Category: Uncategorized

May 10 AM

Equities

Wall Street futures edged higher early Tuesday in the wake of the previous session’s broad selloff as traders await fresh U.S. inflation data later in the week. Major European markets also recouped some lost ground in morning trading. TSX futures were positive.

In the early premarket period, futures tied to the three main U.S. indexes were all up, with Nasdaq and S&P futures advancing more than 1 per cent. On Monday, the Nasdaq fell more than 4 per cent while the S&P 500 The S&P 500 fell below 4,000 for the first time since March 2021. The S&P/TSX Composite Index lost 3.07 per cent to close below 20,000 for the first time since last summer.

Markets are now awaiting the release Wednesday of new inflation figures from the United States, hoping for signs that price pressures are cresting and giving the Federal Reserve reason to be less hawkish on rates. Sentiment has been under pressure amid concerns that a slowing economy in China on the back of strict COVID-19 restrictions could send ripples through the global economy at the same time that central banks are hiking rates to head off spiking inflationary pressures.

“There is one potential catalyzer this week, that could eventually slow down the market selloff: U.S. inflation data due Wednesday,” Swissquote senior analyst Ipek Ozkardeskaya said.

“The consumer price index is expected to have eased to 8.1 per cent in April from 8.5 per cent printed a month earlier. A softer inflation is the only thing that could give hope to investors.”

In this country, Suncor Energy holds its annual meeting on Tuesday after releasing its latest results after yesterday’s closing bell.

In releasing its earnings, Suncor Energy Inc. reported the highest quarterly dividend in the company’s history on Monday. That move came as the energy giant faces pressure from a U.S.-based activist investor for significant structural change. Suncor declared a quarterly dividend of 47 cents per common share payable June 24 to shareholders of record as of June 3.

On Tuesday morning, George Weston Ltd. reports results. Intact Financial will release its latest earnings after the close of trading.

On Wall Street, Peloton Interactive will report ahead of the start of trading.

Overseas, the pan-European STOXX 600 rose 1.10 per cent. Britain’s FTSE 100 gained 0.74 per cent. Germany’s DAX and France’s CAC 40 were up 1.57 per cent and 1.09 per cent, respectively.

In Asia, Hong Kong’s Hang Seng closed down 1.84 per cent after a weak handoff from Wall Street. Japan’s Nikkei fell 0.58 per cent.

Commodities

Crude prices remained choppy with the combination of concern over COVID-19 lockdowns in China and broader economic risks tempering sentiment.

The day range on Brent is US$103.19 to US$106.96. The range on West Texas Intermediate is US$100.44 to US$104.16. Both benchmarks lost more than 5 per cent on Monday, marking the biggest daily declines since March.

“Oil prices were more spooked by the broader commodity meltdown than expected,” Stephen Innes, managing partner with SPI Investments, said.

Crude prices got a lift last week after the European Commission proposed a phased embargo on Russian crude. However, Reuters reports that a new version is now being drafted after pressure from several members for requests for exemptions and concessions.

Later Tuesday, markets will get the first of two weekly U.S. inventory reports with new numbers from the American Petroleum Institute. More official figures follow from the U.S. Energy Information Administration on Wednesday. Analysts are expecting to see a decline in crude stocks.

In other commodities, gold prices bounced in early going as the U.S. dollar pulls back from recent two-decade highs.

Spot gold was up 0.3 per cent at US$1,859.00 per ounce early Tuesday morning. U.S. gold futures were little changed at US$1,859.00.

“The rally is anemic though and if the U.S. dollar regains its mojo later today, gold could make a decisive test of the bottom of its recent range,” OANDA senior analyst Jeffrey Halley said.

Currencies

The Canadian dollar was slightly firmer, helped by improved risk sentiment in the broader markets, after hitting its lowest level in 17 months against the U.S. dollar during the previous session.

The day range on the loonie is 76.70 US cents to 77.01 US cents.

There were no major Canadian economic releases on Tuesday’s calendar.

On world markets, the U.S. dollar index, which measures the greenback against six peers dropped nearly 0.2 per cent to 103.57, having risen as high as 104.19 overnight, a fresh 20-year peak, according to figures from Reuters.

“USD has drifted lower overnight as equity futures are rebounding from yesterday’s sharp losses and bond yields are well below yesterday’s high,” RBC chief currency strategist Adam Cole said.

Other commodities currencies also saw early gains after hitting two-year lows this week. The Australian dollar edged higher in the early morning period, after falling to its weakest since 2020. The Norwegian krone rose 0.26 per cent to 9.6345 krones per U.S. dollar, after falling to its lowest since June 2020.

