow Jones Industrial Average fell 218.6 points at the open to 41,000.19. The S&P 500 fell 44.5 points at the open to 5,605.87, while the Nasdaq Composite dropped 221.0 points to 17,623.209.
The Toronto Stock Exchange’s S&P/TSX composite index was down 0.01 per cent at the open, at 24,951.89 points.
In Canada, investors are getting results from Brookfield Asset Management; George Weston Ltd; energy companies Meg Energy and Suncor Energy Inc.; real estate firms Dream Industrial REIT and Boardwalk REIT; Colliers International Group Inc.; and mining company Kinross Gold Corp.
On Wall Street, markets are watching earnings from Advanced Micro Devices Inc. and Marriott International Inc.
Investors’ attention has been on the possibility of easing trade tensions between the U.S. and China, as well as other countries President Donald Trump has targeted with tariffs. On Tuesday, Trump and Canadian Prime Minister Mark Carney are set to meet in Washington to discuss trade and security.
“We’ve seen a backpedaling and the trade risk has become lower,” said Lars Skovgaard, senior investment strategist at Danske Bank.
With few details about trade discussions, investors have been left trying to make sense of headlines coming out of the White House.
“Now we need to see some deals being announced otherwise the rise in stocks will fade again,” Skovgaard added.
Traders were also waiting on the U.S. Federal Reserve’s policy decision on Wednesday. The central bank is widely expected to keep interest rates steady but the spotlight will be on how policymakers are likely to navigate a tariff-ridden path.
Overseas, the pan-European STOXX 600 was down 0.23 per cent. Britain’s FTSE 100 was down 0.01 per cent, Germany’s DAX was down 0.72 per cent and France’s CAC 40 was in the red by 0.37 per cent.
Investors were processing a surprise from Germany where conservative leader Friedrich Merz failed to garner the parliamentary majority needed to become chancellor. Merz has 14 days to try and win support, but his failure to win parliamentary backing at the first try is a first for post-war Germany.
“I didn’t expect what happened today to have happened at all,” said George Lagarias, chief economist at Forvis Mazars.
“Markets are going to be extremely negatively surprised if Merz fails to be elected as chancellor and Germany falls into disarray.”
In Asia, Hong Kong’s Hang Seng was up 0.7 per cent. Markets were closed in Japan for a holiday.
Commodities
Oil gained more than US$1.50 per barrel on Tuesday, rebounding from Monday’s lowest levels since February, 2021 on technical factors and bargain hunting after a decision by OPEC+ to boost output sent prices down the previous session.
Brent crude futures rose US$1.57, or 2.6 per cent, to US$61.800 a barrel, while West Texas Intermediate crude added US$1.53, or 2.7 per cent, to US$58.66.
Concerns about a market surplus persisted despite the rebound.
“It’s rather surprising that we got this rebound this morning,” said Bjarne Schieldrop, chief commodities analyst at SEB.
“But US$60 [a barrel] is a psychological line. When oil drops down below US$60, you get people saying all right this is a great price.”
In other commodities, spot gold rose 1.2 per cent to US$3,374.78 an ounce as tariff fears lifted demand for the safe-haven metal.
Currencies and bonds
The Canadian dollar was up against its U.S. counterpart.
The day range on the loonie was 72.22 US cents to 72.57 US cents in early trading. The Canadian dollar was up about 3.47 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, lost 0.37 per cent to 99.46. The euro was up 0.27 per cent at US$1.1347. The British pound rose 0.67 per cent to US$1.3386.
In bonds, the yield on the U.S. 10-year note was up at 4.356 per cent.
Economic news
Japan markets closed
China and Euro zone services and composite PMI
(8:30 a.m. ET) Canada’s merchandise trade balance for March.
(8:30 a.m. ET) U.S. goods and services trade deficit for March.
(10 a.m. ET) U.S. Global Supply Chain Pressure Index for April.
(10 a.m. ET) Canada’s Ivey PMI for April.
Also: Canadian Prime Minister Mark Carney to meet with U.S. President Donald Trump in Washington; U.S. Fed meeting begins
With Reuters and The Canadian Press