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Equities

Canada’s main stock index slid early Tuesday as worries over the spread of the coronavirus weigh on sentiment and crude prices slip for the third day. On Wall Street, major indexes also gave up initial gains continuing Monday’s losses.

At 9:51 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 48.58 points, or 0.28%, at 17,514.16. Energy stocks fell 1.2 per cent.

In the U.S., the Dow, Nasdaq and S&P indexes all started the day in the black but reversed course to drop into the red as the session got underway. The S&P 500 index fell 0.7 per cent as of 10:30 a.m. ET. The Dow Jones Industrial Average fell 104 points, or 0.4 per cent, to 27,859. The Nasdaq fell 0.4 per cent.

Overseas, major European markets also dropped into the red after a firmer start. MSCI’s all-country index was down 0.13 per cent after posting its biggest single-day drop in two years on Monday as investors reacted to news of a spike in cases of the virus outside of China, particularly in Italy and South Korea.

“There is no question financial markets are coming round to the realization that this particular crisis is likely to have a slightly longer shelf life than many thought was the case a couple of weeks ago, however flu outbreaks are hardly anything new,” Michael Hewson, chief market analyst with CMC Markets U.K., said in a note. “They happen every year and according to the World Health Organization flu kills up to 650,000 a year, yet markets are reacting to an outbreak that has so far only affected a fraction of that number.”

In this country, bank earnings continue with results from Bank of Nova Scotia and Bank of Montreal.

In the most recent quarter, Scotiabank reported net income of $2.26-billion, or $1.84 per share, in the quarter ended Jan. 31, up from $2.11-billion, or $1.71 per share, a year earlier. On an adjusted basis, the bank earned $1.83 per share, compared with analysts’ estimate for profit of $1.74 per share, according to IBES data from Refinitiv.

Bank of Montreal, meanwhile, posted net income rose of $1.59-billion, or $2.37 per share, in the first quarter ended Jan. 31 from $1.51-billion, or $2.28 per share, a year earlier.

Shares of both banks were higher in early trading in Toronto.

Last week, Royal Bank kicked off bank earnings by posting an 11-per-cent increase in profit with a impressive showing from its capital markets unit and offering encouraging signs of steadying loan losses. Heading into bank earnings, some analysts were expecting to see the country’s big bank post first-quarter profit growth of about 6 per cent.

On Wall Street, shares of HP Inc. were up nearly 4 per cent in early trading in New York after the company posted adjusted profit of 65 US cents in the most recent quarter, topping analysts’ forecasts which called for a number closer to 54 US cents. HP, in reporting its latest results, also said it would cut costs and buy back more stock as it looks to gain investor backing to fight off a US$35-billion takeover bid from printer maker Xerox Holdings Corp. HP said it will boost its share buyback program to US$15-billion from the US$5-billion announced last fall.

Overseas, European markets had surrendered early gains to trade lower by afternoon. The pan-European STOXX 600 was down 0.51 per cent. Britain’s FTSE 100 fell 0.71 per cent. Germany’s DAX slid 0.36 per cent and France’s CAC 40 was off 0.55 per cent.

In Asia, the spillover from Wall Street’s rout on Monday, which saw the Dow plunge more than 1,000 points, hit Japan’s Nikkei, which closed down 3.34 per cent. The Shanghai Composite Index fell 0.60 per cent. Hong Kong’s Hang Seng lost 0.27 per cent.

Commodities

Crude prices lost ground as ongoing concerns over the impact of the virus on demand offset comments from Saudi Arabia’s energy minister that suggested unity in their efforts to shore up prices.

The day range on Brent so far is US$56.17 to US$56.98. The range on West Texas Intermediate is US$51.08 to US$52.02. Crude prices dropped 4 per cent on Monday as virus fears roiled global markets.

On Tuesday, Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, told reporters he was confident every member of the OPEC+ alliance was a responsible and responsive oil producer. A technical OPEC committee has recommended the group cut production by another 600,000 barrels a day to offset the impact of the virus, although Russia has yet to sign onto that proposal.

“Oil prices have recovered after Monday’s coronavirus-linked sell-off following supportive comments from Saudi Arabia’s energy minister, who remains confident in the OPEC+ partnership,” Stephen Innes, strategist with AxiCorp, said.

“Although the group has not yet decided on whether to extend the existing agreement or to cut further, the decision to delay a response to allow a better understanding of the extent of the coronavirus demand impact makes sense.”

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said that brokerage continues to have a bearish bias on oil prices.

“[We] believe that traders should continue chasing top-selling opportunity below the US$55 resistance targeting a retrace below the US$50 level due to the expectation that the divergence in supply and demand could widen and even additional production cuts from OPEC may not absorb the extra glut,” she said.

In other commodities, gold prices pulled back from seven-year highs seen in the week’s first session. Spot gold slipped 0.7 per cent to US$1,649.70, having slipped 1.7 per cent earlier in the session. U.S. gold futures fell 1.5 per cent to US$1,652. On Monday, gold spiked 2.8 per cent to US$1,688.66, its highest since early 2013.

