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Equities

Canada’s main stock index opened down Tuesday with gains in energy shares on higher crude prices offset by weakness in the tech sector. South of the border, markets also started in the red as global growth concerns ahead of this week’s European Central Bank’s policy decision weighed.

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At 9:46 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was down 10.8 points, or 0.07 per cent, at 16,484.29. Tech shares were the biggest drag of the 11 main sectors, falling 2 per cent. Weak producer price figures out of China early Tuesday renewed concern about the health of that country’s economy.

Material shares, which had started lower, advanced 0.4 per cent as trading progressed. Energy stocks were up 1.4 per cent as crude prices notched their fifth session of gains.

On Wall Street, the Dow Jones Industrial Average fell 29.68 points, or 0.11 per cent, at the open to 26,805.83.

The S&P 500 opened lower by 7.42 points, or 0.25 per cent, at 2,971.01. The Nasdaq Composite dropped 37.46 points, or 0.46 per cent,, to 8,049.98 at the opening bell.

Overseas, European markets were mixed in afternoon trading with Thursday’s ECB meeting on the horizon. Markets are expecting the central bank to cut rates in an effort to bolster the bloc’s flagging economy, but questions are now emerging about how much room central banks now have to provide further stimulus.

“Traders are playing the wait and see game in relation to the European Central Bank’s (ECB) meeting on Thursday,” David Madden, market analyst with CMC Markets U.K., said. "Some of the major euro zone indices reached multi-week highs in the last few trading sessions, and now we are seeing some dealers sit on their hands."

To a certain extent, he said, some form of monetary easing from the ECB has been priced in, and the more positive mood in relation to the U.S.-China trade situation has helped bolster sentiment.

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Tuesday’s analyst upgrades and downgrades

On Tuesday, Germany’s 30-year benchmark bond yield pushed into positive territory for the first time in move than a month, according to Reuters. At the same time, yields on the U.S. 10-year note rose to their highest level in 18 days.

On the corporate front, Apple Inc.'s latest product launch is scheduled for later Tuesday. Markets are expecting three new iPhones to be unveiled although analysts suggest the latest models may not be a dramatic departure from those seen last year. Markets will be paying close attention, however, for more details of Apple’s streaming service, which will go up against industry giant Netflix Inc. Apple gave a glimpse of the service earlier this year but hasn’t given many more details about when it will be launched or how much consumers can expect to pay.

On Wall Street, shares of automaker Ford Motor Co. were down more than 4 per cent after Moody’s downgraded Ford’s credit rating to junk status. Moody’s says it expects weaker earnings and cash generation as Ford pursues a costly and lengthy restructuring plan. Apple shares were little changed just after the opening bell.

Elsewhere, shares of Google-parent Alphabet Inc. opened down after 50 U.S. states and territories launched a probe into Google’s “potential monopolistic behaviour.” That announcement came after one from a separate group of states Friday that disclosed an investigation into Facebook’s market dominance.

On Bay Street, Suncor Energy Inc. said late Monday that it will invest $1.4-billion to install two cogeneration units at its Oil Sands Base Plant, cutting greenhouse gass emissions by about a quarter. The natural gas-fueled cogeneration units will replace coke-fired boilers and provide steam generation for Suncor’s bitumen extraction and upgrading operations, as well as 800 megawatts of power to be transmitted to Alberta’s electricity grid. Suncor stock was up 0.64 per cent in early trading in Toronto.

Obsidian Energy shares jumped 11 per cent after the company said it is initiating a process to explore strategic alternatives. Those alternatives, it said, could include a sale or merger of the company. “While the outcome of the strategic review process will depend on the opportunities which arise within such process,” Obsidian said in a release.

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Overseas, European markets mixed after U.K. Prime Minister Boris Johnson lost another bid to call a snap election as tensions continue to simmer over the Brexit stalemate. The pan-European STOXX 600 was off 0.20 per cent. Britain’s FTSE 100 fell 0.12 per cent. Germany’s DAX added 0.32 per cent and France’s CAC 40 slid 0.08 per cent.

In Asia, stocks finished mostly mixed after new figures showed Chinese factory prices fell 0.8 per cent in August from a year earlier. The drop was slightly less than market forecasts but still marked the worst showing in roughly three years. The Shanghai Composite Index ended down 0.12 per cent. Hong Kong’s Hang Seng ended mostly unchanged, adding a slight 0.01 per cent. Japan’s Nikkei finished up 0.35 per cent.

Commodities

Crude prices gained for a fifth session as markets continue to look to OPEC and its allies to extend production curbs to shore up the market.

The day range on Brent so far is US$62.54 to US$63.12. The range on West Texas Intermediate is US$57.84 to US$58.39.

On Monday, Prince Abdulaziz bin Salman, Saudi Arabia’s new energy minister, said he didn’t expect a change in OPEC’s approach and that an agreement among producers to cut production by 1.2 million barrels a day would be kept in place.

