Equity Markets
Canada's main stock index opened higher on Monday, as higher commodity prices fueled energy and mining stocks to lead the market higher.
The Toronto Stock Exchange's S&P/TSX composite index rose 57.05 points, or 0.36 per cent, to 15,864.22 shortly after the open.
Seven of the index's 10 main groups were in positive territory.
Major Wall Street indexes hit fresh records at the open on Monday on gains in financial and technology stocks even as investors awaited a slew of earnings reports this week.
The Dow Jones Industrial Average rose 57.24 points, or 0.25 per cent, to 22,928.96. The S&P 500 gained 5.39 points, or 0.21111 per cent, to 2,558.56. The Nasdaq Composite added 20.87 points, or 0.32 per cent, to 6,626.67.
55 S&P 500 companies are expected to report this week. Out of the 32 that have reported so far, 84.4 per cent have beat earnings expectations, according to Thomson Reuters data.
Reactions to bank results last week were muted, with those for JP Morgan and Citi undermined by concerns over credit card losses. Investment banks Goldman Sachs and Morgan Stanley report before markets open on Tuesday.
Traders said investors who have driven Wall Street to further record highs this year, were yet to show clear signs of turning more negative.
"The market still wants to be optimistic, it wants to continue to move higher from here," said Robert Pavlik, chief market strategist at Boston Private Wealth.
"It seems to be the trend recently that companies report good earnings and the market sells them off a little bit, taking it as an opportunity to lock in profits. But its not something that should worry long term investors."
In Canada, one of the key events of the day will be the release at 10:30 a.m. (ET) of the Bank of Canada's business outlook survey, which analysts say offers an important glimpse into the central bank's thinking when it comes to interest rate moves.
"The Bank of Canada has put heavy emphasis on the business outlook survey in monetary policy decisions – a position reiterated by Governor (Stephen) Poloz himself in comments on September 27th," RBC assistant chief economist Paul Ferley said. "Indeed, a very strong Q2 report released in late June appeared to be a key input into the Bank of Canada's decision to hike the overnight rate for the first time in almost 7 years in July."
So, he said, this morning's release will be watched closely for any signs of change in the economic backdrop. Mr. Ferley also said he wouldn't be surprised to see a some moderation in the future sales and employment measures in the third quarter from high readings in the prior quarter. A moderation to lower "but historically respectable" levels would be consistent with the bank's view that the economic growth in the quarter will be slower but still above potential.
Elsewhere, Bombardier Inc. shares could get some attention following a Bloomberg report that the company is looking for investors for its aerospace business and is weighing the sale of some operations. The story cites unnamed sources familiar with the matter. The report comes as Bombardier faces hefty duties from the United States on sales of its C Series aircraft to Delta Airlines. Delta's CEO says it plans to go ahead with the purchases despite the tariffs.
In the U.S., earnings season continues. After the close of trading, global streaming giant Netflix Inc. releases its latest results. Analysts surveyed by Zack's Investment Research expect Netflix to post earnings per share of 32 cents in the most recent quarter.
In total, about 56 S&P 500 release numbers this week. Traders will be watching the results closely to give purpose to the recent run of stock market records.
"This is particularly the case given the quieter week we have on economic data side, with predominantly tier two (U.S.) figures scheduled for release," OANDA senior market analyst Craig Erlam said.
Overseas, world stocks and commodities were higher early on. A positive reading on the Chinese economy helped set the tone. New figures showed China's producer prices beat market forecasts to climb 6.9 per cent last month, compared with the same month a year earlier.
Asian shares rallied to a decade-high on the figures. Copper prices touched their best level in three years.
MSCI's broadest index of Asia-Pacific shares outside Japan rose for the fifth straight day and managed its best level since late 2007, according to Reuters.
Japan's Nikkei hit a new 21-year high, advancing nearly half a percentage point. Hong Kong's Hang Seng index was up 0.76 per cent. The Shanghai composite index was off 0.35 per cent.
In Europe, markets were higher although shares in Spain remained under pressure after Catalan President Carles Puigdemont failed to clarify whether the region had formally declared independence.
Britain's FTSE 100 was up 0.02 per cent. German's DAX was 0.19 per cent higher and France's CAC 40 gained 0.25 per cent.
Commodities
Oil prices rose Monday on escalating tensions in Northern Iraq. Both benchmark Brent and West Texas Intermediate were higher in early trading. The day's range on WTI so far is $51.35 (U.S.) a barrel to $52.24.
Reuters notes that the gains overnight came as Iraqi forces entered the oil city of Kirkuk, taking territory from Kurdish fighters and raising concerns over exports from OPEC's second-largest producer. Iraq launched the operation in the multi-ethnic region on Sunday as the crisis between Baghdad and the Kurdish Regional Government (KRG) escalated. Tensions have been building since the KRG voted for independence in a Sept. 25 referendum, the news agency said.
"Oil prices are already starting to look well supported though skirmishes between Iraqi and Kurd forces around Kirkuk may well have something to do with that as concerns about supply disruption in the Kurdish region return," CMC chief market analyst Michael Hewson said in an early note.
Kirkuk accounts for 200,000 barrels per day of the some 600,000 barrels of oil produced in the region.
