Author: Consultant

| Published: 10/19/2023 5:35 PM ET

The Canadian market closed at a two-week low on Thursday, as stocks fell amid concerns about interest rates and geopolitical tensions.

Healthcare, real estate, utilities and financials shares were among the major losers.

The benchmark S&P/TSX Composite Index ended with a loss of 101.89 points or 0.52% at 19,348.81.

Bausch Health Companies (BHC.TO) ended 5.37% down, and Tilray Inc (TLRY.TO) drifted down nearly 3%.

Real estate stocks Allied Properties (AP.UN.TO) ended nearly 6% down. Granite Real Estate (GRT.UN.TO) ended 3.5% down, while CDN Apartment (CAR.UN.TO), Riocan Real Estate (REI.UN.TO) and Killam Apartment (KMP.UN.TO) lost 2 to 2.7%.

Among the stocks in the Utilities sector, Brookfield Infra Partners (BIP.UN.TO), Innergex Renewable Energy (INE.TO), Algonquin Power and Utilities Corp (AQN.TO), Hydro One (H.TO) and Northland Power (NPI.TO) lost 1.4 to 3.2%.

Financials shares Goeasy (GSY.TO), Sun Life Financial (SLF.TO), Brookfield Corporation (BN.TO), Brookfield Asset Management (BAM.TO), Onex Corp (ONEX.TO) and EQB (EQB.TO) ended down 2.3 to 3%.

Mullen Group Ltd. (MTL.TO) gained 2.3% on strong results. The company reported a net income of $39.1 million, or $0.44 per share, for the third-quarter, up 2.9% and 7.3%, respectively, from a year-ago.

Canada Goose Holdings Inc (GOOS.TO) ended more than 4% down following a rating downgrade.

Data from Statistics Canada showed industrial producer prices in Canada rose by 0.4% in September, easing from an upwardly revised 1.9% hike in August. The Industrial Product Price Index increased 0.6% year-on-year in September following an upwardly revised flat reading in August.

Raw materials price index in Canada rose by 3.5% month-over-month in September, up from a 3% increase in August. Year-on-year, raw materials prices increased 2.4% in September.

Federal Reserve Chairman Jerome Powell acknowledged recent signs of cooling inflation, but said Thursday that the slowing in price increases was not enough yet to determine a trend and that the central bank would be “resolute” in its commitment to its 2% mandate.

“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks for his speech at the Economic Club of New York. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.”

“While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent,” Powell added.

The speech comes with questions over where the Fed heads from here after a succession of interest rate hikes aimed at cooling inflation. Powell said he doesn’t think rates are too high now. Stocks briefly turned lower as Powell spoke and the 10-year Treasury yield neared 5%.

“Does it feel like policy is too tight right now? I would have to say no,” he said. Still, he noted that “higher interest rates are difficult for everybody.”

Powell noted the progress made toward the Fed’s twin goals.

In recent days, data has shown that while inflation remains well above the target rate, the pace of monthly increases has decelerated and the annual rate has slowed to 3.7% from more than 9% in June 2022.

“Incoming data over recent months show ongoing progress toward both of our dual mandate goals —maximum employment and stable prices,” he said.

The speech was delayed at the onset by protesters from the group Climate Defiance who charged the dais at the club’s dinner and held up a sign saying “Fed is burning” surrounded by the words “money, futures and planet.”

After a short delay, Powell noted the labor market and economic growth may need to slow to ultimately achieve the Fed’s goal.

“Still, the record suggests that a sustainable return to our 2 percent inflation goal is likely to require a period of below-trend growth and some further softening in labor market conditions,” Powell said.

Fed officials have been using interest rate hikes in part to try to level out a supply-demand imbalance in the jobs market. The Fed has raised rates 11 times since March 2022 for a total of 5.25 percentage points. Coming from the near-zero level for the fed funds rate, that has taken the benchmark rate to its highest level in some 22 years.

“We’re very far from the effective lower bound, and the economy is handling it just fine,” Powell said.

The comments come the same day initial jobless claims hit their lowest weekly level since early in 2023, indicating that the labor market is still tight and could exert upward pressure on inflation.

