Author: Consultant

After rocky period, Montreal’s Lightspeed says payment-processing growth could push eventual profit

Lightspeed Commerce Inc. LSPD-T +7.46%increase said its loss more than doubled in the latest quarter after a rocky eight months, but said it believes it’s on a path to eventual profitability amid growth in its payment-processing services.

The point-of-sale, payments and e-commerce company is used by 163,000 restaurants, retailers and hospitality providers. Its revenue grew 78 per cent to US$146.6-million in the quarter that ended in March, from US$82.4-million a year earlier, beating analysts’ consensus forecast of US$141-million.

The boost was largely driven by an increased volume of payments that Lightspeed processed as it brought on new merchants and watched the world’s retailers re-open. The average monthly revenue it receives per retailer also grew by 35 per cent, to US$270 from US$200.

But the Montreal-based software business’s loss widened to US$114.5-million in the quarter, or 77 U.S. cents per share, from US$42-million or 34 U.S. cents per share last year. But Lightspeed forecast a brighter next few years than some analysts did, with revenue of between US$740-million and US$-760-million over its next fiscal year, and an adjusted lost of US$35-million to US$40-million, equal to about 5 per cent of its revenue.

Lightspeed’s Toronto-listed shares experienced volatile trading after markets opened Thursday, at times seeing jumps of up to 4 per cent, but shares were down 0.42 per cent to $25.91 shortly before 10 a.m. ET.

“Simply put, the pandemic was not our environment,” chief executive officer Jean Paul Chauvet said on an analyst conference call Thursday morning. “What we’ve seen in the last few months was a strong return to physical everywhere.”

The company has been rocked since last September as its share price collapsed by more than 80 per cent. That month, short-seller Spruce Point Capital Management alleged it had found inconsistencies in Lightspeed’s disclosures about its customer base, its potential market and revenue per customer. The company said Spruce Point’s allegations contained “inaccuracies and mischaracterizations,” but its share price soon began to plummet. The damage was exacerbated by both the broad selloff of tech stocks and the rise of the COVID-19 Omicron variant, which threw many jursidictions’ (and retailers’) planned reopening plans into disarray.

Chief executive officer Dax Dasilva stepped down last February, four months after the short-seller report and 17 years after he first founded the company, becoming executive chairman as its president, Mr. Chauvet, took over the top job.

Investors have sent Lightspeed shares climbing in recent days, with shares up 28 per cent from the company’s year-to-date low of $20.52 on May 11 to $26.02 on the Toronto Stock Exchange at Wednesday’s close.

Following a pile of acquisitions in recent years, Lightspeed has been integrating its services for retailers and restaurants into one-stop-shop platforms since late last year, combining longtime services such as point-of-sale software with e-commerce offerings such as inventory management.

Canada’s inflation rate hits new 31-year high in April as grocery prices soar

Canada’s inflation rate hit a new 31-year high in April as prices surged for groceries and other everyday items, part of broad-based price hikes that are getting tougher for people to avoid.

The Consumer Price Index rose 6.8 per cent in April from a year earlier, Statistics Canada said Wednesday, edging up from 6.7 per cent in March. It was the latest in a string of troublesome reports: Also on Wednesday, Britain said its inflation rate hit a 40-year high of 9 per cent, while in the U.S. it recently came in at 8.3 per cent.

On a monthly basis, consumer prices in Canada rose 0.6 per cent. The average of the Bank of Canada’s core measures of annual inflation – which strip out volatile items, such as gasoline, and give a better sense of underlying price pressures – jumped to 4.2 per cent from 3.9 per cent.

Explainer: What does inflation mean for the cost of living in Canada? Here’s what you need to know

Inflation is surging for many reasons, including rising commodity prices, some of which are tied to the Russia-Ukraine war; the persistence of supply-chain disruptions, such as the recent idling of some Chinese factories because of COVID-19 policies; and rampant consumer demand for some products, particularly durable goods, many of which are produced overseas.

In turn, the surge is heaping financial stress on many households. In April, the average hourly wage rose 3.3 per cent on an annual basis, or much lower than inflation – meaning, the average worker is seeing their purchasing power decline, a trend that’s been in place for several months.

