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Equities
Canada’s main stock index started higher Tuesday even as new figures painted a weaker-than-expected picture of the broader economy. On Wall Street, key indexes opened little changed and appeared set for monthly gains.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 31.41 points, or 0.15%, at 20,626.38. The index is on track for its seventh consecutive monthly gain.
In the U.S., the Dow Jones Industrial Average fell 8.46 points, or 0.02 per cent, at the open to 35,391.38.
The S&P 500 opened higher by 0.96 points, or 0.02%, at 4,529.75, while the Nasdaq Composite dropped 3.01 points, or 0.02%, to 15,262.88 at the opening bell.
“After Friday’s dovish tapering speech by Fed Chair Powell, a September taper seems very unlikely,” OANDA analyst Ed Moya said in a note.
“The Fed is behind the curve and a pullback in the stock market will have to wait.”
He said the earliest taper of bond buying by the Fed now looks like it could be in November.
“When that happens, fixed income volatility will be extreme,” he said.
In this country, Statistic Canada said the Canadian economy contracted by 1.1 per cent in the second quarter on an annualized basis. Economists had been looking for growth of about 2.5 per cent. On a monthly basis, GDP grew by 0.7 per cent in June, the final month of the quarter. That was in line with market forecasts. However, early estimates suggest a contraction of about 0.4 per cent in July.
“It seems that the Canadian economy wasn’t on as strong a footing as we had believed, and with the fourth wave now seemingly here, the economy faces another storm to navigate through,” CIBC senior economist Royce Mendes said.
On the corporate side, shares of Zoom Video Communications Inc. were down more than 15 per cent in early trading after the company reported its first billion-dollar revenue quarter but signaled a faster-than-expected easing in demand for its video-conferencing service.
The company forecast third-quarter revenue between US$1.015-billion and US$1.020-billion, compared with the analysts’ average estimate of $1.013-billion, according to Refinitiv data. Zoom released its latest quarter results after the close of trading on Monday.
In this country, convenience store operator Alimentation Couche-Tard will release quarter results after the close.
Overseas, the pan-European STOXX 600 was up 0.13 per cent in morning trading. Britain’s FTSE 100 slid 0.17 per cent. Germany’s DAX and France’s CAC 40 gained 0.52 per cent and 0.23 per cent, respectively.
In Asia, Japan’s Nikkei finished up 1.08 per cent. Hong Kong’s Hang Seng added 1.33 per cent.
Commodities
Crude prices were weaker in early going amid concerns that the impact of hurricane Ida could hamper demand as OPEC members prepare to continue raising output.
The day range on Brent is US$71.40 to US$72.36. The range on West Texas Intermediate is US$68.29 to US$69.34.
Reuters reports that the hurricane knocked out at least 94 per cent of the offshore Gulf of Mexico oil and gas production and caused “catastrophic” damage to Louisiana’s grid. The loss of power could last three weeks, slowing efforts to repair and restart energy facilities.
“Crude prices are stuck in wait-and-see mode until the energy traders have a better handle of what will be the full impact of Hurricane Ida with U.S. production,” OANDA senior analyst ED Moya said.
At the same time, traders are awaiting Wednesday’s meeting of OPEC and its allies. The group is expected to agree to go ahead with plans to add another 400,000 barrels per day of supply each month through December.
“With lots of demand uncertainty, OPEC+ can afford to be patient since peak driving season is behind us, corporate travel is not bouncing back just yet, and with an uncertain holiday travel season outlook,” Mr. Moya said. “OPEC+ has built in enough of a cushion that this market is still nowhere near having supply concerns.”
In other commodities, gold prices were higher, helped by a weaker U.S. dollar.
Spot gold was up 0.3 per cent at US$1,815.11 per ounce, after hitting its highest since Aug. 4 on Monday at US$1,822.92. U.S. gold futures rose 0.3 per cent to US$1,817.20.
Currencies
The Canadian dollar gave back early gains after Statscan said the Canadian economy unexpectedly shrank during the second quarter of the year.
The day range on the loonie is 79.19 US cents to 79.56 US cents.
The dollar had been positive through much of the premarket period, but lost altitude after Statscan reported that the economy contracted at an annual rate of 1.1 per cent in the second quarter of the year. The agency also forecast a decline of 0.4 per cent on a monthly basis in July.
On global markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, slipped a quarter of a percent to 92.456, its lowest level since August 6, according to figures from Reuters.
The euro rose 0.3 rose against the U.S. dollar, hitting a three-week high of $1.18315.
Britain’s pound strengthened to a two-week high of US$1.38010, before slipping back below US$1.38.
The yen was mostly flat at 109.85 yen to the U.S. dollar.
More company news
The Globe’s Susan Krashinsky Robertson reports Gap Inc. is launching its Athleta brand in Canada on Tuesday, its first move outside the United States, competing with retailers including Vancouver-based Lululemon Athletica Inc. for a share in a growing market for athleisure clothing. Athleta will begin with Canada-wide e-commerce, followed by two store openings this fall, at Park Royal Shopping Centre in West Vancouver in September, and Yorkdale Mall in Toronto in November.
South Korea’s parliament on Tuesday approved a bill that bans major app store operators such as Google and Apple from forcing software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases. It is the first such curb by a major economy on the likes of Apple Inc and Alphabet Inc’s Google, which face global criticism for requiring the use of proprietary payment systems that charge commissions of up to 30%.
Economic news
(830 am ET) Canada real GDP for the second quarter.
(9 am ET) U.S. S&P Case-Shiller 20-City Home Price Index for June.
(10 am ET) U.S. Conference Board Consumer Confidence for August.
With Reuters and The Canadian Press