Robust job creation in September and a slow pace of layoffs could put progress on inflation at risk.

“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.

In recent days, other Fed officials have said they think the Fed can be patient from here. Even some members who favor tighter monetary policy have said they think the Fed can halt rate hikes at least for now while they watch the lagged impact the rate hikes are expected to have on the economy.

Markets widely expect the Fed to hold off on additional rate hikes, though there remain questions over when officials might begin cutting rates.

Powell was noncommittal on the future of policy.

Given the uncertainties and risks, and how far we have come, the Committee is proceeding carefully. We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook, and the balance of risks,” he said.

Bank of Nova Scotia BNS-T -2.17%decrease is cutting 3 per cent of its global work force ahead of launching its strategic turnaround plan, deepening the streak of job cuts on Bay Street this year.

The restructuring plans announced Wednesday – which also include trimming some real estate holdings and writing down the value of an investment in China-based Bank of Xi’an Co. Ltd. – mark chief executive officer Scott Thomson’s first major move to slash costs since taking on the top job in February.

Scotiabank said that the $590-million in charges to cover the costs will affect its fourth-quarter earnings per share by about 49 cents and its common equity tier 1 ratio – a measure of a lender’s ability to absorb losses – by approximately 10 basis points. (A basis point is one-hundredth of a percentage point.) Scotiabank expects to book the cost savings from these cuts by 2025.

Canada’s fourth-largest lender is preparing to unveil an overhaul strategy as Mr. Thomson seeks to revive the lender’s beleaguered share price. He has said that the plan – set to be unveiled in December – will focus on improving employee culture to improve customer experience, as well as expanding its Canadian business and rejigging its international unit in Latin America.

Scotiabank said in a statement its cuts to its team of 91,000 employees are a result of the bank’s digitization and automation efforts, as well as changes in how customers access their banking products and services. The lender is also continuing to streamline its operations to reallocate resources to key areas where it believes it can expand its business. It did not disclose the total number of jobs affected.

Scotiabank CEO Scott Thomson unveils first leadership shakeup

Some of Canada’s other major banks have been trimming their teams as the lenders face mounting expenses, rising provisions for potential loan defaults and tightening capital requirements. Scotiabank joins Royal Bank of Canada RY-T -1.63%decrease and Bank of Montreal BMO-T -2.29%decrease in unveiling broader cutsin recent months.

In an internal note to Scotiabank employees viewed by The Globe and Mail, Mr. Thomson said that the leadership team is treating affected staff “compassionately and with care,” and helping people find new jobs in the bank, where possible.

“I know this change is difficult and I want to thank you for your support and continued focus on delivering for our clients, the bank and each other,” Mr. Thomson said in the memo. “Today’s announcement is an important step in enabling our new strategy. Moving forward, we will be focused on unlocking our significant potential and ensuring our bank is better equipped to deliver profitable and sustainable growth.”

RBC was the first major lender to signal staffing reductions. During its third-quarter results release at the end of August, the bank said that its number of full-time employees fell 1 per cent from the previous quarter as workers left the bank. It said it expects to further decrease its work force by 1 per cent to 2 per cent next quarter.

Bank of Montreal also shed jobs, reducing its work force by 2.5 per cent. The costs related to the staff cuts stretched across the bank, but largely stemmed from the bank’s Canadian personal and commercial banking unit, its corporate division and its capital markets business.

Scotiabank’s work-force reductions will result in a restructuring charge and severance provisions of about $247-million.

RBC analyst Darko Mihelic said that the moves mark “a small step in the right direction” and that he interprets “the write-downs as a clean-up of the balance sheet.”

The layoffs were part of a broader announcement on costs that Scotiabank expects to affect its earnings results for the fourth quarter. The bank is consolidating its real estate footprint. It anticipates a charge of $63-million in the fourth quarter as it vacated certain premises and service contracts.

“Restructuring charges at the Canadian banks in difficult revenue environments are not unusual, and we may see other banks follow suit (as early as Q4),” BMO analyst Sohrab Movahedi said in a note to clients.

It will also post an impairment charge of $280-million related to the bank’s 18-per-cent investment in Bank of Xi’an. The China-based lender’s $581-million market value has consistently been below the $1-billion carrying value, the Canadian bank said.