Elsewhere, the euro was flat against the greenback at US$1.0563. Britain’s pound rose 0.1 per cent to US$1.2340.

In bonds, the yield on the benchmark U.S. 10-year note was lower at 3.024 per cent in the predawn period.

The Globe’s Alexandra Posadzki reports that Canada’s competition watchdog says the proposed takeover of Shaw Communications by cable giant Rogers has already reduced competition in the wireless market. In an application to stop the merger of the country’s two largest cable networks, the Competition Bureau said Shaw Communications Inc. has stopped competing for mobile phone business ahead of the planned $26-billion takeover by Rogers Communications Inc.

Economic news

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.

Stock futures rise after S&P 500 falls to its lowest level in more than a year

U.S. stock futures rose Tuesday morning, as the S&P 500 tried to rebound after falling to its lowest level in more than a year.

Dow Jones Industrial Average futures were last up 283 points, or 0.88%. S&P 500 and Nasdaq 100 futures climbed 1.1% and 1.7%, respectively.

Shares of AMC gained more than 4%, while Novavax dropped about 19% before the bell on the back of their most recent quarterly reports.

Tuesday’s moves came as Treasury yields eased from multiyear highs. The benchmark 10-year Treasury note yield, which hit its highest level since late 2018 on Monday, traded roughly 6 basis points lower at 3.016%.

On Monday, the S&P 500 dropped below the 4,000 level and hit a low of 3,975.48, marking the index’s weakest point since March 2021. The broad market index dropped 17% from its 52-week high as Wall Street continued to struggle finding a bottom after last week’s losses.

The Dow dropped 1.99%, down more than 12% from 52-week highs. The S&P 500 fell 3.2%. The tech-heavy Nasdaq Composite lost 4.29%, off more than 27% from 52-week highs.

Monday’s decline was sparked by continued fears over rising inflation hit markets on all sides. Tech stocks especially took a beating. Shares for Meta Platforms and Alphabet fell 3.7% and 2.8%, respectively. Shares for Tesla dropped more than 9%.

“The sentiment has been very bearish for the last few months, if not the last few weeks for sure, and an inability to rally…tells you everything that you need to know about the current state of the market, meaning the bears are in control,” said Adam Sarhan, founder and CEO of 50 Park Investments.

https://www.cnbc.com/2022/05/09/stock-market-futures-open-to-close-news.html

Tech giants lost more than $1 trillion in value in the last three trading days

• Apple, the most valuable publicly traded company, has seen its market capitalization trimmed by over $200 billion since Wednesday, when the Fed raised interest rates by a half percentage point.
• Staples like Campbell Soup, General Mills and J.M. Smucker have outpaced Big Tech in the past three trading days.

The world’s largest technology companies have shed over $1 trillion in value in just three trading sessions.

Stocks at large have sold off since the Federal Reserve raised its benchmark interest rate on Wednesday, but technology has endured more pain than other sectors of the economy.

Investors now have less interest in what drove business during a strong bull market in recent years, including during the pandemic, and are now pushing more money toward safer pockets of the market, including staples like Campbell Soup, General Mills and J.M. Smucker.

Apple, the world’s most valuable public company, has shed $220 billion in value since the close of trading on Wednesday, the day Fed Chair Jerome Powell declared that inflation was running too high and that there were no plans for a rate hike more than half of a percentage point.

Markets first moved up on Powell’s comments, but the optimism sputtered out in the following days. Stocks went lower on Thursday, fell again on Friday and then still lower on Monday. The S&P 500 U.S. stock index fell below the 4,000 mark on Monday, having declined by 7% since Wednesday’s close, while the Invesco Nasdaq 100 ETF is off by nearly 10% during the same period.

Here are the other big losses over the last three trading days:

• Microsoft has lost around $189 billion in value.
• Tesla’s markdown registers at $199 billion, months after seeing its valuation fall below $1 trillion.
• Amazon’s market capitalization has declined by $173 billion.
• Alphabet, Google’s umbrella company, is worth $123 billion less than it was last week.
• Graphics card maker Nvidia’s loss stands at $85 billion.
• And Facebook parent Meta Platforms has lost $70 billion in value.

