North American stock markets started lower in what promises to be a busy week amid expectations of higher interest rates from the Bank of Canada, higher inflation in the United States and the onset of earnings season on the New York Stock Exchange.
“There is some widespread caution awaiting a few significant market catalysts,” said Angelo Kourkafas, investment strategist at Edward Jones.
The S&P/TSX Composite Index lost 206.06 points to 18,816.80 points.
In New York, the Dow Jones fell 164.31 points to 31,173.84 points. The S&P 500 index, for its part, fell 44.95 points to 3854.43, while the Nasdaq Composite index lost 262.71 points or 2.3% to 11,372.60 points.
The Canadian dollar was trading at 76.92 cents US, compared to 77.11 cents US on Friday.
Crude oil prices for August orders fell 70 cents to US$104.09 a barrel. In the case of natural gas, prices rose 39.2 cents to US$6.43 per mmBTU for August orders.
The August gold market is down US$10.60 at US$1731.70 an ounce. For September, copper is down 9.2 cents to US$3.43 per pound.
Commodity sectors have been affected by worsening trends in the spread of COVID-19. China’s mall in Shanghai is to undergo a mass testing campaign after its first case of the BA.5 subvariant and other cities adopt restrictions.
Tour operators, including airlines, saw their shares tumble on Monday following reports of a week-long closure of casinos in Macau. Air Canada shares fell 5.1%.
Materials lost ground on lower metal prices, with shares of First Quantum Minerals falling 8.3%.
Kourkafas expects the Bank of Canada’s decision on Wednesday to likely overshadow the unveiling of the U.S. consumer price index (CPI) released the same day, even though inflation was l one of the main variables driving market movements this year.
A tight labor market, exemplified by Canada’s big jump in wage growth last week, likely “paved the way” for a bigger interest rate hike of 75 basis points, he said. said in an interview.
The economy “is still quite strong and inflationary pressures leave no leeway for the Bank of Canada to ease the brakes.”
Headline inflation in the United States is expected to rise by nearly 9% in June on the upward trend in commodity and oil prices, but there are signs of relief for the July report as gasoline prices have fallen.
The core inflation figure, excluding food and energy, could show signs of moderating, he said.
“I suspect we could see core inflation come down, like it did the year before, but very slowly. »
The tech sector has been dragged down by falling shares of Twitter after Elon Musk said he was ending his $44 billion deal to buy the social media company.
In Canada, the sector was the second worst performer with Shopify shares down 8.9% and Lightspeed Commerce down 7.1%.
In the telecommunications sector, Rogers shares lost 4.6% following a major network outage.
Second quarter results begin this week with US banks.
Expectations are that quarterly earnings will rise 5-6% on the S&P500. Investors will be watching corporate management comments closely for the rest of the year, Kourkafas said.