Brent Crude Drops 3.3% to US$114.10 as S&p/tsx Composite Index Rises
Brent crude fell 3.3% to US$114.10 a barrel, while the s&p/tsx composite index pointed higher in early trading after a report that the U.S. was considering fresh military action against Iran. The move hit oil, gold and currencies at once. For Canadian investors, it also came as the resource-heavy benchmark priced in modest GDP growth in line with expectations.
US$126.41 was Brent’s intraday high before the reversal, and West Texas Intermediate also dropped 1.4% to US$105.30 a barrel. Tamas Varga, an oil broker at PVM, said the decline did not look tied to one specific development: “It just sums up the unpredictable nature of trading in a Trump world.”
Europe and Asia Trade Differently
0.9 per cent was the gain for the pan-European STOXX 600 in morning trading, with Britain’s FTSE 100 up 1.55 per cent, Germany’s DAX higher by 0.96 per cent and France’s CAC 40 edging up 0.11 per cent. Japan’s Nikkei closed 1.06 per cent lower and Hong Kong’s Hang Seng fell 1.28 per cent, showing the same report did not push every market in one direction.
1.9 per cent was the rise in spot gold, which climbed to US$4,630.03 an ounce, while June gold futures gained 1.8 per cent to US$4,642.90. Those moves tracked the same flight into metals that often comes when traders are recalibrating geopolitical risk and oil supply expectations in the same session.
The Loonie and the Dollar
73.02 US cents to 73.28 US cents was the loonie’s early trading range, with the Canadian dollar strengthening against its U.S. counterpart. Over the past month, the currency was up about 1.8 per cent against the greenback, a move that leaves importers with a somewhat stronger currency but also keeps pressure on exporters already tied to a volatile energy tape.
0.45 per cent was the drop in the U.S. dollar index to 98.52, while the U.S. dollar traded at $1.3672. The euro rose 0.3 per cent to US$1.1712 and the British pound advanced 0.38 per cent to US$1.3525, a broad currency shift that matched the day’s lower appetite for the dollar and higher demand for alternatives.
Wall Street Watches Earnings
Strong tech earnings and renewed inflation worries were also in focus as Wall Street futures traded in the black. In Canada, investors were getting results from Air Canada, Bombardier Inc., Agnico Eagle Mines Ltd., Eldorado Gold Corp., AltaGas Ltd. and Spin Master Corp., while U.S. traders watched earnings from Apple Inc., Eli Lilly and Co., Mastercard Inc., Caterpillar Inc., Merck & Co. Inc., Amgen Inc., Bristol-Myers Squibb Co. and ConocoPhillips.
Bombardier said demand for its private jets remains strong, said its servicing strategy is paying off and reported its highest free cash flow in nearly two decades in its latest quarter. If oil stays pinned near the low end of the morning range and equities hold their gains, the day’s message is straightforward: geopolitics moved the tape first, but earnings still have enough weight to reset the close.