Bitcoin tumbles more than 50% below its all-time high as crypto plunges again

New York (CNN Business)So much for bitcoin being digital gold.The world’s most valuable cryptocurrency was down 10% Monday after plunging again over the weekend. Bitcoin prices have now plummeted nearly 20% in the past week. At a price of just below $31,000, bitcoin is more than 50% below its record high of near $69,000 from late last year and at its lowest point since July 2021.Other cryptocurrencies, sometimes referred to as altcoins, have been hit hard too. Ethereum, binance, solana and cardano are all down about 15% in the past week, while Elon Musk’s beloved dogecoin has tumbled 10%.

Cryptocurrencies are proving to be just as risky as stocks and susceptible to the same concerns that are dragging down the Dow, S&P 500 and Nasdaq.

“Volatile trading in digital assets has not been that unusual in previous years,” said Michael Kamerman, CEO of trading platform Skilling. “Cryptocurrencies are increasingly moving in sync with tech stocks with investors treating both as risk assets and often retreating to safer corners of the market during bouts of market volatility.”

Some 401(k)s will soon let you invest in cryptoKamerman said he is still bullish on bitcoin for the long term. More hedge funds and other big institutions are starting to invest in crypto, and some global central banks are beginning to embrace it too.But he added that “bitcoin is not immune to the global inflation risk spreading across most other asset classes. Therefore we should expect to see the downward trend continue.”

Bitcoin hit by the same problems dragging down stocks

Inflation fears, worries about big interest rate hikes from the Federal Reserve and jitters about a possible economic slowdown have rattled Wall Street and sent bond yields skyrocketing.The 10-year Treasury bond yield is now hovering just above 3.1%, having more than doubled this year. Long-term bond yields are now at their highest level since November 2018.The surge in yields has also helped lift the value of the dollar, which tends tor rise in tandem with interest rates. The US Dollar Index is now trading near its highest level in twenty years. That’s bad news for bitcoin too, as many crypto backers point to dollar weakness as a bullish sign for digital currencies.As rates (and the dollar) continue to climb, some crypto skeptics think the selling in bitcoin has only just begun. The Federal Reserve is starting to pull back on monthly bond purchases and other stimulus which could be bad news for all sorts of speculative assets.”The dramatic reversal of Fed liquidity … will collapse the pandemic era bubble in crypto currencies, money losing tech companies and meme stocks,” said Jay Hatfield, chief investment officer of Infrastructure Capital Management and manager of the InfraCap Equity Income ETF.

Welcome to the crypto Super BowlHatfield said he thinks bitcoin could plunge as low as $20,000 by the end of the year.The crypto collapse is also hurting several stocks with exposure to the industry. Broker Coinbase plummeted 17% Monday and is down more than 65% this year. Robinhood, which also lets people buy and sell some cryptocurrencies, has fallen more than 45% in 2022.And shares of several cryptocurrency miners, the companies that run servers which solve the complex mathematical puzzles needed to generate new bitcoin and other cryptos, have tanked too. Hive Blockchain (HVBTF), Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) are all down between 50% and 60% this year.The massive pullback in these and other momentum tech stocks is yet another sign of the rapid shift in the market’s mood this year. The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, is in Extreme Fear territory.Investors may continue to shun volatile cryptos in favor of safe havens, such as dividend-paying blue chip stocks.

Traders are “more reluctant to adopt the additional risk associated with the crypto sphere,” said Tammy Da Costa, an analyst at DailyFX, in a report.She added that “the future of individual coins or tokens remains dubious” and that “interest rate hikes are likely to jeopardize the short-term potential for profits” in bitcoin, ethereum and other established cryptos.

MAY 9 NOON:

At midday: TSX hits 3-month low as Shaw, resource-linked stocks tumble

Canada’s main stock index touched a more than three-month low on Monday, pulled down by Shaw Communications and resource-linked stocks as commodities retreated on worries over a slowdown in global economic growth.

At 10:42 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 452.8 points, or 2.19%, at 20,183.42, hitting its lowest level since Jan. 25 with all sub-sectors in red.

Shaw Communications Inc plunged 9.2% to the bottom of the index after Canada’s Commissioner of Competition said it intends to oppose Rogers Communications Inc’s proposed $20-billion merger with the company.

The energy sector dropped 4.7%, as oil prices fell, weighed down by a strong dollar and demand concerns on the back of extended coronavirus lockdowns in China, the world’s top oil importer.

The materials sector, which includes precious and base metals miners and fertilizer companies, lost 3.2% as gold prices retreated 1% as a firmer dollar and elevated U.S. Treasury yields weighed on the appeal of non-yielding bullion.

