Equity Markets
U.S. stock futures pointed to a strong open Monday after the latest jobs report reduced fears of inflation and a faster pace of rate hikes, while the TSX also pointed to positive open after the U.S. gave Canada an exemption on steel and aluminum tariffs late last week. However, oil prices sagged and a report suggested Canada's growing debt levels put its credit markets at risk.
On Friday, stocks finished higher after the jobs reports on both sides of the border. Tepid wage growth though calmed investor fears about inflation and rising interest rates.
Overseas, world stocks surged to a two-week high on Monday after strong U.S. jobs data at the end of last week helped take the edge off investors' concerns about the potential outbreak of trade war between the United States and other major economies.
European shares shot up across the board, following their Asian counterparts, while emerging market currencies strengthened as investors bought up riskier assets and sold safer securities such as gold and government bonds.
"Friday's U.S. employment data was about as perfect a set of figures as you can get from a policy maker's point of view. The increase in jobs was nothing short of amazing," said Marshall Gittler, a strategist at ACLS Global, a currency brokerage.
"In other words, it was a 'Goldilocks' report: not too hot, not too cold, just right."
As a result, the S&P500 surged more than 1.7 percent on Friday -- its second-best day of the year so far -- and the warm glow extended around the globe on Monday.
Germany's DAX led gains in Europe, rising 0.9 percent, and MSCI's world equity index, which tracks shares in 47 countries, hit a two-week high. Britain's FTSE rose 0.03 per cent and France's CAC gained 0.27 per cent.
In Asia, the Nikkei added 1.65 per cent, the Shanghai gained 0.58 per cent, and the Hang Seng rose 1.93 per cent.
Commodities
Oil prices gave up earlier gains on Monday as rising U.S. output loomed over markets, despite a slowdown in rig drilling activity.
"A falling rig count and the strong employment data may have helped support prices," said William O'Loughlin, investment analyst at Rivkin Securities.
In oil markets, U.S. energy companies last week cut oil rigs for the first time in almost two months, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday.
Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago when, when just 617 rigs were active, and most analysts expect U.S. crude oil production, which has already risen by over a fifth since mid-2016, to 10.37 million barrels per day (bpd), to rise further.
That's more than top exporter Saudi Arabia produces and almost as much as Russia pumps out, at nearly 11 million bpd.
Gold fell on Monday as the previous session's upbeat U.S. payrolls data sparked a fresh rally in stock markets and shored up expectations that the Federal Reserve would press ahead with further interest rate hikes this year.
"We are now getting within distance of the FOMC (Federal Open Market Committee) meeting next week, with the rate hike being expected to be executed," Saxo Bank's head of commodity strategy Ole Hansen said.
"We've seen in the past that gold has been struggling ahead of these announcements, so I think we're just being sucked into the slipstream of that meeting. That's raising the risk that gold could be a bit more on the defensive."
Money market traders stuck to bets that the Fed would raise interest rates three times this year after data released on Friday showed U.S. job growth recorded its biggest increase in more than 1-1/2 years in February.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Among other precious metals, silver was down 0.7 per cent at $16.47 an ounce. Palladium was 1 per cent lower at $986.22 an ounce, while platinum was down 0.8 per cent at $957.40 an ounce.
Currencies and bonds
The Canadian dollar slipped slightly in trading Monday, but was just shy of the 78 US cent mark as oil prices slipped.
The euro gained on Monday and the U.S. dollar dropped as last week's strong U.S. jobs numbers and receding fears over a trade war helped a rebound in risk appetite, with higher yielding currencies also performing well.
The dollar, which has tended to fall when risk appetite is rising, meanwhile fell. The greenback against a basket of currencies dropped 0.1 per cent.
The strong U.S. job growth data released on Friday was counterbalanced by slower increases in wages, resulting in money market traders sticking to bets that the Fed would raise interest rates three times this year, with only around a one-in-four chance seen for a fourth rate hike in 2018.
The dollar eased 0.3 per cent to 106.51 yen, edging away from a one-week high of 107.05 yen set on Friday.
The dollar had risen against the yen last week as risk appetite improved on hopes for a breakthrough in the standoff over North Korea's nuclear weapons program.
The greenback also gained ground against the yen last week as fears of a global trade war receded.
U.S. 10-year Treasury yields rose Friday but hovered broadly unchanged on Monday. Meanwhile, the average yield spread of emerging market bonds over U.S. Treasuries on the JPMorgan EMBI Global Diversified index fell by 3 basis points (bps) to 286 bps, the lowest level since end-February.
The yield on the 10-year Treasury was up slightly at 2.899 per cent while the 30-year Treasury was slightly higher at 3.160 per cent.
The Canada 10-year bond was flat at 2.27 per cent.
Stocks set to see action
Stock of Canada's telecom companies could see some reaction Monday after reports of internet price hikes by BCE Inc. and Rogers Communications Inc. Both companies recently notified subscribers about imminent price hikes; BCE's Bell Canada is set to charge internet customers in Ontario $5 more a month and increase the price for Quebec subscribers by $3, while Rogers is hiking its prices by $8 a month for customers on higher-speed plans and by $4 for those with slower download speeds (Rogers serves Ontario and Atlantic Canada).
Earnings include: Bonterra Energy Corp.; Cardinal Energy Ltd.; Pollard Banknote Ltd.
The longtime chief executive of Dow Chemical, who led the company through the financial crisis, a merger with rival DuPont and then the planned disassembly of the entire enterprise, is stepping down. Andrew Liveris announced two years ago he'd retire by mid-2017, but that was delayed until the company named a successor. DowDupont Inc. said Monday that Liveris, 63, will give up his executive chairmanship in April, and his role as director in July, when he officially retires. DowDuPont shares rose about 1 per cent in premarket trading.
Shares of Orexigen Therapeutics sank about 70 per cent in premarket trading after the drugmaker filed for Chapter 11 bankruptcy protection.
Lumentum Holdings rose 5.5 per cent after the laser and optical fiber specialist said it would buy optical components producer Oclaro for about US$1.7-billion in a cash and stock deal. Oclaro jumped 25 per cent.
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Economic News
(2 p.m. ET) U.S. treasury budget balance for February.
With files from Reuters and Bloomberg