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Equities
Canada’s main stock index tracked crude prices lower in early trading Monday while key U.S. indexes pulled back from record levels as weaker-than-expected economic news out of China soured global sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 56.23 points, or 0.27 per cent, at 20,461.84, with the energy sector down 1.7 per cent.
In the U.S., the Dow Jones Industrial Average fell 24.5 points, or 0.07 per cent, at the open to 35490.83. The S&P 500 fell 6.4 points, or 0.14 per cent, at the open to 4461.65, while the Nasdaq Composite dropped 51.4 points, or 0.35 per cent, to 14771.53 at the opening bell.
“The main focus this week is expected to be on the latest Fed minutes, which are due on Wednesday, and U.S. retail sales data for July, which is due tomorrow,” Michael Hewson, chief market analyst with CMC Markets U.K., said in an early note.
“While the discussions over the tapering of bond purchases are expected to dominate this week, anything that was discussed at the recent Fed meeting has already been overtaken by recent events, namely the two recent strong jobs reports, the upwardly adjusted June report as well as the strong July report.”
Sentiment, meanwhile, continues to be tempered by rising COVID-19 infections in some regions as well as geopolitical concerns after the Taliban swept into Afghanistan’s capital.
In this country, Statistics Canada says factory sales rose 2.1 per cent in June, helped by improved production at auto assembly plants and higher sales of petroleum and coal products. Markets had been expecting an increase of about 2.5 per cent. Wholesale sales, meanwhile, fell 0.8 per cent as a result of a drop in building material and supplies and machinery and equipment sectors, the agency said.
Canada’s housing market is also in focus. The Canadian Real Estate Association said national home sales fell by 3.5 per cent on a monthly basis in July. Actual (not seasonally adjusted) activity declined by 15.2 per cent year-over-year, the association said. The number of newly listed properties was down 8.8 per cent, compared with levels seen in June. The MLS Home Price Index rose 0.6 per cent month-over-month and was up 22.2 per cent year-over-year, CREA said.
Overseas, the pan-European STOXX 600 was down 0.61 per cent by midday. Britain’s FTSE 100 fell 1.22 per cent. Germany’s DAX and France’s CAC 40 fell 0.51 per cent and 0.86 per cent, respectively.
In Asia, Japan’s Nikkei lost 1.62 per cent. Hong Kong’s Hang Seng ended down 0.80 per cent. Sentiment took a hit after new figures showed that China’s retail sales rose 8.5 per cent in July, below market forecasts. Industrial production grew 6.4 per cent, also short of expectations.
Commodities
Crude prices fell for a third session as weaker-than-expected economic data out of China raised concerns about the rebound in demand.
The day range on Brent is US$69.12 to US$70.45. The range on West Texas Intermediate is US$66.83 to US$68.27.
“Oil futures weakness ... is likely triggered by weaker-than-expected growth data from China, which is a major consumer of oil,” said Kelvin Wong, market analyst at CMC Markets in Singapore. “All in all, the global peak growth narrative has been intensified.”
Both industrial production and retail sales in China grew at a slower-than-forecast rate in July.
Reuters also reported that China’s crude oil processing last month also fell to the lowest on a daily basis since May 2020, as independent refiners cut production amid tighter quotas, elevated inventories and falling profits.
Last week, the International Energy agency said crude demand is expected to rise at a slower rate over the rest of the year due to rising COVID-19 infections, driven by the spread of the Delta variant.
In other commodities, gold prices slid as the U.S. dollar held steady.
Spot gold was down 0.2 per cent at US$1,775.06 per ounce, after hitting its highest since Aug. 6 at US$1,782.40 earlier in the session. U.S. gold futures eased 0.1 per cent to US$1,776.70.
Currencies
The Canadian dollar was weaker alongside lower crude prices and faltering risk sentiment while the U.S. dollar held steady against global counterparts.
The day range on the loonie is 79.65 US cents to 79.94 US cents.
“The CAD is under-performing somewhat on the session, dragged down by softer crude and soft global risk appetite,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The snap election call by PM [Justin] Trudeau came as expected at the weekend, setting Sept. 20 as the date for the poll. At the margin, this may also be weighing on the CAD, according to some news reports, but we do not see the election as a major factor for the CAD.”
Markets will be looking ahead to Wednesday’s release of fresh inflation figures for a indication of price pressures as the economy reopens.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was steady at 92.53 after falling to a one-week low of 92.468 on Friday.
The U.S. dollar’s gains were the most pronounced against the Chinese yuan and the Australian dollar, against which it advanced 0.1 per cent and 0.5 per cent respectively, according to figures from Reuters.
More company news
U.S. auto safety regulators said early Monday they have opened a formal safety probe into Tesla Inc’s driver assistance system Autopilot after a series of crashes. The National Highway Traffic Safety Administration (NHTSA) said that since January 2018, it has identified 11 crashes in which Tesla models “have encountered first responder scenes and subsequently struck one or more vehicles involved with those scenes.” NHTSA said it has opened a preliminary evaluation of Autopilot in 2014-2021 Tesla Models Y, X, S, and 3.
Economic news
(8:30 a.m. ET) Canada’s manufacturing sales and new orders for June.
(8:30 a.m. ET) Canadian wholesale trade for June.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for August.
(9 a.m. ET) Canada’s existing home sales for July.
(9 a.m. ET) Canada’s MLS Home Price Index for July.
With Reuters and The Canadian Press