What every Canadian investor needs to know today

Equities

Canada’s main stock index opened down Monday, pressured by weakness in energy and materials stocks. On Wall Street, the Dow started in the red, hit by a decline in Boeing shares while the Nasdaq and S&P 500 edged higher.

At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 45.51 points, or 0.22 per cent, at 20,892.04. The index saw modest declines last week.

In the U.S., the Dow Jones Industrial Average fell 138.74 points, or 0.37 per cent, at the open to 37,327.37.

The S&P 500 opened higher by 6.46 points, or 0.14 per cent, at 4,703.70, while the Nasdaq Composite gained 40.39 points, or 0.28 per cent per cent, to 14,564.47 at the opening bell.

“This week attention shifts to the December CPI numbers which does have the potential to put the speculation about a March cut firmly back in its box,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“The sharp rebound in yields last week does suggest that markets are paring back pricing of a March cut with the U.S. dollar also rebounding, as stocks in the U.S. declined for the first time in 9 weeks.”

Markets have priced in about a 64-per-cent chance of the first Fed rate cut coming in March, down from about 80 per cent at the end of last year. The report is due Thursday.

Swissquote senior analyst Ipek Ozkardeskaya said markets are expecting December’s U.S. inflation report to show the annual rate slowly accelerated to 3.2 per cent from 3.1 per cent in November. Core inflation is seen easing to 3.8 per cent from 4 per cent.

“inflation figures in U.S. and Europe have come significantly down last year, but the easing could slow or reverse,” she said. “And that’s the biggest risk to the dovish Fed and European Central Bank (ECB), and Bank of England (BoE) expectations this year.”

Meanwhile, some of the biggest U.S. banks kick off earnings season on Friday with results due from Bank of America, JPMorgan Chase, Citigroup and Wells Fargo.

In Canada, investors will get earnings from retailer Aritzia on Wednesday. On Tuesday, international trade figures for November will be released by Statistics Canada.

On the corporate side, shares of Boeing were down more than 8 per cent in morning trading after the U.S. Federal Aviation Administration said 171 Boeing 737 MAX 9 airplanes would remain grounded after a cabin panel blowout that forced a new Alaska Airlines jet carrying passengers to make an emergency landing.

Overseas, the pan-European STOXX 600 was down 0.03 per cent by afternoon. Britain’s FTSE 100 slid 0.11 per cent. Germany’s DAX and France’s CAC 40 added 0.25 per cent and 0.05 per cent, respectively.

In Asia, markets in Japan were closed. Hong Kong’s Hang Seng finished down 1.88 per cent.

Commodities

Crude prices fell in early trading in the wake of price cuts from exporter Saudi Arabia.

The day range on Brent was US$77.58 to US$78.95 in the early premarket period. The range on West Texas Intermediate was US$72.61 to US$73.95.

“The Middle East conflict continues to rage on,” Stephen Innes, managing partner with SPI Asset Management, said.

“But for today so far, it appears that with no significant escalation over the weekend, oil prices are falling as hedges are getting pulled compounded as investors turn back to economic realities, where higher inventories and soaring U.S. and non-OPEC production collide with a significant drop in the U.S. ISM services employment index.”

Prices saw downward pressure from Saudi Arabia’s announcement on Sunday that it would cut the February official selling price of its flagship Arab Light crude to Asia to the lowest level in 27 months, Reuters reported.

In other commodities, spot gold was down 0.8 per cent at US$2,030.10 per ounce by early Monday morning. U.S. gold futures fell 0.6 per cent to US$2,037.70 per ounce.

Currencies

The Canadian dollar was weaker while its U.S. counterpart extended recent gains ahead of new inflation numbers later in the week.

The day range on the loonie was 74.65 US cents to 74.94 US cents in the predawn period.

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.06 per cent to 102.47.

The euro dipped 0.02 per cent to US$1.0938 while Britain’s pound fell 0.15 per cent to US$1.2699 by early Monday morning.

In bonds, the yield on the U.S. 10-year note was slightly lower at 4.029 per cent.

More company news

Lululemon raised its fourth-quarter sales and profit forecasts on Monday, in a sign that deeper discounts and deals spurred more customers to shop for the company’s products during the holiday season. The company now expects fourth-quarter revenue to be in the range of US$3.170-billion to US$3.190-billion, compared to previous forecast of US$3.135-billion to US$3.170-billion. -Reuters

Air Transat and the union representing its 2,100 flight attendants say they have reached a new tentative agreement. The proposed contract between the airline and the Canadian Union of Public Employees comes after the flight attendants rejected an earlier agreement reached in December. Details of the new tentative deal were not immediately available. –The Canadian Press

Economic news

Euro zone retail sales, economic and consumer confidence

Germany factory orders and trade surplus

(3 p.m. ET) U.S. consumer credit for November.

With Reuters and The Canadian Press

Editor’s note: The weekly performance for the S&P/TSX Composite Index has been corrected in this article.

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