TORONTO -- North American stock markets moved lower to start a busy week with the Bank of Canada expected to hike interest rates, new U.S. inflation numbers forecast to be higher and the U.S. quarterly earnings season set to get underway.
"There is some general caution ahead of a couple of important market catalysts," said Angelo Kourkafas, investment strategist at Edward Jones.
Commodities sectors took hits over worsening COVID-19 trends with China's commercial hub of Shanghai set to undergo a mass testing campaign after its first case of the BA.5 subvariant and other cities adopting COVID-19 curbs.
Travel companies including airlines saw their shares fall Monday on reports of a weeklong shutdown of casinos in Macau. Shares of Air Canada lost 5.1 per cent.
Crude oil prices dipped on fears that new lockdowns will diminish demand by the world's largest oil importer.
The August crude contract was down 70 cents at US$104.09 per barrel and the August natural gas contract was up 39.2 cents at US$6.43 per mmBTU.
The energy sector was weaker with Meg Energy Corp. and Tamarack Valley Energy Ltd. decreasing 3.3 and 3.2 per cent, respectively.
The Canadian dollar traded for 76.92 cents US, compared with 77.11 cents US on Friday.
Materials lost ground on lower metals prices as shares of First Quantum Minerals Ltd. decreased 8.3 per cent.
The August gold contract was down US$10.60 at US$1,731.70 an ounce and the September copper contract was down 9.2 cents at US$3.43 a pound.
Kourkafas expects the Bank of Canada's decision on Wednesday will likely overshadow the U.S. CPI numbers released the same day, even though inflation has been one of the key variables behind market moves this year.
A tight labour market, shown by last week's big jump in wage growth in Canada, probably "sealed the deal" for a larger 75 basis point interest rate increase, he said in an interview.
The economy "is still strong enough and inflationary pressures are not giving the Bank of Canada any room to throttle back if you will, or take its foot off the brakes."
Headline U.S. inflation is expected to increase closer to nine per cent for June because commodity and oil prices trended higher, but there are some signs of relief for July's report as gasoline prices have eased.
And the core inflation number, excluding food and energy, could show signs of moderation, he said.
"I suspect that we might see core inflation probably a tick down, as it did the year before, but very slowly."
Overall, the S&P/TSX composite index closed down 206.06 points to 18,816.80.
In New York, the Dow Jones industrial average was down 164.31 points at 31,173.84. The S&P 500 index was down 44.95 points at 3,854.43, while the Nasdaq composite was down 262.71 points or 2.3 per cent at 11,372.60.
Health care was the biggest laggard on the day, losing 4.6 per cent as Canopy Growth Corp. fell 11.5 per cent and Aurora Cannabis Inc. was 10.4 per cent lower.
The technology sector took a hit with Twitter shares plunging after Elon Musk said he was pulling the plug on his US$44-billion deal to buy the social media company.
In Canada, the sector the second-worst performer with shares of Shopify Inc. down 8.9 per cent and Lightspeed Commerce Inc. down 7.1 per cent.
The telecommunications sector was affected by shares of Rogers Communications Inc. decreasing 4.6 per cent in the aftermath of a large network outage.
Second-quarter results get underway this week with several U.S. banks reporting.
Expectations are that quarterly earnings will increase five to six per cent on the S&P 500, with investors looking closely at company guidance and outlook for the full-year, said Kourkafas.