Also underpinning prices is the decision by U.S. President Donald Trump to not certify that Iran is complying with conditions of an accord, despite indications from international inspectors to the contrary. The move raises the spectre of economic sanctions would could cut off oil from Iran.
In the U.S., rig-count figures released Friday showed drillers cut five rigs from operations last week. That brought the level of rigs in operation to the lowest since early June, according to energy services firm Baker Hughes.
In other commodities, gold was higher, holding above the $1,300 an ounce mark. Both spot gold and gold futures for December delivery were higher.
Silver also posted early gains, managing its best level since mid-September.
Currencies and bonds
The Canadian dollar was off overnight levels ahead of Monday's open as traders await the Bank of Canada's business outlook survey. The declines came as the U.S. dollar found some support on global markets despite a slightly disappointing reading last week on underlying inflationary pressures. The day's range on the loonie so far is 79.90 cents (U.S.) to 80.22 cents.
"In today's BOS, the commentary will perhaps be more important than the main balances, with the impact of a stronger CAD on exporters probably the most anticipated," RBC Europe's chief currency strategist Adam Cole said in a note. "The survey period likely sandwiched the BoC's second rate hike on Sept. 6."
He said the upbeat summer release contributed to the BoC's hawkish shift in tone and their first rate hike in seven years in July, so markets will also be very sensitive to any signs of moderation in this survey. Investment intentions and capacity pressures (ability to meet demand, labour shortages) will be closely followed as well, especially given Governor Poloz's focus on "capacity-enhancing" investment, Mr. Cole noted.
Elsewhere, the U.S. dollar index, which weighs the greenback against a basket of world currencies, was higher again Monday after losing altitude last week. The index lost momentum after the U.S. Commerce Department reported overall consumer prices rose in September as gas prices jumped as hurricanes disrupted refineries. However, the underlying inflationary picture remained tame. However, over the weekend, Fed chair Janet Yellen also said she didn't expect low inflationary pressures to continue for long.
The euro, meanwhile, was lower against the greenback after seeing its biggest weekly gain in a month. Analysts said profit taking was likely behind at least part of the decline.
In bonds, U.S. Treasurys were lower. The yield on the U.S. 10-year note was higher at 2.286 per cent. The yield on the 30-year note was also higher at 2.813 per cent.
Stocks set to see action
AutoCanada Inc. says it's buying 90 per cent of the issued and outstanding shares of Planète Mazda in Montréal. "This is a very important acquisition for AutoCanada," said CEO Steven Landry in a release. "The acquisition marks the addition of a new brand to our portfolio and the start of our relationship with Mazda Canada. It advances our strategy of adding new brands in metropolitan areas to expand and diversify our dealer network and drive sustainable long-term growth."
BlackBerry's U.S.-listed shares were down in premarket trading after patent licensing director exited the company. Victor Schubert, a key attorney executing the company's patent licensing strategy, is second recent departure from BlackBerry's licensing team, Reuters reports. Mr. Schubert told the news agency on Friday that he is no longer with BlackBerry, but did not say when or why he left.
Just over a week out from revelations of a cheating scandal that plunged Kobe Steel Ltd. in crisis and ensnared hundreds of firms, the embattled steel maker's shares skidded to five-year lows on Monday as investors worried about the financial and legal fallout. Kobe Steel Chief Executive Hiroya Kawasaki on Friday said about 500 companies had received its falsely certified products, more than double its earlier count, confirming widespread wrongdoing at the steel maker. Shares of Japan's third-biggest steel maker hit 774.0 yen in the morning, the lowest since Dec. 11, 2012. They managed to recover and rise 2.7 per cent by the close to 827.0 yen, but remain well off the pre-crisis level of 1,368 yen. The broader Tokyo stock market ended 0.47 per cent, touching a 21-year high.
Groupon jumped 3 per cent after brokerage Cowen and Co upgraded the daily deals website operator's stock to "market perform."
Food services company Aramark said on Monday it would buy Avendra LLC, majority owned by Marriott International Inc., and uniform and linen supplier AmeriPride Services Inc. for a total of $2.35 billion, before tax benefit adjustments.
Shares of Apple Inc. were up 0.8 per cent in premarket trading after KeyBanc upgraded the stock to "overweight" from "sector weight."
SoftBank Group Corp. soared 1.3 per cent after people familiar with the matter told Reuters that T-Mobile U.S. Inc. and Sprint Corp. plan to announce a merger agreement without any immediate asset sales, as they seek to preserve as much of their spectrum holdings and cost synergies as they can before regulators ask for concessions. Shares of Sprint rose 1.7 per cent in premarket trading and T-Mobile was up 1.6 per cent.
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More reading: Monday's small-cap stocks to watch
Economic News
Statistics Canada says foreign investment in Canadian securities hit $9.8-billion in August, down from $24-billion a month earlier. At the same time, Canadian investors increased their holdings of foreign securities by $12-billion, led by purchases of U.S. corporate instruments, the agency said. As a result, international transactions in securities generated a net outflow of funds of $2.2-billion.
(10:30 a.m. ET) Bank of Canada Business Outlook Survey and Senior Loan Officer Survey for Q3 is unveiled.
With files from Reuters and Bloomberg