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Equities
Canada’s main stock index opened down Tuesday with energy stocks weighed down by weaker crude prices. South of the border, rising coronavirus infections and uncertainty over fresh government stimulus tempered investor sentiment in early trading.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.55 points, or 0.2 per cent, at 17,546.8.
In the U.S., the Dow Jones Industrial Average fell 71.84 points, or 0.24 per cent, at the open to 29,997.95.
The S&P 500 opened lower by 8.91 points, or 0.24 per cent, at 3,683.05, while the Nasdaq Composite dropped 16.77 points, or 0.13 per cent, to 12,503.17 at the opening bell.
“Monday’s drift is still very much in evidence, markets being content to hold on to recent gains but unwilling to push any higher,” IG chief market analyst Chris Beauchamp said.
Investors continue to hold out hope for fresh U.S. stimulus measures as coronavirus infections rise. The U.S. Congress is expected to vote this week on a one-week funding bill to give talks more time to reach an agreement. The move comes as California announced restrictions on travel and business activity after record case numbers and hospitalizations and New York warned restrictions could be reimposed.
In Europe, meetings between British Prime Minister Boris Johnston and European Commission President Ursula von der Leyen is expected this week as the two sides attempt to salvage the trade deal with just weeks left before Britain is scheduled to exit the bloc.
“We’re always hopeful (of striking a deal) but you know there may come a moment when we have to acknowledge that it’s time to draw stumps and that’s just the way it is,” Mr. Johnson said.
In this country, Enbridge holds its annual investor day by webcast. The company began construction on its Line 3 crude oil pipeline replacement in Minnesota on Dec. 1, a day after state regulators approved the final permit for the $2.6-billion project.
Ahead of the event, Enbridge forecast higher core earnings in 2021 and raised its annual dividend.
The company forecast 2021 EBITDA (earnings before interest, taxes, depreciation, and amortization) to be in the range of $13.9-billion to $14.3-billion, higher than 2020 forecast of about $13.7-billion. Enbridge raised its dividend by 3 per cent to $0.835/quarter or $3.34 annually, effective March 1, 2021.
In Europe, the pan-European STOXX 600 was down 0.41 per cent by afternoon. Britain’s FTSE 100 fell 0.31 per cent. Germany’s DAX lost 0.25 per cent and France’s CAC 40 slid 0.71 per cent.
In Asia, Japan’s Nikkei closed down 0.30 per cent. Hong Kong’s Hang Seng lost 0.76 per cent.
Commodities
Crude prices ticked lower in early going as investor concern mounts over rising coronavirus infections in a number of regions and related restrictions.
The day range on Brent so far is US$48.09 to US$48.95. The range on West Texas Intermediate is US$45.14 to US$45.93. Both benchmarks fell about 1 per cent on Monday.
On Monday, many residents of California faced heavy new restrictions aimed at curbing the spread of the virus. Restaurants in Southern California, the San Francisco Bay Area and the San Joaquin Valley shut for all but takeout and delivery while stores reduced capacity. At the same time, New York’s governor threatened to ban indoor dining in New York City amid concerns over spiking numbers.
Reuters also reported that government sources in France said that country may have to delay unwinding some lockdown restrictions next week after signs that the downward trend in new cases flattened after shops were allowed to open late last month.
“The severity of the ongoing COVID surge (particularly in the U.S., where daily deaths have surpassed the level seen in April this year) has squashed the optimism that followed last week’s OPEC+ meeting,” Axi chief market strategist Stephen Innes said in an early note.
“Vaccine deployment news flow and any progress on stimulus measures to help accelerate the global economic recovery will be a critical near-term driver for oil,” he said.
Later in the session, markets will get the first of two weekly U.S. inventory reports. Analysts are expecting that crude stocks fell last week. Refined product inventories are forecast to have risen.
Elsewhere, gold prices hit a two-week high.
Spot gold rose 0.1 per cent to US$1,864.74 per ounce, having touched its highest since Nov. 23 of US$1,871.52 earlier in the session.
U.S. gold futures were up 0.2 per cent to US$1,869.70.
Currencies
The Canadian dollar edged higher while the U.S. dollar gained against a basket of world currencies during a quiet early session.
The day range on the loonie is 78.07 US cents to 78.32 US cents.
“Markets have been very quiet, with major currencies all around the middle of yesterday’s ranges,” RBC chief currency strategist Adam Cole said.
There were no major Canadian economic releases on the calendar to offer direction for the loonie. Markets are awaiting the Bank of Canada’s rate announcement on Wednesday morning.
The BoC policy decision tomorrow is unlikely to yield any major news (no changes in policy and likely little change in the policy statement’s key messaging),” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The CAD may be finding some support from the government’s aggressive build up of vaccine stockpiles (more per capita than anywhere, Bloomberg reports) and an earlier than expected roll out to its vaccination program, assuming approval from the health authorities shortly.”
On global markets, the U.S. dollar index edged up to 90.969.
Britain’s pound, meanwhile, fell as caution over last-minute Brexit talks rattled sentiment.
Against the U.S. dollar, the pound was nearly half a per cent lower at US$1.3323.
Against the euro, it was 0.3 per cent lower at 90.74 pence, according to figures from Reuters.
More company news
Australia finalized plans on Tuesday to make Facebook Inc and Google pay its media outlets for news content, a world-first move aimed at protecting independent journalism that has been strongly opposed by the internet giants. Under laws to go to parliament this week, Treasurer Josh Frydenberg said the Big Tech firms must negotiate payments for content that appears on their platforms with local publishers and broadcasters. If they can’t strike a deal, a government-appointed arbitrator will decide for them.
Tesla Inc unveiled a US$5-billion capital raise on Tuesday, its second such move in three months as the electric-car maker cashes in on a rally in its shares this year. The company’s shares, which touched a record high on Monday, reversed course to fall over 2% in early trading. Tesla entered an equity distribution agreement with banks including Goldman Sachs and Citigroup Global Markets to sell its common stock, having aggregate sales proceeds of up to $5 billion.
Newmont Corp forecast higher production of the precious metal next year at lower costs, hoping to build on a surge in demand seen during the COVID-19 pandemic. The company said it expects 2021 gold output to be 6.5 million ounces, compared with 6 million ounces it expects to report this year.
Economic news
(8:30 a.m. ET) U.S. productivity for Q3.
With Reuters and The Canadian Press