Canada's main stock index slipped on Monday after Prime Minister Justin Trudeau called an early election as widely expected, while energy stocks tracked a decline in oil prices on the back of dour economic data from China.
The TSX/S&P Composite was off its lows of the morning, but still lacking 37.71 points to greet noon Monday at 20,480.36
The Canadian dollar fell 0.31 cents to 79.57 cents U.S.
In calling for the snap election on Sunday, Trudeau said he needed a new mandate to ensure voters approved of his Liberal government's plan to recover from the pandemic.
With polls showing the governing Liberal Party well ahead of the official opposition, investors have been looking for signs Canada's next government could reduce historic levels of fiscal spending to support the economy during the pandemic, with activity already on track to make a full recovery.
A 5.3% gain propelled mortgage lender Home Capital Group to the top of the TSX, which registered at noon hour at $41.84, after a clutch of brokerages including National Bank of Canada raised their price targets on
its stock.
Weed producer OrganiGram Holdings, on the other hand, tumbled 38 cents, or 10.5% to the bottom of the TSX, with a level of $3.23.
On the economic slate, Statistics Canada reported wholesale trade fell 0.8% in June, reflecting sharp declines in the building material and supplies, and machinery, equipment and supplies sub-sectors in June.
Manufacturing sales rose 2.1% in June, mostly attributable to improved production at auto assembly plants and higher sales of petroleum and coal products.
Lastly, Canada's MLS Home Price Index for sales of existing homes was up 0.6% from month-to-month; 22.2% year-to-year, according to the Canadian Real Estate Association.
ON BAYSTREET
The TSX Venture Exchange capsized 15.16 points, or 1.6%, to 907.90
The 12 TSX subgroups were evenly divided Monday noon, with utilities up 0.5%, communications improving 0.3%, and consumer staples ahead 0.2%.
The half-dozen laggards were weighed most by energy, down 2%, while materials slid 0.7%, and health-care, off 0.3%.
ON WALLSTREET
Major U.S. stock indexes slipped Monday to start the week amid fears of slowing global growth, with China’s economic recovery lagging and oil prices falling.
The Dow Jones Industrials made progress toward the breakeven point, still trailing Friday’s close by 70.87 points to 35,444.51.
The S&P 500 dropped 14.08 points to 4,453.92.
The NASDAQ stumbled 118.71 points to 14,704.19.
Bank stocks trended lower as the 10-year yield fell. Bank of America, JPMorgan Chase and Goldman Sachs each dropped around 1%.
Tesla’s stock retreated Monday after the National Highway Traffic Safety Administration announced a formal probe into the electric vehicle maker’s Autopilot partially automated driving system.
Shares of Moderna, which are up more than 250% this year, lost more than 5%.
Retail stocks bucked the trend and inched higher ahead of quarterly earnings reports from major companies. Walmart gained about 1% ahead of its quarterly report slated for Tuesday. Home Depot and Lowe’s both edged higher ahead of financial reports this week.
U.S. stocks also pulled back amid growing support within the Federal Reserve to announce a tapering of its bond purchases in September and begin the reduction in buying a month or so after. Interviews with central bank officials, along with their public comments, show growing support for a faster taper timeline than markets had expected a month ago.
The major stock indexes for much of the last month have ground to new records on the back of robust corporate earnings results. The S&P 500 has closed at a record high 48 times this year out of 155 trading days, or 31% of the time — the most frequent closing highs on record back to 1950.
In all, 87% of S&P 500 companies have reported positive earnings per share surprises for the second calendar quarter, according to FactSet as of Friday. If 87% is the final percentage, it will mark the highest percentage of S&P 500 companies reporting positive EPS surprises since FactSet began tracking this metric in 2008.
Data showed Chinese economic growth slowing more than expected. China’s retail sales increased by 8.5% in July year-over-year, below the 11.5% forecast from economists polled by Reuters. Online sales gained just 4.4% for the month. On the manufacturing sector in the country, industrial production increased by 6.4%, below the 7.8% consensus estimate.
The country’s National Bureau of Statistics noted an impact from COVID and domestic flooding, saying the country’s “economic recovery is still unstable and uneven.”
Prices for 10-Year Treasurys gained ground, lowering yields to 1.25% from Friday’s 1.29%. Treasury prices and yields move in opposite directions.
Oil prices lost 69 cents to $67.75 U.S. a barrel.
Gold prices prospered $9.60 to $1,787.80 U.S. an ounce.
