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A man watches the financial numbers at the TMX Group in Toronto's financial district in a May 9, 2014 file photo. THE CANADIAN PRESS/Darren CalabreseDarren Calabrese/The Canadian Press

Markets

U.S. and Canadian stock markets pointed to a weak opening Monday as a rally in Asia petered out and investors turned nervous after China announced it was imposing new tariffs on a slew of U.S. products.

Volume was low in many markets as several bourses were closed for the Easter holiday.

U.S. stocks look set to start April on the back foot after the S&P 500 Index and Dow Jones Industrial Average posted their first quarterly losses since 2015. Futures contracts for the Nasdaq 100 fell again after President Donald Trump renewed his criticism of Amazon.com Inc. over the weekend, this time tweeting that the online giant “must pay real costs (and taxes) now!” A measure of volatility rose from Friday.

Investors are entering the second quarter defensively after the worst three months for global stocks in more than two years. February and March were characterized by a surge in volatility amid a barrage of concerns, from escalating trade tensions to a selloff in technology shares. Focus this week will turn to U.S. manufacturing data Tuesday and labor-market figures Friday, which are expected to show the jobless rate fell to its lowest level since 2000. Traders are also waiting for more details on American tariffs on Chinese imports.

“With interest rates still relatively low, and generating negative real returns, if you remain in cash the yield attraction of equities and the growth prospects still make it look the best alternative,” Stephen Davies, founder and CEO of Javelin Wealth Management, told Bloomberg TV on Monday.

“We expect strong and broad-based growth to continue globally,” wrote strategists at Barclays.

But they warned that there were looming risks: “Trade protectionism, U.S. economic policy uncertainty, concerns about higher cross-market volatility and risk premium in core rates markets call for a more tactical approach to risk assets.”

While last month’s fears of an all-out global trade war have abated somewhat, tensions between the United States and China over tit-for-tat tariffs kept investors on edge.

China on Monday imposed tariffs on 128 U.S. products including frozen pork, wine and certain fruits and nuts in response to U.S. duties on imports of aluminum and steel.

In Europe, the Britain’s FTSE , Germany’s DAX and France’s CAC were closed for the Easter holiday.

In Asia, Japan’s Nikkei was off 0.31 per cent, China’s Shanghai fell 0.16 per cent and Hong Kong’s Hang Seng was up 0.24 per cent.


Commodities

Oil rose towards US$70 a barrel on Monday, lifted by a drop in drilling activity in the United States and concerns that Washington could reintroduce sanctions against Iran.

U.S. drillers cut seven oil rigs in the week to March 29, bringing the total down to 797, the first decline in three weeks. The rig count is closely watched as an indicator of future U.S. oil output.

“The market is set for a re-test of the highs of 2018,” said Olivier Jakob, oil analyst at Petromatrix.

“The Iranian factor is going to be a very significant input for the next four weeks. It is going to be an underlying support for the whole month.”

U.S. President Donald Trump has threatened to pull out of a 2015 international nuclear deal with Tehran under which Iranian oil exports have risen. He has given the European signatories a May 12 deadline to “fix the terrible flaws” of the deal.

Oil has risen from a multi-year low near $27 in January 2016, helped by production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which started in 2017 and is due to run until the end of 2018.

The revival in prices has helped to support a surge in U.S. drilling, which has boosted U.S. production to a record 10.43 million barrels per day (bpd), taking it past top exporter Saudi Arabia.

Gold prices rose on Monday as the dollar eased amid renewed concerns over a trade war after China imposed additional tariffs on U.S. products in response to U.S. duties on imports of aluminum and steel.

China has slapped extra tariffs of up to 25 per cent on 128 U.S. products including frozen pork, as well as wine and certain fruits and nuts, in response to U.S. duties on imports of aluminum and steel.

The tariffs take effect on Monday and match a list of potential tariffs on up to US$3-billion in U.S. goods published by China on March 23.

“The trade war is going on and it is getting worse, so that might be the reason that people are selling dollar and buying gold,” said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.

In other precious metals, spot silver climbed 0.8 per cent to US$16.45 per ounce. Platinum rose 0.8 per cent to US$935 per ounce, having fallen to its lowest since end-December in the previous session. Palladium was down 0.1 per cent at US$950.55 an ounce after dropping to US$938.22 on Thursday, its lowest level since Oct. 11.


Currencies

In currencies, the Canadian dollar rose, edging closer to the 78 US cent level as commodity prices rose, particularly oil and gold.

The U.S. dollar held steady against the yen on Monday, taking a breather after last week’s rally and as it treads cautiously amid lingering concerns over a U.S.-China trade spat.

The dollar last traded at 106.32 yen, after having risen more than 1.5 per cent last week for its biggest weekly gain since September 2017.

The dollar was steady at 106.350 yen, while the euro was almost unchanged at $1.2317.

The greenback had gained about 0.6 per cent against a basket of six major currencies last week helped by a combination of factors including perceived progress on North Korea issues.

The dollar index still lost more than 2 per cent last quarter, marking its fifth straight quarter of declines.

The Bloomberg Dollar Spot Index fell 0.1 per cent.

U.S. Treasury yields edged higher ahead of fresh economic data Monday. The yield on the 10-year Treasury was up at 2.7643 per cent while the 30-year Treasury was up at 2.9951 per cent.

Canada’s 10-year bond was up slightly at 2.104 per cent.


Stocks to watch

Hudson’s Bay Co. is the latest Canadian company to be hit with a data breach, saying that customer payment card information may have been stolen from shoppers at certain Saks Fifth Avenue, Saks Off Fifth and Lord & Taylor stores in North America. A spokesperson for retailer would not comment on whether any specific Canadian locations were affected, but did say there is no indication the breach affects any of HBC’s other digital platforms, Hudson’s Bay stores or Home Outfitters locations.

Canadian printing company Transcontinental Inc. said on Monday it would buy U.S.-based plastics packager Coveris Americas for $1.70-billion (US$1.32-billion). Transcontinental will buy the privately held Coveris with cash and debt. The deal is expected to close in the third quarter of 2018.

CanniMed Therapeutics, which is being acquired by Aurora Therapeutics, said Chief Executive Officer Brent Zettl has resigned. Aurora Therapeutics senior vice president Andrċ Jérôme, previously tasked with heading the acquisition of CanniMed, will serve as interim CEO. Aurora is almost set to close the purchase of CanniMed, creating the world’s most valuable weed firm after months of tensions between the companies.

A subsidiary of Keyera Corp. will purchase Encana’s Pipestone liquids hub and the planned Pipestone processing facility in western Alberta under an agreement announced Monday. The Pipestone liquids hub is under construction near Grande Prairie, Alta., with operations expected to start in the fourth quarter of 2018. Keyera will acquire and fund the remaining development cost of the hub, estimated at $105 million. It will also own and fund the planned Pipestone processing facility, which is expected to start up in 2021. Sales proceeds received by Encana are about $39 million.

Earnings expected today include: Callidus Capital Corp.; UrtheCast Corp.

Economic news

(9:30 a.m. ET) Canadian Markit manufacturing PMI.

(9:45 a.m. ET) U.S. Markit manufacturing PMI for March.

(10 a.m. ET) U.S. ISM manufacturing for March. The Street’s expectation is 60.0, down from 60.8 in February.

(10 a.m. ET) U.S. construction spending for February. Consensus is a rise of 0.3 per cent from the previous month.

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