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Equities

Canada’s main stock index opened flat Monday with declines in gold and energy shares offset by gains in utilities and consumer goods. U.S. markets started in the black as gains by Apple Inc. bolstered tech stocks and White House officials played down reports that the U.S. is weighing delisting Chinese companies from U.S. stock exchanges.

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At 10:12 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 29.6 points, or 0.18 per cent, at 16,723.87. Materials shares were down 0.5 per cent as gold prices slid. Energy stocks were off 0.2 per cent.

On Wall Street, the Dow Jones Industrial Average rose 32.08 points, or 0.12 per cent, at the open to 26,852.33.

The S&P 500 opened higher by 5.28 points, or 0.18 per cent, at 2,967.07. The Nasdaq Composite gained 24.46 points, or 0.31 per cent, to 7,964.09 at the opening bell.

MSCI’s all-country index was up about 0.1 per cent.

Early Monday, China warned that any “decoupling” of China and the United States following reports that the Trump administration is considering delisting Chinese companies from U.S. exchanges as part of broader effort to limit U.S. investment. The reports come just weeks before U.S. and Chinese officials are scheduled to resume talks in their bitter trade war. White House trade adviser Peter Navarro on Monday dismissed reports.

“It seems every time we take a step forward with the trade war and optimism rises ahead of a meeting between the two teams, we get some negative headlines,” OANDA analyst Craig Erlam said. “This time it was threats to delist Chinese companies and limit U.S. pension funds investments in Chinese markets. We are becoming used to threats ahead of these talks but any follow through here would be rather dramatic.”

U.S. listed shares of Chinese companies Alibaba Group Holding Ltd and JD.Com Inc. were both up about 2 per cent in early trading on Wall Street. On Friday, both had fallen about 5 per cent on initial reports of possible delisting of Chinese companies.

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More reading: What could be in store for this upcoming U.S. earnings season

Sentiment was also helped by the release of two readings on Chinese factory activity. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for September rose to 51.4 from 50.4 in August, marking the second straight month of expansion. Economists polled by Reuters had expected a dip to 50.2. Meanwhile, the official Purchasing Managers’ Index rose to 49.8 in September, slightly better than expected and advancing from 49.5 in August. Still, that was below the 50-point mark which separates contraction from growth.

In corporate news, Budweiser APAC shares jumped in their market debut in Hong Kong, gaining as much as 6 per cent. The IPO, which raised about US$5-billion, was the second biggest globally this year after Uber Technologies’ New York listing in May.

“The performance is much better than expected, and it’s mainly helped by demand from institutional investors who are confident about the company’s growth story, mainly in China,” Steven Leung, sales director at UOB Kay Hian in Hong Kong, told Reuters.

“You will now see more high-growth companies tapping the markets soon.”

Apple Inc. shares were up 1.4 per cent in early trading after JPMorgan raised its outlook for iPhone sales. JPMorgan now expects sales volumes of about 44 million in the final three months of the year. Sales are seen rising to 63 million in the subsequent quarter. Analyst Samik Chatterjee also raised his price target on the stock to US$265.

Overseas, Europe’s major markets were mixed to higher by afternoon. The pan-European STOXX 600 was up 0.19 per cent. Construction stocks were higher, food and beverage shares slid.

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Britain’s FTSE 100 was off 0.10 per cent. France’s CAC 40 edged up 0.20 per cent. Germany’s DAX gained 0.08 per cent.

In Asia, Tokyo’s Nikkei lost 0.6 per cent, while Hong Kong’s Hang Seng gained 0.5 per cent and the Shanghai Composite shed 0.9 per cent. Markets in China will only trade Monday and then close the rest of the week as the country marks the 70th anniversary of the founding of the People’s Republic of China.

Commodities

Crude prices were down in early going as global economic worries ahead of coming trade talks between China and the United States offset two reports showing stronger-than-expected Chinese factory activity this month.

The day range on Brent so far is US$60.91 to US$62.24. The range on West Texas Intermediate is US$55.12 to US$56.57.

“With Saudi oil production mostly back online, the focus shifts again to the trade war narrative and consequential demand devastation, which is getting intensified by the U.S. administrations possible capital clampdown as they investigate the efficacy of capping U.S. investment flows into China,” AxiTrader strategist Stephen Innes said.

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“Indeed, when stop and reverse trading strategies kick in, they can have an exponentially significant impact on price action and far weightier than a simple cut and run exit strategy. All of which suggests there may have been considerable downside momentum in play last week.”

He also said the global economy remains in focus for crude markets. While U.S. data have been “surprisingly resilient” questions remain about how long this “exceptionalism” can last.

“Even if the U.S. data held up, the decidedly disappointing PMI figures out of Europe last week and the wobbly PPI and IP data from China on Friday offer little reason for oil investors to be optimistic over global demand,” he said.

