Equities
Canada’s main stock index opened lower Monday with energy and tech shares under pressure. On Wall Street, key indexes also started in the red with traders awaiting the midweek rate decision from the Federal Reserve.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 94.94 points, or 0.46%, at 20,619.54.
In the U.S., the Nasdaq Composite dropped 109.37 points, or 0.94 per cent, to 11,512.34 at the opening bell.
The Dow Jones Industrial Average fell 68.87 points, or 0.20 per cent, at the open to 33,909.21, while The S&P 500 opened lower by 21.29 points, or 0.52 per cent, at 4,049.27.
The week’s key event will be the Fed’s rate decision on Wednesday afternoon. Markets are expecting a quarter point rate hike. Last week, the Bank of Canada raised rates by 25 basis points and signalled a pause in its campaign to hike borrowing costs.
“Recent Fed comments – and the comfort hiking 25bp and not 50bp this week – indicate a surprising level of acceptance of the more dovish market pricing, likely reflecting growing Fed optimism that policy can ‘have it both ways’ by bringing down inflation even as financial conditions become more accommodative and labor markets remain historically tight,” Citi chief economist Andrew Hollenhorst said.
“We expect upcoming stronger core inflation to challenge this most recent version of the ‘transitory’ inflation narrative.”
Later in the week, markets will also get U.S. jobs numbers for January. Consensus is for a rise of 188,000 with the unemployment rate increasing 0.1 per cent to 3.6 per cent. The report is due Friday morning. Canada’s January labour force survey will follow next week.
Canadian investors get November GDP on Tuesday morning. Markets are expecting to see a 0.-per-cent increase in growth for the month.
On the corporate side, Canadian earnings kick into gear with Imperial Oil and CP Rail reporting on Tuesday. Telecom giant BCE reports fourth-quarter results on Thursday morning.
The Globe’s Alexandra Posadzki reports this morning that Rogers Communications Inc., Shaw Communications Inc. and Quebecor Inc. have extended the deadline for their proposed deal until mid-February as they await the final signoff from Canada’s Industry Minister. The deal would see Quebecor Inc.’s Videotron acquire Shaw’s Freedom Mobile wireless carrier for $2.85-billion, before Rogers takes over Shaw for $20-billion. Federal Industry Minister François-Philippe Champagne has to approve the transfer of Shaw’s wireless licenses to Videotron in order for the deal to go ahead.
Rogers is also scheduled to report results on Thursday morning.
Tech shares will be in focus on Wall Street with Amazon, Apple, Google and Meta all releasing quarterly earnings later in the week.
Overseas, the pan-European STOXX 600 was down 0.56 per cent in morning trading. The European Central Bank is expected to hike rates by half a percentage point at its policy meeting on Thursday. Britain’s FTSE 100 slid 0.11 per cent. Germany’s DAX and France’s CAC 40 were off 0.60 per cent and 0.54 per cent, respectively.
In Asia, Japan’s Nikkei edged up 0.19 per cent. Hong Kong’s Hang Seng fell 2.73 per cent with tech and property shares leading the losses.
Commodities
Crude prices gave up early gains as markets await the Fed’s rate announcement and continue to weigh the impact of China’s reopening on demand.
The day range on Brent was US$85.74 to US$87.48 in the early premarket period. The range on West Texas Intermediate was US$78.73 to US$80.49.
“Given its consequential impact on demand, China’s reopening has undoubtedly been at the forefront of oil traders’ minds,” Stephen Innes, managing partner with SPI Asset Management, said.
“And while the left tail risk around growth is diminishing, oil traders are waiting for that confirmation bias in this week’s China PMI, which is expected to remain in contraction but should point to a slight recovery.”
Reuters reports that over the weekend, China, the world’s biggest crude importer, vowed to promote a consumption discovery that would support demand.
Later in the week, traders will also get the latest policy decision from OPEC+. Markets are expecting the group to keep output levels unchanged.
In other commodities, spot gold was 0.2-per-cent lower at US$1,923.35 per ounce by early Monday morning. U.S. gold futures fell 0.3 per cent to US$1,922.90.
Currencies
The Canadian dollar was relatively steady, trading above 75 US cents in the early premarket period, while its U.S. counterpart held near eight-month lows ahead of Wednesday’s Fed decision.
The day range on the loonie was 74.88 US cents to 75.19 US cents in early trading.
There were no major Canadian economic releases on Monday’s calendar.
On world markets, the U.S. dollar index, which measures the currency against a basket of its peers, was flat at 101.88, having hit an eight-month low of 101.50 last week, according to figures from Reuters. The index is down 1.5 per cent from January and headed to its fourth monthly loss in a row.
Meanwhile, the euro rose 0.14 per cent to US$1.0885. The euro is on track for a monthly gain against the greenback of more than 1 per cent.
The yen, meanwhile, fell 0.2 per cent to 130.17 per U.S. dollar after Bank of Japan governor Haruhiko Kuroda on Monday said the central bank must continue its easy policy, Reuters reported.
In bonds, the yield on the U.S. 10-year note was higher at 3.544 per cent in the predawn period.
More company news
Unilever on Monday appointed Hein Schumacher to replace Alan Jope as chief executive from July in a move that was welcomed by investors including board member and activist shareholder Nelson Peltz. Schumacher, 51, rejoined Unilever in October last year as non-executive director and is currently the chief of Dutch dairy business FrieslandCampina.-Reuters
Facebook on Monday asked a London tribunal to block a collective lawsuit valued at up to £3-billion ($3.7-billion) over allegations the social media giant abused its dominant position to monetize users’ personal data. Meta Platforms Inc, the parent company of the Facebook group, is facing a mass action brought on behalf of around 45 million Facebook users in Britain. -Reuters
Nissan Motor Co and Renault SA agreed on Monday to a sweeping remake of their two-decade-old automaking alliance that will put them on equal footing and see the Japanese company invest in Renault’s new electric vehicle business. The joint announcement capped nearly four months of intense talks that sources told Reuters were complicated by concerns about the sharing of intellectual property as Renault sought tie-ups with companies outside their alliance. -Reuters
Economic news
(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity for January.
With Reuters and The Canadian Press