“These are some eye-watering numbers,” said Royce Mendes, head of macro strategy at Desjardins Securities, in an interview. “The issue is not just that inflation is high – and in fact, persistently has been running high – it’s that the breadth of price increases is such that Canadians are having a lot of difficulty avoiding inflation.

Several financial analysts on Bay Street expect inflation to breach 7 per cent soon, in part because of rising costs at gas stations. The Bank of Canada “really should be open to doing whatever it takes to bring inflation down in the near term,” Mr. Mendes said.

Households are getting a frequent reminder of inflation at the supermarket. Grocery prices rose 10 per cent in April, the steepest annual increase since 1981. Statscan noted that gains are “broad-based, with consumers paying more for nearly everything at the grocery store.” Over the past year, the price of pasta has risen nearly 20 per cent, fresh fruit by 10 per cent and coffee by around 14 per cent.

Statscan said that “Russia’s invasion of Ukraine in late February put upward price pressure on food products that use wheat,” on account of both countries being major wheat exporters. “Poor weather in growing regions has also impacted prices for food,” the agency said in Wednesday’s report, noting that higher costs of food production – notably, for fertilizer and natural gas – are being passed on to consumers as well.

Housing was another source of pain. Shelter costs rose 7.4 per cent, the largest annual increase in nearly four decades. In part, that was because of sharply higher prices for energy to heat homes. Rents also rose 4.5 per cent, with larger jumps in Ontario (5.3 per cent) and British Columbia (6.4 per cent).

Gasoline prices fell slightly in April, but were still up 36 per cent from a year earlier. With the national average price of gas soaring above $2 a litre this week, energy should continue to put upward pressure on inflation.

“Barring a deep dive in oil prices in coming weeks and months, we expect that the worst is yet to come on the headline readings, and that inflation north of 6 per cent will still be with us by the end of this year,” Doug Porter, chief economist at Bank of Montreal, wrote in a client note.

Central bankers face a tough task in bringing inflation under control and defending their credibility as stewards of low and stable price growth. With Wednesday’s report, the annual inflation rate has now exceeded the Bank of Canada’s target range of 1 per cent to 3 per cent for 13 consecutive months.

The Bank of Canada has embarked on its inflation-fighting process, raising its policy rate twice this year, which took it to 1 per cent from a record low of 0.25 per cent. Bank officials say they intend to raise the benchmark rate to a “neutral” range – which neither stimulates the economy nor inhibits it – of 2 per cent to 3 per cent in short order. The central bank makes its next rate decision on June 1. Financial analysts expect another outsized rate hike of half a percentage point, matching the decision in April.

Toni Gravelle, a deputy governor at the Bank of Canada, said last week that interest rates may need to be raised above neutral under some circumstances, such as persistent supply-chain issues or a strong bump in consumer demand as COVID-19 restrictions ease.

However, he also said there were scenarios in which the bank could pause its rate-hike cycle, including if financially stretched households are forced to drastically reduce their spending owing to onerous debt-servicing costs or if commodity prices start to decline.

“These considerations should make it clear that we are not on a pre-set path of policy rate increases aimed at getting to a specific ‘terminal’ rate,” Mr. Gravelle said in a speech. “Our decisions are not on autopilot.”

Mr. Mendes of Desjardins said the risk is that central bankers move too slowly in raising interest rates and that, subsequently, the public’s view of high inflation becomes entrenched. In that scenario, he said, central banks may have to aggressively raise interest rates, which could have debilitating effects on the economy.

“Every day that inflation remains more than triple the Bank of Canada’s target, it becomes more difficult to engineer a soft landing,” he said.

U.S. weekly jobless claims rise; continuing claims lowest since 1969

• Initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 218,000 for the week ended May 14, the highest level since January, the Labor Department said on Thursday. Economists polled by Reuters had forecast 200,000 applications for the latest week.
• Though claims have been largely treading water since hitting more than a 53-year low of 166,000 in March, the labor market is rapidly tightening and generating strong wage gains that are helping to fan overall inflation in the economy.
• There were a record 11.5 million job openings at the end of March. Claims are down from an all-time high of 6.137 million in early April 2020.

https://www.cnbc.com/2022/05/19/us-weekly-jobless-claims-rise-continuing-claims-lowest-since-1969.html

S&P 500 falls again on Thursday, pushing the benchmark to the brink of a bear market

The S&P 500 fell again on Thursday, pushing the average to the brink of a bear market, as investors continued to dump equities on fears Federal Reserve rate hikes to fight rapid inflation would tip the economy into a recession.

