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U.S. stock were set for a higher start with Dow, S&P and Nasdaq futures all gaining more than 1 per cent early Tuesday after remarks from Chinese President Xi Jinping eased fears of an escalating trade war between the world’s two biggest economies. On Bay Street, futures were in the black as crude prices rallied.

Overnight, shares in Asia bounced on the Chinese president’s vow to open that country’s economy and offered criticism of protectionist policies. Shares in Europe also started the day on a positive footing following the remarks. The MSCI World Index, which measures shares in 47 countries, was up a quarter of a percentage point early on.

"Xi’s apparent desire to balance out his country’s international payments is clearly great news for countries and companies selling goods to China,” Jasper Lawler, head of research at London Capital Group, said. “While China may still be teeing up its reciprocal response to the $100-billion in tariffs from the U.S., Xi has shown good intentions via his speech. We are still clinging on with gritted teeth to our belief that a trade war will be averted.”

On Monday, markets took another wild ride as the Dow gave back most of its 400-point gain in the final stretch on reports that the FBI had raided the offices of U.S. President Donald Trump’s lawyer Michael Cohen. The news, however, appeared to have little lingering market impact as shares drew support from Tuesday’s positive trade news to trend higher.

Auto makers were among the beneficiaries of Tuesday’s trade news, with shares of Ford Motor Co. climbing nearly 2 per cent in premarket trading. General Motors shares rose 2.75 per cent. Tesla shares jumped 2.8 per cent.

On Bay Street, Restaurant Brands shares could come under pressure after Tim Hortons refused to renew the licence of a long-time franchisee who has been critical of the company’s management practices. The Globe’s Marina Strauss reports that a division of parent company RBI told franchisee Mark Kuziora and his wife they have to “immediately vacate the restaurant premises” at a Toronto location when its licence expires on Aug. 31. Tim Hortons’ corporate reputation has already been under pressure recently when a ranking of corporate brands showed the retailer had slid from fourth place last year to No. 50 in the most recent survey.

The big banks’ annual meetings also continue with Bank of Nova Scotia and Laurentian Bank holding their AGMs.

Kinder Morgan Canada stock will also likely be back in the spotlight on news that the federal and Alberta governments are exploring financial support and other rescue options for the the troubled $7.4-billion Trans Mountain pipeline expansion project. Earlier this week, Kinder Morgan set out a number of conditions that must be met by the end of next Monday if the project is to commence. Kinder Morgan Cda Ltd. shares finished Monday down nearly 5 per cent.

On Wall Street, Facebook shares were slightly higher ahead of CEO Mark Zuckerberg’s appearance before Congress to answer questions about the Cambridge Analytica data-sharing scandal. On Monday, Mr. Zuckerberg released prepared remarks ahead of his testimony apologizing for the situation.

“We didn’t take a broad enough view of our responsibility, and that was a big mistake,” he wrote. “It was my mistake, and I’m sorry. I started Facebook, I run it, and I’m responsible for what happens here.”

The testimony is scheduled for 2:15 p.m.

Overseas, European markets rallied in the early hours with the pan-European STOXX 600 climbing 0.57 per cent. Resource stocks, which have heavy exposure to the Chinese market, were among the top gainers. Britain’s FTSE 100 was up 0.46 per cent at last check. France’s CAC 40 rose 0.61 per cent. Germany’s DAX was up 1 per cent.

In Asia, Japan’s Nikkei finished up 0.54 per cent. Top performers included the auto and iron and steel sectors. The Shanghai Composite Index tacked on 1.67 per cent. Hong Kong’s Hang Seng rose 1.65 per cent.


Commodities

Easing trade concerns helped buoy world oil markets early on with Brent crude topping US$70 a barrel. At last check, Brent was trading up and had a range for the day so far of US$68.46 to US$70.10. West Texas Intermediate was also higher with a day range of US$63.20 to US$64.38.

“It’s not so much ‘risk on/risk off’, as it is ‘trade war on/trade war off’ and, at the moment, we’re ‘trade-war off’,” LCG’s Mr. Lawler said.

“There’s a lot of political motivation in the tariffs in the United States, but ultimately, they won’t want a trade war, there is a general desire to boost the U.S. economy.”

Traders will also have a close eye on the latest weekly U.S. inventory figures due from the American Petroleum Institute. The U.S. Energy Information Administration also releases its monthly report on U.S. production Tuesday, followed by its own inventory figures on Wednesday.


Currencies and bonds

The Canadian dollar was trading higher ahead of the North American open, extending the previous session’s rally on higher crude prices and a Bank of Canada report suggesting Canadian businesses remain optimistic. The day range on the loonie so far is 78.69 US cents to 79.04 US cents. On Monday, the loonie touched its best level since late February after the Bank of Canada’s business outlook survey strengthened expectations for more interest rate hikes. The central bank makes its next rate decision next week.

