Equity Markets
Canada's main stock index inched higher in early trade on Monday, helped by gains in heavyweight financial and energy sectors while gold miners weighed.
The Toronto Stock Exchange's S&P/TSX composite index was up 6.18 points, or 0.04 per cent, at 15,179.21 shortly after the open.
Six of the index's 10 sectors were up, led higher by technology, energy and financial stocks.
Paramount Resources gained 2.6 per cent after Raymond James boosted its target price for the stock.
Gold stocks fell though, with Kinross, Alamos and Barrick all declining 1 to 2 per cent.
In Canada, General Motors Corp. is in the news after Unifor workers at the company's assembly plant in Ingersoll, Ont., went on strike Sunday night. The Globe's Greg Keenan reports the move cuts off the main supply of GM's hot-selling Chevrolet Equinox vehicles. Negotiators for the two sides had been unable to come to an agreement on a new contract before the 10:59 p.m. EDT Sunday deadline. GM stocks was up slightly in early trading.
On Wall Street, the S&P and the Dow opened at record highs on Monday as appetite for riskier assets improved on easing tensions on the Korean peninsula and ahead of the U.S. Federal Reserve's meeting that could unveil plans to trim its bloated balance sheet.
The Dow Jones Industrial Average rose 51.47 points, or 0.23 per cent, to 22,319.81. The S&P 500 gained 3.3 points, or 0.13 per cent, to 2,503.53. The Nasdaq Composite added 12.60 points, or 0.2 per cent, to 6,461.06.
The Fed begins its two-day policy meeting on Tuesday, culminating with a rate decision on Wednesday afternoon. Few traders expected a move on rates but many expect the powerful central bank will announce plans to start trimming its balance sheet. In recent weeks, both the Bank of Canada and the Bank of England surprised markets on the policy front. In Canada, the central bank hiked rates for the second time this summer while in Britain investors were caught off guard by indications that rate increases were on the way sooner rather than later.
CMC chief market analyst Michael Hewson last week's performance on the bond markets seems to suggest investors are starting to price in the prospect for some form of additional central bank tightening in coming months with yields in Germany, Britain and the U.S. all rising sharply.
"This is a little surprising particularly where the U.S. is concerned given that the path of recent U.S. economic data hasn't been that great and last week U.S. retail sales showed that the U.S. consumer didn't release the purse strings anywhere near as much as had originally been thought in June and July," he said in a morning note.
"The previous month's numbers were revised lower, while the August numbers also came in lower than expected. While some of that might have been to do with hurricane Harvey, the prospect of an improvement in the coming months given the damage caused by hurricane Irma seems limited."
Among the world's other central banks, the Bank of Japan makes its next policy announcement on Thursday.
Overseas, world stocks notched a record high as the U.S. dollar managed its best showing against the yen in eight weeks on hopes that the Fed will begin pulling back the reins on monetary policy.
MSCI's index of world stocks touched a new high overnight as investors appeared relieved that the situation on the Korean Peninsula hadn't worsened. U.S. President Donald Trump is scheduled to address world leaders at the United Nations on Tuesday.
In Europe, stocks rose to their highest level in six weeks with the pan-European Stoxx 60O seeing broad gains. Britain's FTSE 100 was up 0.38 per cent. Germany's DAX advanced 0.38 per cent and France's CAC 40 rose 0.34 per cent.
In Asia, markets finished the first session of the week in positive territory as investors looked ahead to Wednesday' s Fed announcement. Hong Kong's Hang Seng rose 1.27 per cent and the Shanghai composite index was up 0.29 per cent. Markets in Japan were closed for a public holiday.
Commodities
U.S. crude prices topped $50 (U.S.) a barrel overnight as refineries knocked off line by Hurricane Harvey continued to go back into service and the number of new U.S. oil rigs for production dropped.
In the pre-dawn hours, West Texas Intermediate spiked above $50 a barrel, although it later pulled back slightly to fall below that level. The day's range so far is $49.71 to $50.33. WTI managed a three-month high of $50.50 last Thursday.
Brent crude, meanwhile, neared the $56 (U.S.) a barrel and was holding close to its highest levels in roughly five months.
"The WTI crude traded higher for the 6th consecutive session," LCG senior market analyst Ipek Ozkardeskaya said of early market action. "Yet, gains past $50 were not stable last week. Price above the 50-week moving average ($49.50) could seem relatively high for opening fresh positions for many traders who are waiting for a concrete commitment to limit production from the OPEC and its allies."
However, she also noted that the Energy Information Administration chief Neil Atkinson cautioned that the lack of new investment in crude production could shrink the global glut and fall short of rising demand."
"This could raise 'at least a possibility' of returning to a 'very, very high' prices similar to a decade ago." Ms. Ozkardeskaya said.
Meanwhile, Gulf refineries continue to come back on line, with Royal Dutch Shell's Deer Park refinery in Texas being among the latest. The plant can process 325,700 barrels a day, according to Reuters.
Also, figures released Friday showed U.S. energy firms cut the number of oil rigs in service last week by seven, bringing the total to 749. That's the fewest in service sine June.
In other commodities, gold prices were at their lowest levels in two weeks as the U.S. dollar rose and stocks advanced. Spot gold and U.S. gold futures for December delivery were both lower.
"Further risk-taking appetite left gold prices in the dust," said OCBC analyst Barnabas Gan.
Silver was also lower. London copper was higher after losing altitude last week on concerns over slowing growth in China.
Currencies and bonds
The Canadian dollar was trading just above the 82-cent (U.S.) mark early on as its U.S. counterpart rose ahead of Wednesday's Fed decision. The loonie moved within a fairly narrow range of $81.95 cents to 82.15 cents.
