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Equities
Canada’s main stock index fell in early trading with declines in crude prices weighing on sentiment. On Wall Street, key indexes were also in red after U.S. retail sales posted a bigger-than-forecast drop.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 107.63 points, or 0.53 per cent, at 20,375.79.
In the U.S., the Dow Jones Industrial Average fell 125.4 points, or 0.35 per cent, at the open to 35500.01. The S&P 500 fell 17.6 points, or 0.39 per cent, at the open to 4462.12, while the Nasdaq Composite dropped 123.2 points, or 0.83 per cent, to 14670.563 at the opening bell.
“There has been no shortage of optimism in the markets recently as they’ve slowly but surely hit new record highs,” OANDA senior analyst Craig Erlam said.
“I don’t think much has fundamentally changed, rather we’re just seeing a little profit taking during a relatively quiet period.”
He said there is some concern in the markets about the spread of COVID-19 as well as China’s crackdown on the tech sector.
“But European and US markets have overlooked these issues to a great extent in recent weeks so I don’t think it’s having much of an impact now,” he said.
On Tuesday, markets got a reading on U.S. retail sales. The U.S. Commerce Department said sales fell 1.1 per cent in July, more than the 0.3-per-cent decline markets had been expecting. Economists had predicted a slowdown, citing inventory issues in the auto sector. Investors will be watching for signs that the central bank is readying to scale back asset purchases.
On the corporate side, Home Depot and Walmart both reported results before the start of trading. Other major U.S. retailers including Target and Lowe’s post results later in the week.
Walmart raised its full-year U.S. same-store sales forecast after beating analysts’ estimates. Sales at U.S. stores open at least a year rose 5.2 per cent, excluding fuel, in the second quarter. Analysts had estimated a growth of 3.69 per cent, according to IBES data from Refinitiv.
Home Depot shares were down in nearly 5 per cent in early trading after the retailer’s U.S. same-store sales fell short of analysts’ forecasts. U.S. same-store sales rose 3.4 per cent in the second quarter, compared with a 25 per cent jump a year earlier. Analysts had expected U.S. same-store sales to rise 4.9 per cent, according to IBES data from Refinitiv.
In this country, investors got another reading on the state of Canada’s housing market. Canada Mortgage and Housing Corp said the seasonally adjusted annual rate of housing starts fell 3.2 per cent to 272,176 in July. Multiple urban starts fell 3.1 per cent while single detached urban starts rose by 7.1 per cent.
Overseas, the pan-European STOXX was off 0.14 per cent in early trading, with most sectors underwater. Britain’s FTSE 100 edged up 0.10 per cent. Germany’s DAX and France’s CAC 40 were down 0.31 per cent and 0.41 per cent, respectively.
In Asia, Japan’s Nikkei lost 0.36 per cent. Hong Kong’s Hang Seng fell 1.66 per cent. Chinese tech shares came under pressure after Chinese regulators issued draft rules for the internet sector, banning unfair competition and restricting the use of user data.
Commodities
Crude prices gave back early gains on concerns that rising COVID-19 infections driven by the Delta variant would curb the recovery in demand.
The day range on Brent is US$68.84 to US$69.77. The range on West Texas Intermediate is US$66.62 to US$67.66. Both benchmarks fell more than 1 per cent on Monday.
On Tuesday, New Zealand was put under a strict lockdown after that country’s first coronavirus case in six months was reported in Auckland.
Meanwhile, Japan was set to extend its state of emergency in Tokyo and other regions to Sept. 12 and widen curbs to seven more prefectures. In Australia, authorities said they expect to see cases “rise substantially” in Sydney in coming weeks despite a prolonged lockdown, according to a Reuters report.
“The overall market sentiment is weak,” said Tetsu Emori, CEO of Emori Fund Management Inc.
“High fuel demand season in the northern hemisphere summer is almost ending, while the spreading pandemic is delaying a recovery in global fuel demand,” Tetsu Emori, CEO of Emori Fund Management Inc., said.
In other commodities, gold prices hit their highest in a week amid market jitters over rising COVID-19 infections.
Spot gold rose 0.2 per cent to US$1,791.55 per ounce, after hitting a peak since Aug. 6 at US$1,792.83.
U.S. gold futures were up 0.2 per cent at US$1,793.00.
Currencies
The Canadian dollar was down in early going amid weak risk sentiment while its U.S. counterpart edged higher against a basket of currencies.
The day range on the loonie is 79.17 US cents to 79.57 US cents.
Investors get housing starts figures before the start of trading, although the week’s key Canadian economic release comes Wednesday with new inflation figures from Statistics Canada.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, edged up 0.1 per cent to 92.705, after gaining in the previous session. The euro was steady against the U.S. dollar at US$1.177, according to figures from Reuters.
The New Zealand dollar fell to a near three-week low after the country saw its first COVID-19 case since February.
The New Zealand dollar was last down 1.4 per cent at US$0.6921, its lowest in 20 days and on track for its biggest daily decline since May.
The Australian dollar, meanwhile, fell to a nine-month low after central bank minutes in that country were viewed as dovish. The Australian dollar fell 0.7 per cent to US$0.72885.
More company news
BHP Group says it has approved $7.5-billion in capital spending to build its Jansen potash project in Saskatchewan. The decision came as BHP announced a plan to merge its oil and gas operations with Woodside Petroleum Ltd. and reported its latest quarterly results. The long-delayed project, located about 140 kilometres east of Saskatoon, is expected to produce about 4.35 million tonnes of potash per year with the potential for further expansions.
Economic news
(8:15 a.m. ET) Canadian housing starts for July.
(8:30 a.m. ET) Canada’s international securities transactions for June.
(8:30 a.m. ET) U.S. retail sales for July.
(9:15 a.m. ET) U.S. industrial production for July.
(10 a.m. ET) U.S. NAHB Housing Market Index for August.
(10 a.m. ET) U.S. business inventories for June.
(1:30 p.m. ET) U.S. Fed Chair Jerome Powell hosts a virtual town hall for teachers and students.
With Reuters and The Canadian Press