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Equities

Canada’s main stock index slid at the open on Tuesday with energy and financial stocks weighing on sentiment. On Wall Street, major markets were little changed as investors wait for clearer signals on the state of trade talks between the United States and China.

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At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 30.94 points, or 0.18 per cent, at 17,001.92.

In the U.S., the Dow Jones Industrial Average rose just 14.28 points, or 0.05%, at the open to 28,080.75, while the S&P 500 opened higher by 1.21 points, or 0.04 per cent, at 3,134.85. The Nasdaq Composite gained 2.91 points, or 0.03 per cent, to 8,635.40 at the opening bell.

Early Tuesday, China’s commerce ministry said China’s Vice Premier Liu He, U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin held a phone call on issues related to a phase one trade agreement, helping inject some early optimism into the markets.

“While little is changing from day to day, investors are craving daily updates and in the absence of much else to discuss, markets are sensitive to them,” OANDA senior analyst Craig Erlam said.

“We had another positive update overnight, with the Chinese Ministry of Commerce confirming that they had held another call with U.S. negotiators. Of course, the details of the call were lacking but the language used was promising, which, let’s face it, is all we have to go off and as long as that remains the case, investors will be optimistic of a deal.”

Overnight, markets also got the Hong Kong debut of Chinese e-commerce giant Alibaba, marking the world’s biggest share sale of the year. Alibaba shares finished up more than 6 per cent. The listing is seen as a vote of confidence in Hong Kong after months of unrest.

“The largest listing of the year comes at a worrying time for Hong Kong but everything appears to have gone very smoothly,” Mr. Erlam said. “This was an opportunity to show that, despite the protests that have brought Hong Kong to a standstill and wreaked havoc on the economy, it’s business as usual for the stock exchange.”

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In this country, bank earnings kick off with results from Bank of Nova Scotia.

For the quarter, Scotiabank reported a 1.6-per-cent increase in profit. Net income rose to $2.31-billion, or $1.73 a share, in the quarter ended Oct. 31, from $2.27-billion, or $1.71 a share, a year earlier. On an adjusted basis, the company earned $1.82 a share, in line with analysts’ forecasts. Scotiabank shares were up slightly in Toronto shortly after the opening bell.

Overall, Canada’s biggest banks are expected to turn in disappointing profit growth for the fiscal year ended Oct. 31. The Globe’s Andrew Willis reported earlier this week that analysts are forecasting earnings per share for 2019 will increase between 2 and 5 per cent compared with the previous year, below the banks’ stated targets of 5 per cent to 10 per cent annual EPS growth.

Elsehwhere, Canadian convenience store giant Alimentation Couche-Tard is making a US$5.8-billion play for Caltex Australia Ltd. as it pursues global growth. Laval, Que.-based Couche-Tard offered to pay AU$34.50 in cash per share for Caltex, increasing an earlier proposal of $32 per share that was rejected, Caltex said early Tuesday. The offer is equivalent to roughly $7.8-billion. Caltex said it was considering the non-binding bid and that talks were at a preliminary stage. Couche-Tard shares were up about 1 per cent.

Couche-Tard also reports its latest results after the close of trading Tuesday.

On Wall Street, investors get results from Best Buy, Dollar Tree and Dell.

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Overseas, major European were little changed in afternoon trading with the pan-European STOXX 600 hovering around break even. Britain’s FTSE 100 was up 0.08 per cent. Germany’s DAX slipped 0.08 per cent. France’s CAC 40 gained 0.05 per cent in morning trading.

Asian markets fared better, with the exception of Hong Kong’s Hang Seng despite Alibaba’s blockbuster debut. The Hang Seng slid 0.29 per cent on the day. The Shanghai Composite Index rose 0.03 per cent. Japan’s Nikkei finished up 0.35 per cent.

Commodities

Crude prices moved higher as traders welcomed positive headlines on the global trade situation and looked ahead to an expected decline in U.S. inventories.

The day range on Brent so far is US$63.44 to US$63.97. The range on West Texas Intermediate is US$57.76. to US$58.31.

“Oil prices have stabilized in recent sessions, despite risk appetite improving and trade talks seemingly progressing,” Mr. Erlam said in an early note. "Following a rally of more than 10 per cent since early last month, this does beg the question of whether it’s perhaps a little overextended to the upside."

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If that’s the case, he said, bullish trade headlines may struggle to give prices a kick higher compared to the activity seen a few weeks ago. “Instead we may see some significant profit taking at the first sign of bearish triggers,” he said.

Outside trade news, markets will get the first of two weekly readings on U.S. crude inventories later Tuesday.