Meanwhile, new figures released Friday by energy services firm Baker Hughes showed U.S. energy companies cut the number of oil rigs last week, marking the 10th straight week of declines. Drillers cut six oil rigs in the week to Sept. 27, bringing the total count down to 713, the lowest since May 2017. In the same week a year ago, there were 863 active rigs.

In other commodities, gold prices pulled back as uncertainty around U.S.-China trade talks pushed investors toward the U.S. dollar.

Spot gold fell 0.4 per cent to US$1,490 per ounce, after prices hit US$1,486.60 in the previous session, their lowest since Sept. 18. U.S. gold futures dipped 0.6 per cent to US$1,496.60 per ounce.

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“In the short term, investors are sliding towards a dollar-denominated safe-haven appeal,” Mr. Innes said.

Currencies

The Canadian dollar was steady around the mid-75-US-cent mark as its U.S. counterpart held near recent highs and investors await a reading on Canadian GDP later in the week.

The day range on the loonie so far is 75.48 US cents to 75.61 US cents.

The main event for the Canadian dollar this week will be the release of Statistics Canada’s report on July gross domestic product. That report is due before the start of trading on Tuesday.

“We forecast that the first monthly GDP report for (the first half of) 2019 will see a return to about trend growth with a 0.1 per cent month-over-month advance in July,” RBC chief currency strategist Adam Cole said.

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For broader currency markets, Mr. Cole said headlines on Brexit and the Trump impeachment inquiry will likely dominate, although there are key data points coming too, particularly the September U.S. jobs numbers set for release on Friday. (Canadian figures will be released the following week.)

"Our economists look for payrolls to come in at 160,000, he said. “Fundamentally, the tightening in the labour market looks nowhere near done. While the headcount numbers are poised to slow for demographic reasons, the wage numbers have already been picking up the slack.”

On Monday, the U.S. dollar was trading near its recent highs as investors moved toward the safe-haven currency amid continued uncertainty over U.S.-China trade talks.

The U.S. dollar index, which weighs the greenback against a basket of world counterparts, rose 0.1 per cent to 99.169 in early European trade, while against the euro it was slightly higher at US$1.0929 . The U.S. dollar earlier this month hit a more than 2-year high of 99.37.

In bonds, the yield on the U.S. 10-year note was slightly higher at 1.696 per cent.

More company news:

AltaGas Ltd. said it has struck a deal to sell its interest in the Central Penn Pipeline to Meade Pipeline Investment, LLC, a subsidiary of NextEra Energy Partners, for $870-million. The transaction is expected to close in the fourth quarter. ’We have exceeded our asset sales guidance range for this year, and we are well positioned to focus on executing against our unique value proposition,” AltaGas president and chief executive officer Randy Crawford said. “In 2019, we have increased our financial flexibility and delevered our balance sheet."

BP Chief Executive Officer Bob Dudley is drawing up plans to step down next year, ending a tumultuous decade at the helm of the oil and gas company that swung from near collapse in 2010 to rapid growth today, Reuters reports, citing sources close to the company. Mr. Dudley, BP’s first American CEO, has indicated several times in closed discussions in recent years that he would like to retire at the age of 65, taking him into 2020.

French oil major Total has completed the acquisition of Anadarko’s 26.5-per-cent stake in Mozambique’s liquefied natural gas project for US$3.9-billion, Total said, in a deal expected to raise much-needed revenue for Mozambique.

A German court has opened proceedings in a landmark case in which some 470,000 consumers aim to establish a right to compensation from automaker Volkswagen for cars affected by the company’s diesel emissions scandal. The case, brought by the Federation of German Consumer Organizations and joined by hundreds of thousands of diesel owners, uses rules enacted last year allowing a form of class-action suit. The new system was prompted in part by the scandal over Volkswagen’s use of software to turn emissions controls off when vehicles weren’t being tested, which was discovered in 2015.

Martina Merz, chairwoman of Thyssenkrupp’s supervisory board, will take over as the conglomerate’s chief executive on Tuesday, the company said on Monday. Her CEO appointment, agreed on unanimously by the group’s supervisory board, will be limited to a maximum of 12 months, the group said, adding the contract with current CEO Guido Kerkhoff was terminated by mutual agreement.

Economic news

Statistics Canada says prices for products manufactured in Canada rose 0.2 per cent in August. Prices for raw materials purchased by manufacturers operating in Canada fell 1.8 per cent, mostly as a result of lower prices for crude energy products, the agency said.

(9:45 a.m. ET) U.S. Chicago PMI for September. Consensus projection is 50.0, down from 50.4 from August.

With Reuters, The Canadian Press and The Associated Press

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