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Equities

Canada’s main stock index rose on Monday, powered by gains in energy shares as oil prices jumped after U.S. President Donald Trump said China was ready to negotiate on the trade dispute.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 111.53 points, or 0.7 per cent, at 16,149.11.

Energy stocks gained 1 per cent with Encana up 1.8 per cent, Arc Resources up 1.6 per cent and Enerplus up 1.45 per cent.

Tech stocks also rose 1.2 per cent with Shopify up 2.8 per cent, Quarterhill up 2.3 per cent and Constellation Software up 1.5 per cent.

Consumer discretionary stocks also rose, up 1 per cent. BRP was up 2.6 per cent, Restaurant Brands gained 2.1 per cent and Magna rose 1.3 per cent.

U.S. stocks opened higher on Monday, as President Trump sought to ease trade tensions with China, calming investor nerves after intense feuding between the world’s top two economies last week sent stocks into a tailspin.

The Dow Jones Industrial Average rose 197.15 points, or 0.77 per cent, at the open to 25,826.05. The S&P 500 opened higher by 19.59 points, or 0.69 per cent, at 2,866.70. The Nasdaq Composite gained 77.81 points, or 1 per cent, to 7,829.58 at the opening bell.

The benchmark S&P 500 index logged its worst run of weekly losses on Friday since a selloff in late May after both sides threatened to slap more tariffs on each other’s goods, and Trump told U.S. companies to look for alternatives to doing business with China.

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In a softening of stance, Trump said on Monday Beijing had contacted Washington overnight to say it wanted to return to the negotiating table, adding that talks between the two countries were “more meaningful” than any time.

“The sentiment today is conciliatory, the president is trying to walk back,” said Art Hogan, chief market strategist at National Securities in New York.

“Whether or not he (Trump) has a phone call with China doesn’t matter, the point is that he is attempting to keep the September meeting scheduled and get back to the negotiating bit.”

Shares of tariff-sensitive stocks including Apple Inc rose 1.9 per cent, while those in Boeing Co jumped 2 per cent.

Chipmakers, which are heavily reliant on China for their revenue, also rose in early trading. Intel Corp, Qualcomm Inc, Advanced Micro Devices Inc and Nvidia Corp were up between 1 per cent and 3.8 per cent.

Concerns about the global economy slipping into recession and uncertainty over the pace of U.S. interest rate cuts have made investors nervous about how far the longest cycle of U.S. expansion can survive. The S&P 500 closed about 6 per cent off its record high on Friday.

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However, a batch of strong earnings from retailers including Walmart Inc and Target Corp in the past weeks has bolstered confidence in domestic growth.

Data from the Commerce Department showed new orders for key U.S.-made capital goods unexpectedly rose in July, but shipments fell by the most in nearly three years, suggesting business investment remained soft and could weaken further amid an escalation in U.S.-China trade tensions.

Among other stocks, Celgene Corp rose 3.4 per cent after Amgen Inc said on Monday it would buy the company’s psoriasis drug Otezla, clearing the way for Bristol-Myers Squibb to go ahead with its US$74-billion deal for Celgene. Shares of Bristol-Myers jumped 3.2 per cent.

Shares of Beyond Meat Inc rose 3.7 per cent after Yum Brands Inc said it will be testing Beyond Meat’s plant-based nuggets at an Atlanta KFC restaurant.

In corporate news, struggling Canadian energy retailer Just Energy Inc. continues to look for a way to restructure or find a bailout. Its shares rose 3.3 per cent.

Oil and gas producer PDC Energy Inc. said it would buy smaller rival SRC Energy Inc in a US$971.3- million deal to boost its cash flow as investors in the sector press for higher returns from companies. PDC rose nearly 18 per cent. SRC gained 12 per cent.

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Overseas, European stocks were mixed with Britain’s FTSE off 0.5 per cent, Germany’s DAX up 0.15 per cent and France’s CAC up 0.3 per cent.

Asian markets fell sharply across the board with Japan’s Nikkei off 2.2 per cent, China’s Shanghai off 1.2 per cent and Hong Kong’s Hang Seng down 1.9 per cent as protests continued.

Commodities

Oil prices rose on Monday after the United States and China both suggested they could ease up in a trade war that has undermined the outlook for the global economy and crude demand.