Scotiabank has operated in China for 30 years, according to its website. In addition to its investment in Bank of Xi’an, it has two branches in Shanghai and Guangzhou, and a wealth-management joint venture with the Bank of Beijing.

Shares of Scotiabank fell 2.2 per cent in Toronto on Wednesday.

Published: 10/18/2023 5:37 PM ET

The Canadian market ended on a weak note on widespread selling on Thursday with those from industrials and financials sectors suffering sharp losses.

Rising bond yields, concerns about the outlook for interest rates and escalating tensions in the Middle East weighed on the market.

According to reports, a deadly missile attack on Al-Ahli Baptist Hospital in Gaza killed more than 500 people including women and children.

Hamas attributed the blast to an Israeli airstrike, but the Israeli military said it was not involved and the explosion was caused by a misfired Palestinian rocket.

The benchmark S&P/TSX Composite Index ended down 242.10 points or 1.23 percent at 19,450.70, slightly off the day’s low of 19,434.34.

BRP Inc (DOO.TO) fell 7.3%. ATS Corporation (ATS.TO) drifted down nearly 6%. Stantec Inc (STN.TO), TFI International (TFII.TO), Magna International (MG.TO), Cargojet (CJT.TO), Canadian National Railway (CNR.TO), goeasy (GSY.TO), Premium Brands Holdings (PBH.TO), Bank of Montreal (BMO.TO) and Fairfax Financial Holdings (FFH.TO) lost 2 to 4.5%.

CGI Inc (GIB.A.TO) announced that its subsidiary CGI Federal has received a multi-year contract worth about $522.6 million to modernize systems and technology of the U.S. Environmental Protection Agency. The stocks ended marginally up.

On the economic front, data from the Canada Mortgage and Housing Corporation showed housing starts in Canada edged up by 8% over a month earlier to 270,466 units in September.

A wave of high-profile mergers and acquisitions in the Canadian oil patch is a sign of an industry that is flush with cash and increasingly confident in the short– and medium-term outlook for fossil fuels, experts say.

Since the start of the year, there have been a number of billion-dollar-plus deals struck in the Canadian energy sector, including Crescent Point Energy Corp.’s CPG-T +2.20%increase $1.7-billion purchase of Spartan Delta Corp.’s Montney oil field assets, ConocoPhillips’ COP-N +0.18%increase approximately $4-billion purchase of TotalEnergies’ TTE-N +0.89%increase Surmont oil sands project, and Suncor Energy Inc.’s SU-T +0.51%increase $1.47-billion acquisition of Total’s stake in the Fort Hills oil sands mine.

The latest headline-grabbing deal was announced Monday, when Tourmaline Oil Corp. TOU-T +1.77%increase – Canada’s largest natural gas producer – said it would purchase privately held Bonavista Energy Corp. for $1.45-billion.

Strathcona Resources Ltd. SCR-T -1.13%decrease also recently merged with Pipestone Energy Corp. PIPE-T +1.04%increase in an all-stock deal, with the merged company expected to be the fifth largest oil producer in the country.

According to figures from Calgary-based Sayer Energy Advisors, M&A activity in the Canadian energy sector has totalled $12.7-billion since the start of 2023. While that’s less than the $15.2-billion and $17.9-billion the sector saw in 2022 and 2021, respectively, it is occurring at a time when the Canadian oil patch has now benefited from two years of strong commodity prices. Many companies are flush with cash and have rapidly been paying down debt, giving them a strong enough balance sheet to pursue growth through acquisitions.

“I think you’ll still see some more consolidation, for sure. I think there’s still going to be some more transactions,” said Tom Pavic, president of Sayer Energy Advisors.

“A number of companies have the capital to pursue these transactions – they’ve been generating quite a bit of cash flow.”

Heather Exner-Pirot, director of energy, natural resources and environment for the Macdonald-Laurier Institute, said the Canadian oil patch saw a significant amount of consolidation in 2021 as the country began to emerge from the COVID-19 pandemic. But she said the deals that are happening now are very different.