The American Petroleum Association, an industry group, releases its weekly tally later in the session. Those numbers will be followed Wednesday by more official government figures from the U.S. Energy Information Administration.

A poll conduced by Reuters shows that analysts are expecting to see a decline in inventories by about 300,000 barrels.

“Confirmation of a stock draw from the API today and the EIA tomorrow could offer some immediate support to the market, with the last stock drawdown seen in mid-October,” ING analyst Warren Patterson told Reuters.

In other commodities, gold prices were relatively steady.

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Spot gold was up 0.1 per cent at US$1,455.60 per ounce, close to its lowest since Nov. 12 hit earlier in the session. U.S. gold futures were down 0.1 per cent at US$1,455.40.

“Trade deal optimism continues taking its toll on gold markets, which could be prone to further declines as sureness builds up to the actual trade-talk event horizon,” AxiTrader strategist Stephen Innes said.

Currencies

The Canadian dollar was weaker despite improved risk sentiment in the markets, trading toward the low end of the day range of 75.10 US cents to 75.20 US cents.

There were no major economic releases due Tuesday to offer direction for the Canadian currency. On Monday, the loonie put in a steady showing after Statistics Canada reported that wholesale trade rose by 1 per cent in September, offsetting most of the previous month’s decline.

“USD/CAD continues to trade with a bid tone despite the uptick in risk sentiment,” RBC chief currency strategist Adam Cole said.

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On world currency markets, the U.S. dollar touched a two-year high against Japan’s safe-haven yen on the latest trade news. However, those gains quickly unraveled as the session continued. Currency trading is also slowing ahead of the Thursday Thanksgiving holiday in the United States.

The U.S. dollar was last trading neutral at 108.96 yen, after rising as high as 109.205, its highest since Nov. 12, according to Reuters.

The euro was also flat versus the dollar at US$1.1016 , not far from the 11-day low of $1.1004 it reached on Monday.

In bonds, the yield on the U.S. 10-year note was lower at 1.745 per cent. The yield on the 30-year note was also down at 2.179 per cent.

More company news

Best Buy Co. shares jumped more than 7 per cent after the retailer beat market expectations for quarterly same-store sales and forecast strong earnings in the holiday quarter. Overall same-store sales rose 1.7 per cent in the third quarter ended Nov. 2, beating analysts’ average estimate of a 1.3-per-cent increase, according to IBES data from Refinitiv. The company forecast fourth quarter adjusted earnings of US$2.65 to US$2.75 per share. Wall Street forecasts had been looking for earnings by that measure of US$2.65.

Volkswagen’s luxury car unit Audi announced a major restructuring scheme, slashing around 9,500 jobs until 2025 in an effort to adopt production to the e-mobility era and achieve billion-euro cost savings. “The resulting savings of around 6 billion euros will secure the strategic operating profit margin corridor of 9 to 11% and will be invested in projects of the future such as electrification and digitalisation,” the company said in a statement.

Discount store operator Dollar Tree Inc reported better-than-expected quarterly sales, as revamped stores and new products drew more shoppers to its namesake and the Family Dollar chain. Net sales rose 3.7 per cent to US$5.75-billion, above analysts’ average estimate of US$5.74-billion, according to IBES data from Refinitiv. Same-store sales rose 2.50 per cent in the third quarter ended Nov. 2, slightly falling short of the average analyst estimate of 2.54 per cent.

London Stock Exchange shareholders overwhelmingly backed the exchange’s US$27-billion takeover of data and analytics company Refinitiv on Tuesday, a deal designed to broaden LSE’s trading business and make it a major distributor of market data. LSE Chairman Don Robert told a shareholders meeting in London that the exchange’s board was unanimous in recommending the Refinitiv deal because it was a “compelling opportunity” in the best interests of shareholders and the company.

Fiat Chrysler and Peugeot-owner PSA told their employees they would sign a binding merger agreement in coming weeks. In two separate communications through internal channels, obtained by Reuters on Tuesday, the two groups told employees that more than 50 people were involved in the process. FCA and PSA are in talks to finalise a merger that would create the world’s fourth-largest carmaker.

Australia’s Evolution Mining Ltd on Tuesday agreed to buy Canadian gold mining complex Red Lake from Newmont Goldcorp Corp for $375-million in cash. Evolution also agreed to pay an additional $100-million upon new resource discovery at the mine. “Red Lake is an under-capitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio,” said Jake Klein, Evolution’s executive chairman.

Economic news

The S&P CoreLogic Case-Shiller 20-city U.S. home price index rose 2.1 per cent in September from a year ago, up from a 2-per-cent annual gain in August.

(10 a.m. ET) U.S. new home sales.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index.

With Reuters and The Canadian Press

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