“People are taking profits. Gold has been severely overbought in the last two weeks because of Covid-19 and expectations for easy monetary policy,” CMC Markets analyst Margaret Yang Yan told Reuters.

“It’s a slight reversion of levels from yesterday but I won’t say it’s risk-on now, because of the virus. We still have a lot of opportunities ahead in terms of virus impact and after traders take in profits, buyers will come back to the market.”

Currencies

The Canadian dollar was slightly weaker as crude prices steadied and risk sentiment shows signs of improving on global markets.

The day range on the loonie is 75.16 US cents to 75.31 US cents. On Monday, the loonie hit a two-week low of 75.14 US cents.

For the currency, the day’s main event will be afternoon remarks by Bank of Canada Governor Timothy Lane in Montreal, although the talk is the future of money and may not have a significant impact on the markets. Mr. Lane is the last scheduled speaker from the central bank ahead of next week’s decision on interest rates.

“Risk sentiment is bouncing a bit,” Elsa Lignos, global head of FX strategy for RBC, said.

On world exchange markets, rising speculation that the Federal Reserve will be forced to cut rates in response to the coronavirus outbreak weighed on the greenback.

Against a basket of currencies the dollar was 0.2 per cent weaker at 99.19, moving away from the three-year high seen last week.

Elsewhere, Reuters reports Japan’s Prime Minister Shinzo Abe said on Tuesday that clusters of coronavirus cases had emerged in the country and that the government would take stronger steps to fight contagion. The yen last traded up 0.2 per cent at 110.53 per dollar.

China’s yuan was last up 0.2 per cent at 7.0225 per U.S. dollar in the offshore market. That was its best level in five days.

More company news

Air Canada said it would allow travellers to rebook flights to parts of Italy at no charge following a spike in coronavirus cases over the weekend, the biggest outbreak in Europe. In a statement, Air Canada said the “goodwill policy” covers travel planned to Milan, Turin, Florence, Venice and Verona for Feb. 24 to March 2 which can be rebooked up to March 31.

Thomson Reuters Corp said it had appointed former Nielsen Holdings Plc president Steve Hasker as its new chief executive officer, succeeding Jim Smith. Mr. Hasker, most recently a top executive at Hollywood talent agency CAA, will assume his new role on March 15, Thomson Reuters said.

Aimia Inc. says it earned a profit of $4.9-million in its latest quarter compared with a loss of $126.2-million in the same quarter a year earlier. The company says the profit amounted to 20 cents per share for the three months ended Dec. 31 compared with a loss of 86 cents per share in the fourth quarter of 2018 when it had more shares outstanding. Aimia also said six new non-management directors have been appointed to replace six outgoing board members.

Mastercard said CEO Ajay Banga will step down at the start of the next year and be replaced by Chief Product Officer Michael Miebach. In a separate statement issued on Monday, Mastercard Inc also said its net revenue in the first quarter will likely take a hit of between 2 per cent and 3 per cent due to the coronavirus outbreak. Shares fell about 1 per cent in early trading.

Home Depot reported a better-than-expected fourth quarter with strong comparable-store sales. The home improvement retailer also boosted its quarterly dividend by 10 per cent, according to The Associated Press. Shares rose 2.6 per cent just after the opening bell. For the three months ended Feb. 2, Home Depot Inc. earned US$2.48-billion, or US$2.28 per share.

Department store chain Macy’s Inc reported quarterly comparable sales that beat Wall Street estimates with the help of a smaller-than-feared decline in holiday sales. Macy’s shares rose 7 per cent in pre-market trade. Comparable sales at Macy’s owned and licensed stores fell 0.5 per cent in the fourth quarter ended Feb. 1, compared with the 0.93-per-cent drop estimated by analysts, according to IBES data from Refinitiv.

Economic news

U.S. home prices rose at a faster pace in December as mortgage rates remained low and a falling supply of available properties set off bidding wars between buyers, The Associated Press reports. The S&P CoreLogic Case-Shiller 20-city home price index climbed 2.9 per cent in December from a year earlier after posting a 2.5-per-cent gain in November.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for February.

With Reuters and The Canadian Press

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 1:45pm EDT.

SymbolName% changeLast
WN-T
George Weston Limited
-1.5%182.5
BNS-T
Bank of Nova Scotia
+1.18%70.24
BNS-N
Bank of Nova Scotia
+1.41%51.88
BMO-T
Bank of Montreal
+1.25%132.4
BMO-N
Bank of Montreal
+1.48%97.81
AC-T
Air Canada
-0.51%19.54
TRI-T
Thomson Reuters Corp
-0.25%211.14
TRI-N
Thomson Reuters Corp
+0.02%155.98
HPQ-N
HP Inc
+0.56%30.29
MA-N
Mastercard Inc
+0.31%479.42
HD-N
Home Depot
-0.68%383.25

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