“Immediately post-COVID it was a sign of weakness. There were some companies that just weren’t going to make it and were vulnerable, and were ripe for the picking by those that were still strong enough to do it,” she said.

“Now what I think we’re seeing are signs of strength. These companies have excellent balance sheets and the capacity to go and acquire and strengthen their empires.”

South of the border, U.S. multinational oil giant Exxon Mobil Corp. XOM-N +1.28%increase announced last week it will acquire Pioneer Natural Resources PXD-N +1.33%increase in a US$59.5-billion megadeal.

That merger has been interpreted by many industry watchers as Exxon demonstrating its confidence in fossil fuels, even as the world continues to seek to transition to lower-carbon energy sources in order to slow the pace of climate change.

Exner-Pirot said she agrees with that assessment, and added that the global energy crisis sparked by Russia’s invasion of Ukraine has brought investors flooding back to the industry on the assumption that fossil fuels will still be in high demand in at least the short and medium term.

“(Oil and gas) is the best-performing sector, and I think investors are looking for ways to get back into energy,” she said.

“Definitely, people are feeling bullish.”

Still, Exner-Pirot pointed out that Canada’s energy sector has far fewer players now than it did prior to the oil price crash of 2015, an industry-shaking event that drove another major wave of consolidation. She said the fact that so much consolidation has already occurred naturally limits the amount of deal-making that can take place now.

“Where Exxon and Pioneer made sense is that so much of their land overlapped. So you really could get efficiencies by combining them – you really could produce a cheaper barrel,” she said.

“And I think the extent to which that’s possible in the Canadian oil patch is starting to diminish, only because there have been so many acquisitions. I don’t think we’re going to see a whole tsunami of new deals.”

Canada’s inflation rate unexpectedly dipped in September, a result that alleviates pressure on the Bank of Canada to resume raising interest rates next week.

The Consumer Price Index rose 3.8 per cent in September from a year earlier, down from 4 per cent in August, Statistics Canada said Tuesday in a report. Analysts on Bay Street were expecting the inflation rate to remain at 4 per cent. The CPI fell 0.1 per cent on a monthly basis.

The Bank of Canada has warned that bringing inflation back to its 2-per-cent target could be a bumpy ride, and that’s proven to be the case. After easing to 2.8 per cent in June, the annual inflation rate climbed over the summer, largely because of higher energy prices.

Live updates: Canada annual inflation rate edges down to 3.8% in September

Now, inflation is back on a downward trajectory. Higher interest rates are weighing on consumption across the economy, while gasoline prices have fallen in recent weeks. Economists said the October CPI report should bring another decline in the inflation rate.

Tuesday’s report had a significant effect on monetary policy expectations. Bond yields tumbled after the release, while financial markets priced in lower odds the Bank of Canada would raise its benchmark interest rate by a quarter-point on Oct. 25, its next decision date.

https://charts.theglobeandmail.com/S5K2Q/6/

To date, the BoC has raised its key rate to 5 per cent – the highest since 2001 – from crisis lows of 0.25 per cent. This abrupt shift in lending conditions is putting pressure on household and government finances, while economic growth has stagnated in recent months.

Some analysts on Bay Street said the Bank of Canada had done its job with interest rates – that 5 per cent was likely the peak for this cycle.

“Given that inflation is the most lagging of indicators, and the economy is clearly weakening, we’re likely to see ongoing disinflationary pressure,” Benjamin Reitzes, a Bank of Montreal strategist, said in a client note. “There’s no need for further rate hikes in Canada.”

There were widespread improvements in September. Grocery prices rose 5.8 per cent in September on a year-over-year basis, down from 6.9 per cent in August. At peak levels, grocery inflation was running at more than 11 per cent. This deceleration was foreshadowed by weaker price increases – or even declines – at earlier stages of the food supply chain.

Over the past year, prices have risen 4.4 per cent for meat, 4 per cent for dairy products and 3 per cent for fresh fruit. However, Statscan cautioned that prices were being compared to a spike last year, a “base-year effect” that is leading to more subdued numbers.

“The slowing trend in food price inflation is expected to continue through at least the turn of the year and likely into 2024,” Mr. Reitzes said.