The broad market index shed 0.5%, putting it 19.5% below its intraday record reached in January. It also sits a little more than 19% below its record closing level. A close of 20% or more below its all-time high would mark a bear market, its first since the March 2020 pandemic sell-off.

S&P 500′s rapid decline from January record

S&P 500 YTDWATCHLIST+

ChartLine chart with 251 data points.The chart has 1 X axis displaying Time. Range: 2021-12-30 00:00:00 to 2022-05-18 00:00:00.The chart has 1 Y axis displaying values. Range: 3800 to 5000.Jan 10Jan 24Feb 7Feb 21Mar 7Mar 21Apr 4Apr 18May 2May 163800400042004400460048005000cnbc.comEnd of interactive chart.

The Dow Jones Industrial Average fell 299 points, or 1%, a day after it experienced the biggest one-day drop since 2020. The Nasdaq Composite was flat, though it teetered back and forth between gains and losses on Thursday morning.

“The main takeaway for investors is to brace for extended volatility,” said Greg Bassuk, CEO at AXS Investments. “We believe that volatility is going to be the investor narrative for the balance of Q2, and frankly, you know, for the balance of 2022.”

On Wednesday, the Dow fell more than 1,100 points, marking its worst sell-off in nearly two years. The S&P 500 also suffered its worst one-day decline since June 2020, losing about 4%, and the Nasdaq Composite fell 4.7%.

Those losses were driven in part by back-to-back quarterly reports from Target and Walmart that showed higher fuel costs and restrained consumer demand hurting results amid the hottest inflation in decades. Even after a 24% drop on Wednesday, Target shares were lower again Thursday by 2%.

“The sharp sell-off in these companies (as well as other goods/consumer companies this quarter) shows that inflationary pressures are finally having an impact on earnings,” Maneesh S. Deshpande, head of U.S. equity strategy at Barclays, said in a Thursday note. “Despite heightened inflation for a better part of a year, [S&P 500] margins and forward earnings have remained resilient, which no longer seems to be the case.”

Cisco was the latest major company to plunge on results with the tech bellwether down 13% Thursday. Cisco said after the bell Wednesday that quarterly revenue fell short of analysts expectations and it warned revenue would disappoint in the current quarter.

Stocks have been under pressure all year with investors first pivoting away from highly-valued tech stocks with little profits. But the sell-off has since spread to more sectors of the economy, including banks and retail, as growing fears of a recession spooked investors.

“The issue now is there really appears to be nowhere to hide,” wrote Jonathan Krinsky, chief market technician with BTIG. On Wednesday, “they came for consumer names, but they still sold beaten down growth. In other words, money is rotating into cash instead of between different sectors.”

“While it won’t be a straight line, [this] is confirmation that selling rallies in bear markets is much easier than buying dips,” Krinsky said.

Investors remained concerned that aggressive action by the central bank to tamp down inflation would spark a steeper downturn. During a Wall Street Journal Conference on Monday, Federal Reserve Chair Jerome Powell reiterated his comments that “there won’t be any hesitation” to bring down inflation.

Several Wall Street strategists issued some dire forecasts for stocks should the Fed’s rate increases tip the economy into a recession. GDP in the first quarter decreased at a 1.4% rate so some slowing is already being seen.

Deutsche Bank cut its official target for the S&P 500 overnight, but said a recession would bring even bigger losses.

“In the event we slide into a recession imminently, we see the market selloff going well beyond average, i.e., into the upper half of the historical range and given elevated initial overvaluation, -35% to -40% or S&P 500 3000,” wrote Binky Chadha, Deutsche Bank’s chief global strategist in a note.

Meanwhile, U.S. weekly jobless claims rose to 218,000 for the week ending May 14, the Labor Department said Thursday, the latest hint that economic growth is slowing.