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“Oil is rising as markets appear content that Saudi Arabia’s new energy minister, Prince Abdulaziz bin Salman will not deliver any changes to the current OPEC + production cut agreement and on expectations that US crude stockpiles will see a drawdown of just over 2 million barrels,” Edward Moya, senior market analyst with OANDA, said.

“Oil ministers from Nigeria and Iraq reiterated their intent to continue to deliver their respective production cuts and we will likely see more continued supportive comments from the sidelines of the World Energy Congress in Abu Dhabi on Thursday.”

For oil to breakout, he said, energy traders will now be looking for a major de-escalation of the U.S.-China trade raw. “It seems the trade war is the key domino that will be required to start alleviating global demand woes,” he said.

Crude markets will also get the first of two weekly reports on U.S. inventories later on Tuesday. The American Petroleum Institute releases its figures on weekly crude stocks Tuesday afternoon, followed by the U.S. Energy Information Administration’s report on Wednesday morning.

Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels last week. A decline would mark the fourth straight week of falling inventories.

Gold prices, meanwhile, remained on the back foot as hopes of monetary policy stimulus bolster market’s risk appetite. Spot gold was down 0.2 per cent to US$1,495.00 per ounce, after hitting its lowest since Aug. 13 at US$1,486 earlier in the session. Gold prices are now down about 5 per cent since hitting a peak of $1,557 on Sept. 4, according to Reuters. U.S. gold futures fell 0.5 per cent to US$1,503.30 per ounce early Tuesday.

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“Gold is being driven by position unwinding, and given the unyielding position purge, it may breach the critical US$1490 level later today if there’s a glint of more risk-positive news,” Stephen Innes, managing partner with VM Markets, said. “Gold investors have been hanging their hope on significant policy response from the ECB, but with ECB members pushing back on the deluge, long gold positioning continues to look fragile.”

Currencies

The Canadian dollar edged higher after a solid reading on the country’s housing market.

The day range on the loonie so far is 75.81 US cents to 75.96 US cents.

Ahead of the open Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate rose 1.9 per cent to 226,639, from July’s 222,467. Economists had been expected a number closer to 211,000 in August.

“So far in the third quarter, starts are averaging a robust 224.600 rate, slightly above Q2′s pace,” TD economist Rishi Sondhi said. “Combined with a probable rise in home sales, this suggests a healthy quarter is in store for residential investment in Q3.”

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On global markets, increased risk tolerance among investors pushed Japan’s yen to a five-week low of 107.50 against the U.S. dollar.

The euro was flat at US$1.104. It reached an overnight high of US$1.1067 after a Reuters report that Germany may set up public-investment agencies to boost fiscal stimulus without breaching national spending rules. Britain’s pound was also little changed after parliament voted to block Prime Minister Boris Johnson’s bid for an early election. Mr. Johnson said his government would push on with negotiating a Brexit deal “while preparing to leave without one.”

In bonds, the yield on the U.S. 10-year note was higher at 1.627. The yield on the 30-year note was also up at 2.106 per cent.

More company news

Encana Corp. said announced Michael McAllister has been promoted to president, Brendan McCracken to executive vice president, corporate development and external relations, and Greg Givens to chief operating officer. The changes are effective immediately.

Fortis Inc. raised its dividend as it announced an increased capital investment plan. The utility company says it will now pay a quarterly dividend of 47.75 cents per share, up from 45 cents. Shares in Fortis will have an annual yield of 3.4 per cent based on its closing share price on Monday. The increased payment to shareholders came as the company said it will spend $18.3-billion between 2020 and 2024, up $1-billion from the previous year’s plan.

Ford Motor Co said it was launching 17 electric vehicles in Europe by 2024, including eight this year. The automaker said it expects the majority of its passenger vehicle sales to come from electric vehicles by the end of 2022.

BMW will halt production at its Oxford plant on Oct. 31 and Nov. 1 and is considering removing a shift there in case the United Kingdom leaves the European Union without a deal, its Chief Financial Officer Nicolas Peter said on Tuesday. Peter said a no-deal Brexit would impact production, adding that suspending production on the date of Britain’s scheduled departure from the EU and the following day would shield BMW from losses in its logistics.

Jack Ma, who founded Alibaba Group, the world’s biggest e-commerce company, is stepping down as chairman at a time when the rapidly changing industry faces uncertainty amid a U.S.-Chinese trade war. Ma stepped down Tuesday as part of a succession announced a year earlier. He will stay on as a member of the Alibaba Partnership, a group of 36 people with the right to nominate a majority of the company’s board of directors. Ma, 55, founded Alibaba in 1999 to connect Chinese exporters to American retailers.

Economic news

The seasonally adjusted annual rate of housing starts came in at 226,639 units in August, up 1.9 per cent from 222,467 units in July.

Statistics Canada says the value of building permits issued by Canadian municipalities rose 3 per cent to $8.3-billion in July. Much of the increase came in the form of permits for multi-family and commercial buildings.

(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey (JOLTS)

With Reuters, The Associated Press and The Canadian Press

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