Supply-chain issues appear to be firmly in the rearview. Prices for durable goods rose just 0.4 per cent in September from a year earlier, down from 1.4 per cent in August. Goods related to the beleaguered housing sector – such as furniture and appliances – are declining in price.

The travel industry had an outsized effect on the September numbers. Airfare prices fell 21 per cent, which Statscan attributed to a larger availability of flights.

Still, there are some pesky aspects of inflation. Housing costs rose 6 per cent in September, matching the annual gain seen in August. Rents jumped 7.3 per cent in September, up from 6.5 per cent in August, a sign of how Canada’s housing shortage is affecting the numbers.

But over all, inflationary pressures are abating. The Bank of Canada’s preferred measures of core inflation, which remove volatile movements in the CPI, slowed down in September.

Royce Mendes, head of macro strategy at Desjardins Securities, said around 40 per cent of the items in the CPI basket were experiencing inflation of 5 per cent or higher – down 10 percentage points from August.

“The slowdown in most measures of inflation combined with the lower volatility across categories should easily give the Bank of Canada enough confidence to hold rates next week,” he wrote in an investor note.

Interest-rate swaps, which capture market expectations about monetary policy, are pricing in a 15-per-cent chance the BoC hikes interest rates by a quarter-point, down from 42 per cent before the inflation report was published.

“Canadian consumers can breathe a sigh of relief, firstly because inflation appears to be easing again and secondly because that deceleration diminishes the chances of further interest rate hikes from the Bank of Canada,” Andrew Grantham, senior economist at CIBC Capital Markets, said in a research note.

“While inflation is admittedly still well above target, there were signs within today’s release that the weakening of domestic demand is now starting to impact pricing in some areas and should continue to do so moving forward, without the need for further interest rate hikes.”

Oil futures fell on Monday on a report the U.S. and Venezuela could soon reach a deal to ease sanctions on Venezuela if a presidential election date is set, while traders see the Israel-Hamas conflict not affecting crude supplies in the short term.

Brent futures were down 59 cents, or 0.67 per cent, at $90.27 a barrel at 10:30 CDT (1532 GMT). U.S. West Texas Intermediate (WTI) crude fell by 29 cents, or 0.37 per cent, to $87.30 a barrel.

The U.S. and Venezuelan governments were getting ready to sign a pact in Barbados as early as on Tuesday to ease U.S. sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year, according to media reports.

Easing sanctions on Venezuela’s oil industry could result in increased oil supply.

Traders were optimistic the war between Israel and Palestinian Islamist Hamas would remain confined to Gaza.

“It’s more of the same on Monday in terms of the conflict in the Middle East being contained from affecting crude oil supplies,” said John Kilduff, partner with Again Capital LLC.

Both oil benchmarks had climbed nearly 6 per cent on Friday, taking Brent 7.5 per cent higher on the week and WTI up 5.9 per cent.

Israeli air strikes on Gaza intensified on Monday, after diplomatic efforts to arrange a ceasefire in southern Gaza failed.

The White House said it hopes the Rafah crossing at the Gaza-Egypt border could open for a few hours on Monday to allow some people to leave ahead of Israel’s suspected ground offensive.

U.S. Secretary of State Antony Blinken returned to Israel on Monday, where he discussed humanitarian aid with Israeli Prime Minister Benjamin Netanyahu.

Russia has also entered the diplomatic fray, with President Vladimir Putin set to hold talks with Iran, Israel, Palestinians, Syria and Egypt.

Heightened tensions in the Middle East may have compounded other risk factors to push prices higher last week.

The United States last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7′s price cap of $60 a barrel, an effort to close loopholes in the mechanism designed to deprive Moscow of revenue for its energy sales.

“The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the $60/barrel limit by the US started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving ‘stability’,” PVM analyst John Evans said on price rises at the end of last week.

Canada’s main stock index climbed on Monday following a surge in information technology shares, while rising long-term government bond yields and risks of a potential escalation in the Middle East conflict kept investors cautious.

At 10:55 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 161.09 points, or 0.83%, at 19,623.95.

Information technology stocks were the top gainers during the session and climbed 1.5% to log their best day in nearly two weeks.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.7%, boosted by a rise in copper prices on a weak U.S. dollar.