The Dow has declined for seven straight weeks and is down 14% in 2022. The Nasdaq is down 27% this year. The S&P 500 has lost 18%

Stock futures fall as more companies warn about higher costs, Target shares crater

U.S. stock futures fell on Wednesday morning after another major retailer warned of rising cost pressures, confirming the fears over inflation that have sent major benchmarks to big losses so far this year.

Futures for the Dow Jones Industrial Average shed 167 points, or 0.5%, with the average set for its first loss in four days. S&P 500 futures traded 0.7% lower, while Nasdaq 100 futures slipped 1%.

Those losses come after a disappointing earnings report from Target. Shares tumbled more than 24% in premarket trading Wednesday after Target reported first-quarter earnings that were much lower than Wall Street estimated because of higher costs for fuel and compensation. The retailer also saw lower-than-expected sales for discretionary merchandise like TVs.

Target’s report comes right after Walmart on Tuesday posted earnings that fell short of expectations as it too cited higher fuel and labor costs. Walmart shares ended Tuesday lower by 11%. They were down another 2% in premarket trading Wednesday.

“Any company that relies on households and discretionary purchases will likely suffer this quarter because a lot of discretionary income has been funneled to food and energy prices,” said Jack Ablin, founding partner of Cresset Capital.

Other retailers took a hit on the back of Target’s quarterly earnings miss, with the SPDR S&P Retail ETF slipping more than 4% in Wednesday premarket trading. Best Buy’s stock price dropped more than 6% in premarket trading, Dollar General’s fell more than 6% in premarket trading and Dollar Tree’s declined more than 5% in premarket trading.

Lowe’s shares fell more than 2% in premarket trading after missing sales expectations in its first quarter report as shoppers bought fewer supplies for outdoor projects.

More notable decliners in retail included shares of Macy’s, which dropped 7% in premarket trading, and shares of Kohl’s, which fell more than 5% in premarket trading.

Wednesday’s market reversal comes after shares had been mounting a comeback off the year’s lows. On Tuesday, the Dow rose 431 points, or 1.3%, while the S&P 500 gained 2% and the Nasdaq Composite climbed nearly 2.8%.

The Dow has declined for seven straight weeks, but stocks have stabilized over the last three trading sessions. Last week, the S&P 500 fell to the brink of a bear market — or 20% below its record high — but the index has now gained 4% since Thursday’s close.

Despite the recent comeback, the S&P 500 is down 14% for the year, while the Nasdaq Composite is off by 23%.

Gas prices have steadily marched higher, contributing to inflationary pressures seen across the economy. The national average for a gallon of regular gasoline hit a record $4.567 on Wednesday, according to AAA. Prices are 48 cents more than a month ago, and $1.52 more than what consumers paid last year.

Every single state is now averaging above $4 per gallon, with some states paying much more. In California, the statewide average has crossed $6.

The yield on the benchmark 10-year Treasury note topped 3% on Wednesday morning as investors weighed the prospects of tighter monetary policy.

Stocks and other risk assets have been pressured by inflation and the Federal Reserve’s attempt to tamp down price increases through rate hikes, which has led to concerns about a potential recession. Fed Chair Jerome Powell said at a Wall Street Journal conference on Tuesday that “there won’t be any hesitation” about raising rates until inflation is under control.

However, some recent economic data, including the jobs report and retail sales data from April, still show the U.S. economy growing.

“There’s a big difference between corrections in the equity markets and outright bear markets,” said Matt Stucky, a senior portfolio manager at Northwestern Mutual Wealth Management. “The difference being bear markets are almost always sort of associated with some kind of recessionary macroeconomic environment, or at least an inevitable one in the forecast horizon over the next six-to-12 months. For us, as we sit here today, we just don’t see that.”

U.S. housing starts fall in April; building permits tumble

U.S. homebuilding fell moderately in April, but a sharp decline in permits pointed to a slowdown in the housing market amid rising mortgage rates, which are contributing to reducing affordability for entry-level and first-time buyers.