Later in the week, the markets will get readings on Canadian factory sales as well as inflation and retail sales, which could offer some direction for the currency. Factory sales, due Tuesday, are seen falling 0.7 per cent. August in inflation and July retail sales will be reported Friday. Economist expected the consumer price index to post a monthly rise of 0.2 per cent with the annual rate sitting at 1.5 per cent year over year. Retail sales are expected to climb 0.3 per cent. Excluding autos, sales are forecast to have increased 0.5 per cent for the month.
Elsewhere in currency markets, the green back hit an eight-week high against the yen, helped by rising U.S. bond yields and expectations that the Fed will announce plans to start trimming its balance sheet. Last week, the U.S. dollar gained 2.8 per cent against the yen. That's its best week since November. The markets now see about a 50-50 chance of another Fed interest rate hike by the end of the year.
The pound, meanwhile, hit its highest level in more than a year against the U.S. dollar in early trading before pulling back. Sterling got a major boost last week when the Bank of England surprised the markets by indicating that rate hikes are on the horizon. But some analysts suggest the effect may not last.
"Any BoE-fuelled sterling rally may be on its last legs; what we have defined as a 'withdrawal of stimulus' hiking cycle is now priced into the currency," ING currency strategist Viraj Patel said.
In bonds, U.S. Treasurys were lower ahead of the Fed's policy announcement. Yields on the 10-year note were higher at 2.211 per cent. Yields on the 30-year note were also higher at 2.775 per cent.
In Europe, Portugal's 10-year bond tumbled to its lowest level since January 2016 on Monday after the country returned to an investment grade rating after 5-1/2 years, Reuters reports.
Standard & Poor's on Friday became the first of the big three credit ratings agencies to lift Portugal back to investment grade, citing its improving economy and public finances, the news agency said.
Stocks set to see action
The United States has appealed a ruling by the World Trade Organization which said it had not withdrawn a tax break for Boeing Co. as required, a U.S. filing published by the global trade body showed on Monday. The U.S. appeal contests elements of a WTO compliance ruling on June 9, which largely cleared the United States of maintaining unfair support for the firm but said it had failed to withdraw a tax break in Washington state. The European Union, the complainant in the case, launched its own appeal on June 29.
Ford Motor Co. and Indian auto maker Mahindra and Mahindra Ltd announced they are exploring forming a strategic alliance, as traditional auto makers increasingly collaborate to meet the threat of competition from technology-focused firms. The companies said in a joint statement on Monday the areas of potential co-operation include connected cars, mobility programs, electric vehicles and sourcing among other areas. "The agreement of intent between the two companies will allow each to leverage their mutual strengths during a period of unprecedented transformation in the global automotive industry," the two companies said.
Alphabet Inc.'s Google on Monday launched a localized payments app for India as it tries to gain a foothold in the country's rapidly-growing digital payments space. India's crowded digital payments market, expected to grow ten-fold to $500-billion by 2020, received a shot in the arm after Prime Minister Narendra Modi banned old high-value notes last year, forcing people to use e-wallets and card payments. A state-backed payments system, Unified Payment Interface (UPI), has also helped banks enter the fray, forcing wallet players to actively partner with lenders or adopt the platform in the world's fastest growing Internet services market.
U.S. defence contractor Northrop Grumman Corp. said on Monday it would buy missile and rocket maker Orbital ATK Inc for about $7.8-billion in cash, with plans to establish a new, fourth business sector. Orbital has billion-dollar contracts with NASA as well as the U.S. Army. The deal, expected to close in the first half of 2018, comes as the firing of missiles by North Korea in recent months has focused attention on missile defence systems. Northrop's offer price of $134.50 per Orbital share represents a premium of 22 per cent over the stock's Friday close. Orbital shares were up almost 20 per cent in premarket trading.
Ryanair shares fell on Monday after the Irish budget airline disrupted the plans of hundreds of thousands of travellers by cancelling flights to cope with pilot shortages and improve its punctuality record Ryanair blamed a number of factors for the sudden cancellations including a backlog of staff leave, which must be taken by the end of the year. Europe's largest airline by passenger numbers also said air traffic control strikes and weather disruption were affecting its performance.
Kinross Gold Corp said it plans to expand two gold mines, including the second phase of its Tasiast operation in West Africa, spending more than $1 billion to boost output and lower costs. The Phase 2 expansion at Tasiast in Mauritania, which would have an initial capital cost of $590-million, will raise the mine's mill capacity to 30,000 tonnes per day from 12,000 tonnes, said Kinross, the world's fifth biggest gold producer by output. That would lift average annual gold production at Tasiast to 812,000 ounces at an all-in sustaining cost of $655 an ounce. The Toronto-based miner said it will spend another $445-million to add five years of production to its Round Mountain mine in Nevada, currently scheduled to end in 2022. That project will add 1.5 million ounces of gold reserves.
Dollar Tree Inc said on Monday Chief Executive Bob Sasser will become executive chairman. Sasser's CEO role will be assumed by Gary Philbin, who is Enterprise President at the company.
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Economic News
Statistics Canada says foreign investment in Canadian securities totalled $24-billion in July. The agency said that was led be record acquisition of Canadian bonds. Meanwhile, Canadian investors cut their holdings of foreign securities by $1.8-billion for the month. As a result, Statscan said, Canada's international transactions in securities generated a net inflow of funds into the Canadian economy of $25.8-billion in July.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday slipped to 64 this month, down for 67 in August. Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September last year, according to The Associated Press.
With files from Reuters