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Equities
Canada’s main stock index slid in early trading Monday, weighed down by weakness in crude and gold prices. On Wall Street, key indexes advanced as investors weigh ongoing concerns about spiking inflation.
In the U.S., the Dow Jones Industrial Average rose 28.52 points, or 0.08 per cent, at the open to 36,128.83.
The S&P 500 opened higher by 6.45 points, or 0.14 per cent, at 4,689.30, while the Nasdaq Composite gained 33.86 points, or 0.21 per cent, to 15,894.82 at the opening bell.
Heading into this week, inflation continues to be a key topic for investors.
“As we look towards another week the inflation genie has so far been the dog that hasn’t barked, however the volume over the apparent lack of urgency to rising inflation risks from central banks has been getting louder in the past few weeks,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“While those who are saying that central banks can’t do much about supply chain disruptions and shortages of products, and as such should look through the sharp rises in prices, are undoubtedly correct in some part, that view entirely misses the very real point that monetary policy could well be exacerbating some of this upward pressure in prices.”
In this county, markets will get October inflation data on Wednesday.
Alvin Tan, Asia FX strategist with RBC, says that bank’s economists are forecasting the annual rate of inflation will rise to 4.5 per cent, supported by further increases in food and energy as well as home-owning and auto-related components.
“Annual CPI growth is still being biased higher by base effects from when the economic impact of the pandemic was more severe, but price growth has also been broadening versus pre-pandemic (2019) levels as well, and that is expected to persist in October,” he said in a note.
On Monday morning, markets got a reading on Canada’s housing market.
The Canadian Real Estate Association says national home sales rose 8.6 per cent month-over-month. Actual monthly activity was down 11.5 per cent on a year-over-year basis. The MLS Home Price Index rose 2.7 per cent month-over-month and was up 23.4 per cent year-over-year.
On the corporate front, retailers on both sides of the border report later in the week. In the U.S., Home Depot and Walmart report earnings Tuesday. In Canada, grocers Loblaw and Metro release results Wednesday morning.
Overseas, the pan-European STOXX 600 was up 0.19 per cent by midday. Britain’s FTSE 100 slid 0.14 per cent. Germany’s DAX and France’s CAC 40 edged up 0.25 per cent and 0.52 per cent, respectively.
In Asia, Japan’s Nikkei rose 0.56 per cent. Hong Kong’s Hang Seng gained 0.25 per cent. Economic reports out of China on Monday showed retail sales rose 4.9 per cent in October while industrial output gained 3.5 per cent. Both figures were above market forecasts.
Commodities
Crude prices were lower with rising supply and increased costs seen weighing on global demand.
The day range on Brent is US$81.08 to US$82.49. The range on West Texas Intermediate is US$79.88 to US$81.20. Crude prices have declined for the past three weeks.
Figures released by energy services company Baker Hughes Co. showed U.S. oil and gas rig counts rose by six last week to 556, the highest since April 2020. Higher rig counts are seen as an early indicator of future production.
Meanwhile, OPEC cut its latest demand forecast by 330,000 barrels a day as a result of high prices.
“That number could rise if we do see further COVID waves which may at least partly explain why producers are so reluctant to increase monthly output targets, even if not doing so is raising prices and contributing to the demand drag,” OANDA senior analyst Craig Erlam said.
“Still, it seems prices may have peaked for now and could consolidate around this region.”
Gold prices, meanwhile, slid.
Spot gold fell 0.3 per cent to US$1,858.86 per ounce early Monday morning, while U.S. gold futures dropped 0.4 per cent to US$1,861.40.
Currencies
The Canadian dollar was firmer in early going as its U.S. counterpart pulled back from a 16-month high against global currencies with markets looking for clues as to the Federal Reserve’s response to rising inflation.
The day range on the loonie is 79.63 US cents to 79.85 US cents.
“CAD-positive news is not particularly evident this morning, however; oil prices are on the longest, losing run since March as investors continue to ponder the threat of the U.S. releasing SPR [strategic petroleum reserve] stockpiles to try and help dampen domestic inflation,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which measures the currency against six peers, flattened at 95.146, after managing its highest level since July 2020 on Friday, according to figures from Reuters.
The euro was flat at US$1.1438, close to Friday’s 16-month low.
After touching its lowest level this year on Friday versus the U.S. dollar, Britain’s pound also flattened at US$1.3412, ahead readings on employment, inflation and retail sales this week.
In bonds, the yield on the U.S. 10-year note was lower at 1.555 per cent in the predawn period.
More company news
Restaurant Brands International Inc. says it is buying U.S.-based fast food chain Firehouse Subs for US$1-billion. The Toronto-based company behind Tim Hortons, Burger King and Popeyes says the sandwich restaurant is a strong and growing player in the quick service restaurant industry, with substantial long-term growth potential.
Agnico Eagle Mines Ltd. says advisory firm Glass Lewis has recommended shareholders vote in favour of a deal to merge with Kirkland Lake. In September, Agnico reached a friendly agreement to acquire Kirkland Lake in an all-stock, no-premium acquisition worth more than $13-billion. The deal will see Toronto-based Agnico increase its footprint significantly in Canada and Australia.
Cineworld sales touched 90% of pre-COVID levels in October, the world’s second-largest theater operator said on Monday. It said revenue had grown steadily since reopening in April, driven by big-budget movies including Marvel’s “Black Widow,” “Shang-Chi and the Legend of the Ten Rings,” Bond film “No Time to Die,” and book-to-screen science-fiction “Dune.”
Royal Dutch Shell will scrap its dual share system in favour of a single class of shares to boost shareholder payouts and simplify its structure, it said on Monday, as the energy giant battles calls from an activist investor to split up. The company, which has set targets to gradually shift from hydrocarbons, expects to drop “Royal Dutch” from its name and be called Shell Plc. It also plans to move its tax residence to Britain, its country of incorporation, from the Netherlands.
Great-West Lifeco Inc. is raising its quarterly dividend to shareholders by 12 per cent. The insurance company says it has declared an additional dividend of 5.2 cents per share, payable on Dec. 31 to shareholders of record at the close of business on Dec. 3. Combined with its dividend of 43.8 cents per share announced Nov. 3, Great-West will pay a total quarterly dividend of 49 cents per share. The Office of the Superintendent of Financial Institutions lifted COVID-19-related restrictions on Nov. 4 that had prevented federally regulated banks and insurers from raising dividends and buying back shares.
Economic news
(8:30 a.m. ET) Canadian manufacturing sales and new orders for September.
(8:30 a.m. ET) Canada’s wholesale trade for September.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for November.
(9 a.m. ET) Canada’s existing home sales for October.
(9 a.m. ET) Canada’s MLS Home Price Index for October.
With Reuters and The Canadian Press