Housing starts slipped 0.2% to a seasonally adjusted annual rate of 1.724 million units last month, the Commerce Department said on Wednesday. Data for March was revised lower to a rate of 1.728 million units from the previously reported 1.793 million units. Economists polled by Reuters had forecast starts declining to a rate of 1.765 million units.

Permits for future homebuilding dropped 3.2% to a rate of 1.819 million units.

A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index dropped to the lowest level in nearly two years in May.

Builders blamed the fifth straight monthly decline in sentiment on soaring prices for building materials as well as rapidly rising mortgage rates, which were squeezing entry-level and first-time homebuyers from the market.

The 30-year fixed-rate mortgage averaged 5.30% during the week ended May 12, the highest since July 2009. It has increased by more than 100 basis points since mid-March when the Federal Reserve started raising interest rates to cool demand and bring down sky-rocketing inflation.

The U.S. central bank has hiked its policy interest rate by 75 basis points since March. The Fed is expected to increase that rate by half a percentage point at each of its next policy meetings in June and July.

But homebuilding remains underpinned by a record low housing supply. There is a massive backlog of houses approved for construction that are yet to be started. Investment in homebuilding grew moderately in the first quarter. (Reporting by Lucia Mutikani Editing by Chizu Nomiyama)

Canada’s annual inflation rate edges up to 6.8% in April

Canada’s annual inflation rate accelerated again in April, edging ahead of analyst expectations, largely driven by rising food and shelter prices, Statistics Canada data showed on Wednesday.

Headline inflation hit 6.8% in April, just beating analyst forecasts that the annual rate would stay flat at 6.7%, and edging closer to the 6.9% hit in January 1991. It was the 13th consecutive month above the Bank of Canada’s 1-3% control range.

Grocery prices rose 9.7% in April, the largest increase since September 1981, with consumers paying more for nearly everything at the grocery store, said Statscan. Prices for starchy staple foods like pasta and bread led gains.

“Russia’s invasion of Ukraine in late February put upward price pressure on food products that use wheat,” said Statscan. “Poor weather in growing regions has also impacted prices for food.”

Statscan, which will change how its tracks used car prices starting with its release next month, said in a separate paper that March’s headline rate would have been 6.9% instead of 6.7% had the new methodology been in place at the last basket update.

Shelter prices in April rose at their fastest pace since June 1983, as high housing costs and rising rent continued to drive gains, with mortgage interest costs rising on the month for the first time since April 2020.

Gasoline prices fell slightly in April from March. Still, consumers paid 36.3% more at the pump for gasoline in April compared with a year-ago.

The CPI common measure, which the Bank of Canada says is the best gauge of the economy’s performance, rose to 3.2% from an upwardly revised 3.0% in March and ahead of analyst forecasts of 2.9%. CPI trim was 5.1% and CPI median was 4.4%.

The Canadian dollar was trading at 1.2807 to the greenback, or 78.08 U.S. cents.

The pandemic housing boom is winding down. Economists forecast a 10-20% price correction

Economists are predicting that Canadian home prices will fall as much as 20 per cent this year as higher interest rates begin to hit the country’s booming real estate market.

Mortgage rates are expected to climb again as the Bank of Canada aggressively hikes interest rates to deal with runaway inflation. Economists expect higher borrowing costs will lead to a significant price drop in some of the hottest markets.

Toronto-Dominion Bank economist Rishi Sondhi forecasts a double-digit percentage decline in the national average home price over the March to December period this year. Bank of Montreal senior economist Robert Kavcic predicts a 10-per-cent to 20-per-cent drop in the home price index in certain regions.

“When we speak of housing correction it’s not a question of if, but where, how much and for how long,” Mr. Kavcic said in a research note. “Suburban markets in Ontario look shakiest,” he said.

The national home price index, which adjusts for pricing volatility, fell 0.6 per cent to $866,700 from March to April on a seasonally adjusted basis, according to the Canadian Real Estate Association, or CREA. That was the first drop since April, 2020, when homeowners struggled to sell their properties amid the pandemic economic lockdown.

The current drop in home prices was led by smaller markets in Southern Ontario. Oakville-Milton’s home price index was down 5.6 per cent from March to April, while London was off 4 per cent and Cambridge was down by 3.9 per cent, according to CREA.