Brent was up 56 cents, or 0.9 per cent, at US$59.90 a barrel, while U.S. oil was up 66 cents, or 1.2 per cent, at US$54.83 a barrel.

SEB analyst Bjarne Schieldrop said the oil market was worried about “the secondary global growth effects of an upwards spiralling trade war between China and the U.S.”

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“The second concern for the oil market is that ... China is now ready to wrestle with the U.S. in the global space of oil.”

Gold jumped more than 1 per cent to surpass the US$1,550 per ounce mark for the first time in more than six years on Monday as investors flocked to safe haven assets driven by the heightened U.S.-China trade dispute.

Spot gold was up 0.3 per cent at US$1,530.63 per ounce, after hitting its highest since April 2013, at US$1,554.56 earlier in the session. U.S. gold futures were up 0.2 per cent at US$1,540.30.

“This is all about the trade tensions and the related risk of global slowdown or even a global recession that is driving investors to safe-havens,” said Julius Baer analyst Carsten Menke.

“There is doubt in markets about these trade talks, so benefit of doubt or the leap of faith is not provided by financial markets anymore when it comes to the trade topic, which will be supportive for gold.”

Currencies and bonds

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The Canadian dollar was down slightly, trading at the 75 cent level. Economists will be looking ahead to this week’s second quarter GDP figures, expected to come in at 3 per cent annualized.

The dollar rebounded and was last up 0.3 per cent against a basket of currencies.

China’s yuan fell to an 11-year low in the onshore market and a record low offshore on Monday after the latest escalation in the U.S.-China trade war rattled investor confidence.

In China’s onshore market, the yuan fell to 7.1500 per dollar, the lowest since February, 2008.

In the offshore market, the yuan slid to as low as 7.187 yuan, the weakest since international trading in the currency began in 2010, before recovering to 7.1624 yuan – down 0.4 per cent on the day – after Trump’s upbeat comments on a trade deal.

In a sign that some calm had returned to markets, the Japanese yen – which investors regard as a safe-haven – fell 0.4 per cent to 105.76, having earlier hit a new seven-month high of 104.46 earlier on Monday.

Commerzbank analysts said “market sentiment has been undoubtedly hit hard as there is an even lower chance of a trade truce in the foreseeable future.”

Other corporate news

E-commerce solutions firm Pitney Bowes Inc said on Monday it would sell its software solutions business to private enterprise software company Syncsort for US$700-million in an all-cash deal. The deal is expected to close before the end of 2019. Pitney rose 2.5 per cent.

Addus Homecare has signed a definitive agreement to buy Hospice Partners of America for US$130-million. Addus stock fell 0.5 per cent.

China Petroleum & Chemical Corp, or Sinopec, is seeking a tariff exemption for U.S. oil being imported in coming months, sources familiar with the matter said, after Beijing late last week imposed retaliatory tariffs on U.S. goods, including crude oil. The largest refiner in Asia is expected to receive four supertankers carrying 8 million barrels of U.S. crude at Tianjin in September and October, according to the sources, data from analytics companies Refinitiv and Kpler. Its U.S.-listed stock was up 0.05 per cent.

Walt Disney Co and Target Corp announced a collaboration on Sunday that will open 25 Disney stores inside select Target locations nationwide on Oct. 4, with plans for 40 additional sites by October next year. Disney said in a statement that the “shop-in-shop” would feature an array of more than 450 items from the company, including more than 100 products previously only available at its locations. Disney stock was up 1.2 per cent while Target was up 1.5 per cent.

Earnings include: Best Buy Co. Inc.; Dollar Tree Inc.; Heico Corp.; Leucrotta Exploration Inc.

Economic news

(8:30 a.m. ET) U.S. durable goods orders for July. The Street expects an increase of 1.1 per cent from June.

Orders to U.S. factories for large manufactured goods rose for the second straight month, but the strength again came from a big increase in the volatile aircraft category. A category that tracks business investment also rose for the second straight month, though last month’s reading was revised down significantly.

Orders for durable goods – items meant to last at least three years – rose 2.1 per cent, the Commerce Department said Monday. That follows a 1.8 per cent gain in June, which helped to offset significant declines in May and April.

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for July.

Also: G7 Summit in Biarritz, France concludes

With files from Reuters

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