“The rally in commodity prices on Friday helped to cushion the blow in Canada relative to the U.S., (on Monday) we see a reversal to that with stocks under pressure and with commodities under pressure,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Toronto-listed technology stocks, down 3.6%, fell for the third straight session, tracking weakness in the U.S. tech-heavy Nasdaq index.

The financials sector slipped 1%, while the industrials sector fell 2.4%.

Concerns around a slowdown in global growth amid lockdowns in China and prospects of aggressive policy tightening by major central banks pressured global investor sentiment.

Investors waited for earnings from major Canadian companies including Suncor Energy, Manulife Financial, Canadian Tire and Canada Goose due later in the week.

“Unless there is some huge surprise from a specific company, for most part macro forces will be driving the markets,” Cieszynski added.

U.S. stocks slid on Monday as higher U.S. Treasury yields hit growth stocks amid prospects of aggressive monetary policy tightening, with investor sentiment taking a hit from fears of a sharp economic slowdown in China.

All of the 11 major S&P sectors fell in early trading.

The energy sector tumbled 3.4% as oil prices fell more than 2%, sparked by weak China data and a tighter COVID-19 lockdown in Shanghai that deepened fears that the global economy is headed for a slowdown.

The tech-heavy Nasdaq dropped 3.4%, while the benchmark S&P 500 index hit its lowest level in a year as megacap stocks Microsoft Corp, Amazon, Apple Inc, Google-owner Alphabet Inc, Meta Platforms and Tesla Inc fell between 2.3% and 3.2%.

Benchmark 10-year U.S. Treasury yields were at 3.12% after hitting their highest levels since November 2018 earlier in the session as expectations of higher interest rates unnerved investors.

After a 50 basis points increase in interest rates this month by the U.S. central bank, many traders expect it to raise it by another 75 basis points at its June meeting.

“The market is focused on long-term interest rates. The higher they go, the more they’re afraid of a recession or a stagflation economy,” said Christopher Grisanti, chief equity strategist at MAI Capital Management in Cleveland.

“The fear has become so great that everything is getting sold, the proverbial throwing the baby out with the bathwater.”

The U.S. Federal Reserve can stick to half point interest rate hikes for the next two to three meetings then assess how the economy and inflation are responding before deciding whether further rises are needed, Atlanta Fed president Raphael Bostic said.

Investors will keep a close eye on the U.S. inflation data for April for clues on whether the price pressures are reaching a peak.

The Dow Jones Industrial Average was down 333.72 points, or 1.01%, at 32,565.65, the S&P 500 was down 62.00 points, or 1.50%, at 4,061.34, and the Nasdaq Composite was down 238.81 points, or 1.97%, at 11,905.85.

Technology-focused growth stocks have faced the brunt of the sell-off this year as their returns and valuations are discounted more deeply when yields rise.

The tech-heavy Nasdaq notched a fifth straight weekly loss on Friday, its longest losing streak since the fourth quarter of 2012.

The S&P 500 growth index has dropped nearly 22.8% so far this year, compared to a 13.5% fall in the benchmark index .

The first-quarter earnings season is in its final stretch, and of the 434 S&P 500 companies that have reported results as of Friday, 79% have topped analysts’ estimates, according to Refinitiv.

Declining issues outnumbered advancers for a 5.92-to-1 ratio on the NYSE and a 4.82-to-1 ratio on the Nasdaq.

Reuters

Japan’s Nikkei 225 falls 2% as Asia-Pacific stocks slip; China’s April trade data comes in above expectations

• Shares in Asia-Pacific declined in Monday trade.
• Chinese exports and imports data for April released Monday came in above expectations.
• Markets in Hong Kong are closed today for a holiday.

https://www.cnbc.com/2022/05/09/asia-pacific-stocks-set-for-lower-start-chinas-april-trade-data-ahead.html

China’s April exports slow, imports unchanged as virus curbs expand

• China’s export growth slowed to single digits in April, while imports were unchanged as tighter and wider Covid-19 curbs halted factory production, disrupted supply chains and triggered a collapse in domestic demand.
• Exports in dollar terms grew 3.9% in April from a year earlier, compared with the 14.7% growth reported in March and slightly beating analysts’ forecast of 3.2%.
• The growth was the slowest since June 2020.

https://www.cnbc.com/2022/05/09/china-economy-april-exports-slow-imports-unchanged-amid-virus-curbs.html

Calendar: What investors need to know for the week ahead

Monday May 9

China trade surplus, aggregate yuan financing, new yuan loans and money supply

Japan PMI

(8:30 a.m. ET) Canadian building permits for March.