The housing slowdown has been triggered by a rapid increase in borrowing costs over the past few months. The Bank of Canada’s next interest-rate announcement is scheduled for June 1. The central bank is widely expected to hike interest rates by another 50 basis points.

Realtors have described a sudden change in buyer sentiment. Some homes are not fetching any offers and sitting on the market for upward of a month. That is in contrast to the first two years of the pandemic when homes drew dozens of bidders and sold for hundreds of thousands of dollars over the listed price.

“The pandemic housing boom is clearly winding down. Bidding wars are easing and prices are beginning to flatten,” said Phil Soper, chief executive officer of Royal LePage.

“When markets overshoot as they have for the past two years, they correct,” he said, adding that it was too soon to say that the pendulum had swung completely over into a buyer’s market and that he is observing instances of both multiple offers and homes not selling.

Over all, CREA said the number of resales fell 12.6 per cent from March to April on a seasonally adjusted basis, a sharper drop than the previous month, with volumes falling in most regions across the country.

Cailey Heaps, a realtor who has been selling homes in Toronto for more than two decades, said she is still seeing multiple offers above the listed price but also said: “We are not seeing the same frenzy that was present in the early months of the year.”

CREA said a little more than half of the country was in a balanced market for the first time since June, 2020, when the economy was starting to reopen. Although the number of new listings fell from March to April, buyer demand has also waned.

Even if home prices drop by 20 per cent over the latter half of this year, values will still be higher than before the start of the pandemic. Since January, 2020, the national home price index is up 52.2 per cent.

Compared with April of last year, the home price index is up 23.8 per cent.

Before the Bell: What every Canadian investor needs to know today

Equities

Wall Street futures moved higher early Tuesday as markets weigh results from big U.S. retailers. Major European markets were positive in morning trading. TSX futures gained as crude prices edged higher.

In the early premarket period, Dow and S&P futures were each up by more than 1 per cent while Nasdaq futures advanced more than 2 per cent. On Monday, U.S. stocks put in a mixed session with the Nasdaq losing 1.2 per cent and the S&P 500 falling 0.39 per cent. The Dow edged up 0.08 per cent. Canada’s S&P/TSX Composite Index outperformed, advancing 0.53 per cent on a rally in energy shares.

“Markets remain in fight or flight mode while rolling the dice on recession odds,” Stephen Innes, managing partner with SPI Asset Management, said.

“Still, traders seem to be in the mood to stay bearish until proven otherwise.”

Early Tuesday, investors got results from Home Depot and Walmart as U.S. earnings season continues to wind down.

Home Depot hiked its full-year sales forecast on demand for home improvement tools and building materials. The retailer now expects comparable sales to increase about 3 per cent in fiscal 2022, compared to its previous forecast of a slight positive growth. Analysts were expecting a 1.4-per-cent increase, according to IBES data from Refinitiv.

However, Walmart cut its full-year profit forecast. The company said it expects fiscal 2023 earnings per share to fall about 1 per cent, compared to its previous forecast of a mid-single digit increase.

Meanwhile, Elon Musk’s US$44-billion bid to buy Twitter Inc. remains in the spotlight with Mr. Musk saying the deal can’t move forward until the social media company shows proof that spam bots account for less than 5 per cent of its total users.

“My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5% (spam accounts). This deal cannot move forward until he does,” Musk said in a tweet.

On Monday, Mr. Musk suggested he could seek a cheaper price for the deal, telling a conference in Miami: “You can’t pay the same price for something that is much worse than they claimed.” Last week, Mr. Musk said the Twitter deal was on hold pending further user data from Twitter.

In this country, The Globe’s Alexandra Posadzki reports that Quebecor Inc. chief executive officer Pierre Karl Péladeau is crediting recent regulatory decisions with encouraging competition in the wireless sector, as Quebecor’s Videotron Ltd. subsidiary prepares to expand its mobile services beyond its home province of Quebec.

Overseas, the pan-European STOXX 600 rose 1.6 per cent in morning trading. Britain’s FTSE 100 gained 0.76 per cent. Germany’s DAX and France’s CAC 40 advanced 1.46 per cent and 1.37 per cent, respectively.

