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Equities
Canada’s main stock index opened higher on Monday but then slid lower as shares of precious metal miners were supported by gold prices that climbed towards near six-year highs.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 8.31 points, or 0.05 per cent, at 16,533.74. By 9:45 a.m. it was down 8.96 points.
Materials stocks were the biggest gainers, up 0.4 per cent. Oceanagold rose 1.5 per cent, Barrick was up 1.4 per cent and Yamana Gold gained 1.5 per cent.
Financials were up 0.24 per cent and consumer staples gained 0.23 per cent.
Health care stocks were down 1.6 per cent with Canopy down 3.8 per cent, Aphria off 2.3 per cent and Hexo down 2.4 per cent.
Tech stocks fell 1.2 per cent and energy shares were down 0.8 per cent.
U.S. stocks opened slightly higher on Monday but then also slid lower, boosted by technology shares, while investors pinned their hopes on a meeting between Presidents Donald Trump and Xi Jinping later this week to de-escalate trade tensions. Investors also worried about rising tensions between the U.S. and Iran.
The Dow Jones Industrial Average rose 8.48 points, or 0.03 per cent, at the open to 26,727.61. By 9:45 a.m. it wad down 34.04 points to 26,719.13.
The S&P 500 opened higher by 0.96 points, or 0.03 per cent, at 2,951.42. The Nasdaq Composite gained 8.87 points, or 0.11 per cent, to 8,040.58 at the opening bell. They both slid lower and by 9:45 a.m. were down 3.72 points and 19.63 points, respectively.
The S&P 500 index hit a record high last week, boosted by rising expectations that the U.S. Federal Reserve would cut interest rates and optimism over a revival in trade talks between the United States and China.
“Markets are generally optimistic about the fact that both sides are continuing to meet, talk, discuss and debate tariffs, and so there’s still the potential for progress,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“Don’t think markets are expecting a deal, but at least as long as there’s dialogue, there’s hope for progress.”
Shares of trade-sensitive Boeing Co were up 0.6 per cent in early trading, while chip companies, which have a major exposure to China, were also trading higher.
Investors were also hopeful that the Federal Reserve was ready to battle growing risks to global and domestic growth from the long-drawn trade conflict, after the U.S. central bank signalled a potential interest rate cut later this year.
However, gains were kept in check by rising tensions between the United States and Iran, after Tehran shot down an American drone last week.
Trump said on Sunday he was not seeking war with Iran after a senior Iranian military commander warned any conflict in the Gulf region could spread uncontrollably and threaten the lives of U.S. troops.
Among other stocks, shares of casino operator Caesars Entertainment Corp jumped nearly 14 per cent after rival Eldorado Resorts Inc said it agreed to buy the company for US$8.5-billion. Shares of Eldorado fell 1.3 per cent.
United Technologies Corp gained nearly 1 per cent after Cowen & Co upgraded shares of the building and aerospace supplier to “outperform” from “market perform.”
Celgene Corp shares fell 4.1 per cent after Bristol-Myers Squibb Co said its planned US$74-billion deal to buy the drugmaker was expected to close at the end of 2019 or beginning 2020, compared with its earlier expectations of closing the deal in the third quarter. Shares of Bristol-Myers dropped 6.1 per cent.
Overseas, Pan-European STOXX 600 fell 0.2 per cent , reflecting losses in Paris and Milan. Stocks in London were up 0.06 per cent. Germany’s export-sensitive DAX fell 0.6 per cent after a profit warning by Daimler caused its shares to drop nearly 5 per cent. France’s CAC was down 0.2 per cent.
However, gains in Asia saw the MSCI regional and global stocks gauges rise again towards last week’s six-week highs. Japan’s Nikkei was up 0.13 per cent, China’s Shanghai gained 0.21 per cent and Hong Kong’s Hang Seng added 0.14 per cent.
Commodities
Oil prices rose on Monday, extending large gains last week that were prompted by tensions between Iran and the United States, as Washington was set to announce new sanctions on Tehran.
West Texas Intermediate crude was up 50 cents, or 0.87 per cent, at US$57.93 a barrel.
Brent futures were up 9 cents, or 0.14 per cent, at US$65.29 a barrel.
U.S. President Donald Trump said on Friday he called off a military strike in retaliation for the shooting down of a U.S. drone by Iran, saying the potential death toll would be disproportionate, adding on Sunday that he was not seeking war.
Oil prices surged after Iran shot down the aircraft on Thursday that the United States claimed was in international airspace and Tehran said was over its territory.
Brent racked up a gain of about 5 per cent last week, its first weekly gain in five weeks, and WTI jumped about 10 per cent, its biggest weekly percentage gain since December 2016.