For the loonie, the day’s economic news centres on Canada’s housing market. Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts fell to 224,213 in March from 231,026 a month earlier. The latest number came in slightly ahead of market expectations, which called for a reading closer to 218,000.

“Stronger-than-expected growth was seen in the single-detached category, whereas the always-volatile multiples came back a bit from the heights seen in January,” CIBC economist Royce Mendes said. “The pace of starts has been running ahead of what would be expected given the data we have on building permits. We continue to expect that home builders will break ground at a slower rate over the remainder 2018 as the combined effects of higher interest rates and B20 rules keep a lid on growth in the sector.”

Meanwhile, Statistics Canada reported the value of building permits issued by Canadian municipalities fell by 2.6 per cent in February to $8.2-billion. The market had been expecting a decline of about 1.5 per cent. The decline followed an increase of 5.2 per cent in January.

The Canadian dollar held most of its early gains following the release of the two reports and continued to trade just below 79 US cents.

In other currencies, the U.S. dollar was higher against the yen on comments out of China promising to cut import tariffs. The euro, meanwhile, held most of Monday’s gains against the greenback.

The U.S. dollar index, which weighs the greenback against a group of world currencies, slid to a two-week low of 89.635 early Tuesday.

In bonds, U.S. Treasury yields rose as trade concerns eased. The yield on the 10-year note was higher at 2.795 per cent. The yield on the 30-year note was also higher at 3.025 per cent.


Stocks set to see action

Payments technology company Verifone Systems Inc shares jumped more than 50 per cent in premarket trading after the company agreed to be taken private by an investor group led by Francisco Partners for US$2.58-billion in cash. Verifone said the deal was valued at US$3.4-billion, including debt, and that the transaction was expected to close during the third quarter of this year.

Shares of Nvidia rose nearly 4 per cent in premarket trading after Morgan Stanley raised the stock to ‘overweight’.

U.S. auto parts maker Tenneco Inc said it would buy Federal-Mogul, a maker of powertrain components, from Icahn Enterprises LP for US$5.4-billion as it looks to gain share in the fast growing Asia markets. Tenneco’s shares rose 2.8 per cent in premarket trading.

Bayer shares jumped nearly 5 per cent on Tuesday following a media report that the U.S. Justice Department will allow the German drugs and pesticides group to acquire Monsanto in a US$62.5-billion deal. The Justice Department reached an agreement in principle with Bayer and Monsanto in recent days after the companies agreed to sell more assets, the Wall Street Journal said late on Monday, citing people familiar with the matter.

French insurer AXA is restructuring its Swiss business in a move that would hit its results in the short term, but is expected to give it more financial flexibility ahead of the US$15-billion acquisition of XL Group. AXA, Europe’s second-biggest insurer by market value behind Allianz, said it would make its Swiss Group Life insurance unit a semi-autonomous business focusing on small-to-medium sized enterprises.

Nestlé announced a plan to make 100 per cent of its packaging recyclable or re-usable by 2025. Nestlé said it believes that there is an urgent need to minimize the impact of packaging on the environment. “Plastic waste is one of the biggest sustainability issues the world is facing today,” Nestlé CEO Mark Schneider said in a statement . “Tackling it requires a collective approach. We are committed to finding improved solutions to reduce, re-use and recycle.”

Shares in LVMH hit record highs on Tuesday after the owner of fashion labels like Christian Dior signaled strong momentum for the sector with better-than-expected first quarter sales growth. The upbeat start to the year for LVMH, the industry’s biggest company, sets an encouraging tone for peers and points to enduring demand from Chinese consumers, which sustained strong earnings at many luxury firms last year.

The top U.S. watchdog for consumer finance is seeking a record fine against Wells Fargo & Co that could exceed several hundred million dollars for auto insurance and mortgage lending abuses, according to three sources with knowledge of the plans. The penalty would be the first issued by Mick Mulvaney, whom President Donald Trump tapped in November to head the Consumer Financial Protection Bureau (CFPB). The fine would fulfill Trump’s vow to come down hard on the country’s third-largest lender, which has been grappling with a sales practices scandal since September 2016.

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Economic news

Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts slid to 225,213 in March, from 231,026 in February. The rate of urban starts fell 2.8 per cent.

Statistics Canada says housing starts fell 2.6 per cent in February to $8.2-billion. The decline followed an increase of 5.2 per cent in January. The market had been expecting a decline of about 1.5 per cent in the latest report.

With Reuters and The Canadian Press

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 30/05/24 10:35am EDT.

SymbolName% changeLast
WFC-N
Wells Fargo & Company
+0.48%59.03
COHN-A
Cohen & Company Inc
0%10.3
BNS-T
Bank of Nova Scotia
+0.82%64.03
BNS-N
Bank of Nova Scotia
+1.23%46.88
USEG-Q
U S Energy Corp
+0.9%1.1099
KMI-N
Kinder Morgan
+0.16%18.94
PAY-N
Paymentus Holdings Inc Cl A
0%19.06

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