In Asia, Japan’s Nikkei finished 0.42-per-cent higher. Hong Kong’s Hang Seng jumped 3.27 per cent as Chinese tech shares surged.

S&P 500 FUTURES

4,071.50+66.75 (1.67%)

DOW FUTURES

32,582.00+423.00 (1.32%)

TSX 60 FUTURES

1,234.30+11.40 (0.93%)

PAST DAY

1.67%1.32%0.93%

CLOSE, MAY 16

6:35 A.M., MAY 17

SOURCE: BARCHART

Commodities

Crude prices were up in early going helped by optimism over the potential for further easing of COVID-19 restrictions in China and continued efforts in the EU to gradually phaseout Russian crude.

The day range on Brent is US$113.64 to US$115.14. The day range on West Texas Intermediate is US$113.49 to US$114.98.

“Oil prices have remained near multi-week highs this week, supported by surging gasoline and distillate prices in the U.S., and fears around an EU ban on Russian oil imports remaining in play,” OANDA senior analyst Jeffrey Halley said.

Sentiment was underpinned by reports that Shanghai marked a third consecutive day with no new COVID-19 cases outside quarantine zones. Shanghai plans to resume outdoor activities in stages, with most restrictions on movement remaining in place until May 21. The lockdown is likely to be lifted by June.

Markets have been nervously watching the situation in China, concerned that tough COVID-19 restrictions will hit demand and weigh on the broader economy.

Later in the session, traders will get weekly crude inventory numbers from the American Petroleum Institute. More official numbers follow on Wednesday morning from the U.S. Energy Information Administration.

Analysts are expecting to see a further decline in crude stocks.

In other commodities, gold prices steadied.

Spot gold was up 0.1 per cent at US$1,826.29 per ounce by early Tuesday morning. U.S. gold futures gained 0.6 per cent to US$1,825.00.

“The yellow metal has been very vulnerable to rising yields and a stronger [U.S.] dollar recently as central banks are forced into much more aggressive action,” OANDA senior analyst Craig Erlam said in a note.

“With the dollar remaining a hot favourite and pressure intensifying on central banks to tackle inflation, gold could remain out of favour for a while yet.”

HIGH GRADE COPPER

US$4.26+0.07 (1.71%)

SPOT GOLD

US$1,831.80+17.80 (0.98%)

WTI

US$115.18+0.98 (0.86%)

PAST DAY

1.71%0.98%0.86%

CLOSE, MAY 16

6:35 A.M., MAY 17

SOURCE: BARCHART

Currencies

The Canadian dollar was higher, trading around 78 US cents, as its U.S. counterpart eased for a third session against a group of world currencies.

The day range on the loonie is 77.79 US cents to 78.08 US cents.

There were no major Canadian economic releases on Tuesday’s calendar. In the U.S., Federal Reserve chair Jerome Powell will speak at a conference this afternoon on the central bank’s plan for taming inflation.

In world currencies, the U.S. dollar index was down 0.39 per cent to 103.76, more than 1-per-cent below last week’s two-decade high of 105.010, according to figures from Reuters.

The euro rose 0.4 per cent to US$1.0476.

The yen was 0.24-per-cent lower at 129.41 per U.S. dollar, holding above a two-decade low while Britain’s pound jumped 1.2 per cent to US$1.2469.

In bonds, the yield on the benchmark U.S. 10-year note was modestly higher at 2.913 per cent in the predawn period.

CANADIAN DOLLAR/U.S. DOLLAR

US$0.7800+0.0017 (0.2146%)

PAST DAY

PREV. CLOSE1:35 A.M., MAY 17

0:00 A.M., MAY 17

US$0.7794

6:35 A.M., MAY 17

US$0.7800

SOURCE: BARCHART

Economic news

(8:30 a.m. ET) Canada’s international securities transactions for March.

(8:30 a.m. ET) U.S. retail sales for April.

(9:15 a.m. ET) U.S. industrial production for April.

(10 a.m. ET) U.S. NAHB Housing Market Index for May.

(10 a.m. ET) U.S. business inventories for March.

With Reuters and The Canadian Press