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Major indexes on both sides of the border fell at the open on Tuesday as recession fears continued to weigh on global sentiment.
Shortly after the open, the Toronto Stock Exchange’s composite S&P/TSX was down 239.36 points, or 1.26%, at 18,789.5.
In the US, the Dow Jones Industrial Average fell 194.14 points, or 0.62%, to open at 30,903.12.
The S&P 500 opened lower 32.72 points, or 0.86%, to 3,792.61, while the Nasdaq Composite fell 163.66 points, or 1.47%, to 10,964.18 at the open.
“Volatility remains high in every asset class for sure, even though it’s a holiday in the US [on Monday] it meant a 12-hour break from the noise,” said OANDA senior analyst Jeffrey Halley.
“What is clear is that the strategy of watching the cockfight from the sidelines rather than intervening remains the sensible one,” he said. “Financial markets continue to tie themselves in knots so complex they would give even the most seasoned sailor a headache as they try to price in a recession without a recession and its impact on asset prices.”
In the US, traders now await the release of the latest Federal Reserve minutes on Wednesday and new jobs data on Friday. Canadian investors also get employment data on Friday morning.
The Globe’s Mark Rendell reports that Canadian consumers and businesses expect inflation to remain high for several years, adding to pressure on the Bank of Canada to announce another big rate hike next week to prevent rapid growth in consumer prices from taking hold . The central bank released its business outlook and consumer expectations surveys on Monday.
These surveys come ahead of Bank of Canada policy announcements next week. Markets expect the central bank to raise interest rates by three-quarters of a percentage point after the Fed made a similar move in its latest policy announcement.
On Tuesday, Canadian investors will get May building permit figures from Statistics Canada. The agency reported that the total value of building permits rose by 2.3 percent. Non-residential permits jumped 7%, while housing permits fell 0.1%.
The latest home sales data from the Real Estate Board of Greater Vancouver will be released later this morning. Toronto home sales numbers follow on Wednesday.
Overseas, the pan-European STOXX 600 fell 1.83% by afternoon. Britain’s FTSE 100 fell 2.40 percent. Germany’s DAX and France’s CAC 40 lost 2.49% and 2.41%, respectively.
In Asia, Japan’s Nikkei rose 1.03 percent. Hong Kong’s Hang Seng rose 0.10 percent.
Goods
Crude oil prices struggled early as recession fears continued to weigh on sentiment.
Brent’s daily range is $112.82 to $114.75. West Texas Intermediate ranged from $107.25 to $111.45.
“Although oil traded supported on the day due to improved risk sentiment and possible easing of US trade tariffs against China, oil is still struggling to break out of its current recessionary malaise as the market moves from inflation to economic despair,” Stephen Innes, managing director of SPI Asset Management, said.
Meanwhile, Norwegian offshore workers began a strike on Tuesday that will reduce oil and gas production.
Reuters reports that Norwegian producer Equinor said the strike was expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas production accounted for 27,500 boepd.
Among other commodities, gold prices fell, hit by a stronger US dollar.
Spot gold was down 0.2 percent at $1,805.20 an ounce early Tuesday, while U.S. gold futures were up 0.4 percent at $1,807.80.
Currencies
The Canadian dollar was lower along with weaker risk sentiment in broader markets, while its U.S. counterpart hit a new two-decade high against a group of global currencies.
The loonie’s daily range is from 77.37 US cents to 77.97 US cents.
“A hawkish BoC remains an important headwind for the CAD alongside an economy that looks more resilient than that of other major advanced countries,” said Sean Osborne, chief currency strategist at Scotiabank.
“However, markets may trade cautiously in the coming days as they await the release of Fed minutes tomorrow and US ISM, ADP and NFP data later in the week.”
No major economic reports for Canada on Tuesday.
In global markets, the U.S. dollar index, which weights the greenback against a basket of global rivals, rose 0.8 percent to 105.98, a fresh two-decade high for the currency, according to Reuters data.
Meanwhile, the euro fell to a two-decade low against the US dollar amid lingering recession fears.
The euro’s 0.8 percent drop on the day took the currency to its weakest level since late 2002.
Meanwhile, the Australian dollar was also weaker despite the country’s central bank’s decision to raise interest rates for the third time in as many months.
The Australian dollar fell 0.09 percent to $0.6820 after trading as high as $0.6895 earlier in the day.
In bonds, the yield on the U.S. 10-year note eased slightly to 2.882 percent in the pre-dawn session.
More company news
A two-week strike at Canadian National Railway Company ends after the union representing 750 signal and communications workers agreed to binding arbitration. Steve Martin, a spokesman for the International Brotherhood of Electrical Workers, said the strike, which began on June 18, would end shortly after midnight. Employees will return to their roles Wednesday morning, the company said in a news release.
French music streaming platform Deezer failed to attract much investor interest for its Paris market debut seven years after its initial public offering ended, with its shares falling sharply in early trading on Tuesday. Deezer, whose larger rivals include Spotify, was down 27.15 percent at 0947 GMT at 6.00 euros a share after opening at 8.50 euros.
British Airways is canceling more flights scheduled for the summer holiday season, it said on Tuesday, amid widespread disruption at airports caused by staff shortages and a surge in travel demand. The airline said it will now cut its April-October schedule by 11%, after saying in May the cuts would amount to 10%.
Economic news
(830 a.m. ET) Canadian Building Permits for May.
(10 a.m. ET) US Factory Orders for May.
With Reuters and the Canadian press
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