(10 a.m. ET) U.S. wholesale inventories for March. The Street is projecting an increase of 1.8 per cent from the previous month.

Earnings include: Ballard Power Systems Inc.; Boardwalk REIT; CT Real Estate Trust; Curaleaf Holdings Inc.; Element Fleet Management Corp.; Ero Copper Corp.; Finning International Inc.; Galaxy Digital Holdings Ltd.; George Weston Ltd.; Hudbay Minerals Inc.; Ovintiv Inc.; RioCan REIT; Ritchie Bros Auctioneers

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Tuesday May 10

Japan household spending

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.

Earnings include: Bausch Health Companies Inc.; Converge Technologies Solutions Corp.; Cronos Group Inc.; Dentalcorp Holdings Ltd.; Equitable Group Inc.; Exchange Income Corp.; Freehold Royalties Ltd.; Innergex Renewable Energy Inc.; Intact Financial Corp.; InterRent REIT; Ivanhoe Mines Ltd.; Keyera Corp.; Kinross Gold Corp.; Northland Power Inc.; Nuvei Corp.; NuVista Energy Ltd.; Parex Resources Inc.; Pet Valu Holdings Ltd.; Spartan Delta Corp.; Summit Industrial Income REIT; Suncor Energy Inc.; Superior Plus Corp.

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Wednesday May 11

China CPI and PPI

Germany CPI

(8:30 a.m. ET) U.S. CPI for April. Consensus is a rise of 0.2 per cent from March and 8.1 per cent year-over-year.

(2 p.m. ET) U.S. Treasury budget for April.

Earnings include: Birchcliff Energy Ltd.; Boralex Inc.; Boyd Group Services Inc.; CCL Industries Inc.; Crombie REIT; Dye & Durham Ltd.; Goeasy Ltd.; Granite REIT; Interfor Corp.; Manulife Financial Corp.; Pan American Silver Corp.; Paramount Resources Ltd.; Power Corp. of Canada; Smart REIT; Stantec Inc.; Stella-Jones Inc.; Sun Life Financial Inc.; Tricon Capital Group Inc.; Vermilion Energy Inc.; Wesdome Gold Mines Ltd.; WSP Global Inc.

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Thursday May 12

Japan current account surplus and bank lending

(8:30 a.m. ET) U.S. initial jobless claims for week of May 7. The Street expects 180,000, down 20,000 from the previous week.

(8:30 a.m. ET) U.S. PPI for April. Consensus is a rise of 0.5 per cent from March and 10.7 per cent year-over-year.

Earnings include: Algonquin Power & Utilities Ltd.; Allkem Ltd.; Brookfield Asset Management Inc.; Canada Goose Holdings Inc.; Canadian Tire Corp. Ltd.; Cascades Inc.; CI Financial Corp.; Crescent Point Energy Corp.; Docebo Inc.; Dream Office REIT; ECN Capital Corp.; E-L Financial Corp. Ltd.; First Majestic Silver Corp.; H&R REIT; iA Financial Corp. Inc.; Intertape Polymer Group Inc.; Leon’s Furniture Ltd.; Lithium Americas Corp.; Northwest Healthcare Properties REIT; Peyto Exploration & Development Corp.; Primo Water Corp.; Quebecor Inc.; Terrascend Corp.

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Friday May 13

Euro zone industrial production

(8:30 a.m. ET) Canada’s new motor vehicle sales for March. Estimate is a decline of 20.0 per cent year-over-year.

(8:30 a.m. ET) U.S. import and export price indexes for April. Consensus projections are increases of 0.6 per cent and 0.7 per cent, respectively.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April.

(10:30 a.m. ET) Bank of Canada Senior Loan Officer Survey.

Earnings include: Definity Financial Corp.; Emera Inc.; NexGen Energy Ltd.; Onex Corp.; Seabridge Gold Inc.; Solaris Resources Inc.

Longtime China bull Stephen Roach says there’s ‘no way’ Beijing will meet its 5.5% growth target

• China is facing “enormous risk” and “formidable pressures” at the moment, according to economist Stephen Roach, who has been a longtime bull on the Asian giant.
• Beijing has officially set a growth target of around 5.5% for the Chinese economy this year, but Roach says “it will be lucky if it makes 4.”
• A slowdown in the Chinese economy is set to have global ramifications, he warned, with Beijing now unable to bail out the world the same way it did after the global financial crisis.

https://www.cnbc.com/2022/05/06/theres-no-way-china-will-meet-its-5point5percent-growth-target-stephen-roach.html