Gold prices declined after a strong rally in the previous session, even as demand for the safe-haven asset remained tight over the prospects of the Middle East conflict escalating.

Yields on the U.S. and Canadian benchmark bonds rose on reports that the United States is trying to prevent the tensions between Israel and Hamas from spilling further.

Rate-sensitive real estate and the financial stocks added 1.1% each.

Energy sector dropped 0.2% as oil prices slipped as investors continued to mull the potential impact of the escalating Israel-Hamas conflict on oil prices.

“If investors believe the Middle East conflict could spread to Iran, Syria, etcetera, then we could see a larger spike in the price of oil,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.

Investors will now focus on comments from Philadelphia Federal Reserve President Patrick Harker for more clues on the U.S. central bank’s interest rates path.

In corporate news, Canada’s LOGISTEC Corp rose 12.2% after the marine cargo handling firm agreed to go private in a $67/ share buyout deal with Blue Wolf Capital Partners.

Meanwhile, the Bank of Canada’s third-quarter survey found that Canadian businesses see inflation easing over the next two years. Many still expect it to take over three years to return to the central bank’s 2% target.

Wall Street rebounded from Friday’s selloff and benchmark Treasury yields rose as investors embarked upon the first full week of third quarter corporate results while keeping a close eye on the Israel-Hamas war.

All three major U.S. indexes started the session with solid gains in a broad rally that favored economically sensitive sectors such as transports, consumer discretionary and materials.

Israeli forces continued their bombardment of Gaza after efforts to arrange a cease fire stalled as the conflict entered its tenth day.

“There’s some optimism among investors about earnings season and as they watch the situation in the Middle East,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “There’s feeling that we got through the weekend and we’re beginning earnings season and we’ll see where it takes us.”

A spate of big bank earnings reports on Friday marked the unofficial beginning third quarter earnings season, and the coming week promises to turn up the heat, with Bank of America , Goldman Sachs Group, Netflix, Tesla and a host of heavy-hitting industrials on deck.

Economic data was also sparse on Monday, with the New York Fed’s Empire State index posting a shallower than expected decline. Retail sales, industrial production, housing starts and existing home sales fill out the week’s roster.

“The economy is continuing to move ahead albeit at a slower pace,” Pavlik said. “We will be able to avoid recession and if the Fed holds rates steady going forward, a soft landing is well within their reach.”

The Dow Jones Industrial Average rose 362.5 points, or 1.08%, to 34,032.79, the S&P 500 gained 49.67 points, or 1.15%, to 4,377.45 and the Nasdaq Composite added 158.91 points, or 1.19%, to 13,566.14.

European stocks were muted by geopolitical concerns, but were given a lift after elections in Poland suggested the ruling nationalist party could fall short of a majority.

The pan-European STOXX 600 index rose 0.45% and MSCI’s gauge of stocks across the globe gained 0.76%.

Emerging market stocks lost 0.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.59% lower, while Japan’s Nikkei lost 2.03%.

U.S. Treasury yields inched higher as the government increased debt issuance while an expected Israeli ground invasion of Gaza kept markets in a tentative mood.

Benchmark 10-year notes last fell 19/32 in price to yield 4.706%, from 4.629% late on Friday.

The 30-year bond last fell 40/32 in price to yield 4.8642%, from 4.779% late on Friday.

The greenback lost ground against a basket of world currencies as a strengthening euro outweighed a weakening yen ahead of a week that promises to be heavy with commentary from Fed officials, and as developments in the Middle East continue to be monitored.

The dollar index fell 0.28%, with the euro up 0.37% to $1.0548.

The Japanese yen weakened 0.09% versus the greenback at 149.70 per dollar, while Sterling was last trading at $1.2183, up 0.35% on the day.

Crude prices inched lower as investors kept watch for signs of escalation in the Israel-Hamas conflict.

U.S. crude fell 1% to $86.81 per barrel and Brent was last at $90.01, down 0.97% on the day.

Gold slid, backing down from Friday’s rally despite geopolitical worries.

Spot gold dropped 0.8% to $1,916.80 an ounce.

Reuters