But U.S. Secretary of State Mike Pompeo said “significant” sanctions on Iran would be announced on Monday aimed at further choking off resources that Tehran uses to fund its activities in the region.
Gold rose above US$1,400 on Monday, hovering near a six-year high touched in the previous session, driven by dovish signals from global central banks and increased tensions between the United States and Iran.
Spot gold was up 0.6 per cent at US$1,406.83 per ounce, heading for a fifth straight session of gains. Gold prices hit US$1,410.78 on Friday, their highest since Sept. 4, 2013.
U.S. gold futures rose 0.7 per cent to US$1,410.20 an ounce.
“The weakness of the U.S. dollar, gold’s technical picture and interest from investors themselves have become self-sustaining factors, especially after the massive inflows into the gold exchange-traded funds (ETF),” Commerzbank analyst Eugen Weinberg said, adding that tensions between the United States and Iran also supported gold.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 4.57 per cent on Friday from a day earlier, in its biggest one-day percentage gain since September 2008.
Silver edged 0.1 per cent higher to US$15.37 per ounce and platinum was up 0.9 per cent at US$813.82. Palladium rose 1.1 per cent to US$1,516.03 an ounce.
Currencies and bonds
The Canadian dollar was trading higher near the 75.8 US cent level. It gained as oil and gold prices rose and the U.S. dollar fell. It has gained more than a cent since in the last week.
The U.S. dollar fell against its rivals on Monday after sustaining its biggest weekly drop in four months last week as the U.S. central bank opened the doors for a likely rate cut as early as next month.
The greenback has been on the receiving end of a broad market selloff in major currencies as global central banks led by the U.S. Federal Reserve signalled a dovish outlook on monetary policy due to growing signs of a weak global economy.
On Monday, the dollar slipped 0.2 per cent against a basket of its rivals at 96.028. It fell 1.4 per cent against other currencies last week, its biggest weekly drop since mid-February.
“If the Fed embarks on a rate-cutting cycle, the dollar will weaken more because of the cushion room that the United States has relative to other economies where central banks are a bit more constrained to ease policy,” said Constantin Bolz of wealth manager Portfolio Concepts.
The 10-year U.S. Treasury yield was down slightly at 2.031 per cent. The Canada 10-year bond yield was down at 1.454 per cent.
Other corporate news
JetBlue Airways Corp. has sued Walmart Inc. for trademark infringement, after the world’s largest retailer began using the name Jetblack for its text-based personal shopping service. In a complaint filed on Friday night in Manhattan federal court, JetBlue called Jetblack a “transparent attempt” by Walmart to capitalize on the goodwill associated with the carrier’s trademarks. JetBlue shares were down 0.16 per cent and Walmart was up 0.5 per cent.
FedEx Corp has apologized for another Huawei delivery “mistake,” reigniting Chinese ire and drawing the fire of state media which suggested the U.S. delivery firm could end up on China’s coming list of companies that harm national interests. FedEx shares fell 1.7 per cent.
Bristol-Myers Squibb Co said on Monday it would divest Celgene Corp’s psoriasis treatment Otezla as the companies look to gain approval for their $74-billion (58 billion pounds) deal from the U.S. Federal Trade Commission (FTC). Bristol fell 6 per cent while Celgene was down 4.2 per cent.
U.S. casino operator Eldorado Resorts Inc has agreed to merge with Caesars Entertainment Corp in a $17.3-billion cash-and-stock deal, including debt, the companies said on Monday. Eldorado’s shares fell 8.4 per cent and Caesars was up 14.7 per cent.
Qatar Petroleum has signed an agreement with Chevron Phillips Chemical to build a new petrochemicals complex, part of plans by the world’s top liquefied natural gas (LNG) exporter to broaden its energy interests.
Hydro One Ltd. says chairman Tom Woods is stepping down from its board of directors at the end of July. Woods was among the 10 new directors named last year as replacements after for the company’s previous board resigned amid pressure from Ontario’s Progressive Conservative government. The former CIBC executive helped lead Hydro One through several key milestones including the hiring of Mark Poweska as chief executive. Its shares slid 0.2 per cent.
A Toronto startup aiming to build the world’s most powerful computer by harnessing the quantum properties of light has raised $32-million from leading early stage financiers in Canada and the United States. The financing for three-year-old Xanadu Quantum Technologies Inc. was led by Ontario Municipal Employees Retirement System (OMERS) and backed by Canada’s Georgian Partners Inc., Radical Ventures and Real Ventures, American billionaire venture capitalist Tim Draper and Silicon Valley Bank.
Earnings include: Probe Metals Inc.
Economic news
No economic releases scheduled.
With files from Reuters