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Equities

Canada’s main stock index rose at the start of trading Tuesday with a jump in crude prices lifting energy shares. South of the border, Wall Street’s main indexes gained as investors welcomed efforts around the globe to ease COVID-19 lockdowns.

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At 9:42 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 144.12 points, or 0.98 per cent, at 14,889.16.

Energy stocks rose more than 5 per cent on the back of rising crude prices. Financials were up 1.2 per cent and industrial stocks gained 0.5 per cent.

In the U.S., the Dow Jones Industrial Average rose 209.12 points, or 0.88 per cent, at the open to 23,958.88.

The S&P 500 opened higher by 26.14 points, or 0.92 per cent, at 2,868.88. The Nasdaq Composite gained 98.94 points, or 1.14 per cent, to 8,809.66 at the opening bell.

On Monday, California Governor Gavin Newsom announced the state will begin gradually allowing some retailers to reopen their doors as early as Friday for curbside pickup. In Hong Kong, social distancing measures put in place to curb the spread of the coronavirus were also scaled back.

“California was one of the first to lockdown six weeks ago so it holds that most of the states will be in a similar position inside the next couple of weeks,” Jasper Lawler, head of research with London Capital Group, said.

“Markets have settled into a period of calm ...There’s a growing sense that the worst for the global economy is right now while lockdowns are in place and coronavirus treatments are unproven. It follows that it only gets better from here as lockdowns ease and treatments are found.”

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On the earnings front, Canadian investors get results from Loblaw-parent George Weston early Tuesday. After the close, major insurers begin reporting with earnings due from Sun Life. Suncor Energy also reports after the closing bell.

On Wall Street, investors get results from Walt Disney Co. Investors will be watching for a clear indication of the impact of the COVID-19 pandemic, which has shuttered the company’s theme parks, curbed its content production and left sports properties without new games.

Overseas, easing lockdown restrictions also bolstered major European markets. The pan-European STOXX 600 rose 1.75 per cent by afternoon. Britain’s FTSE 100 rose 1.64 per cent. Germany’s DAX added 1.84 per cent. France’s CAC 40 was up 2.04 per cent.

In Asia, Hong Kong’s Hang Seng gained 1.08 per cent. Markets in China and Japan were closed for public holidays.

Commodities

Crude prices jumped as easing lockdowns around the globe helped boost hopes that rising demand would follow.

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The day range on Brent so far is US$27.77 to US$29.30. The range on West Texas Intermediate is US$21.13 to US$22.77.

In the predawn period, WTI was up nearly 9 per cent while Brent advanced roughly 7 per cent

“The rebound in the oil price was largely driven by expectations of a pickup in demand as governments continue to gear up for the gradual easing of various states of lockdown, as Italy and Spain relaxed some restrictions, while the U.K. government outlined its latest guidelines, or blueprint for what is required for a limited restarting of the U.K. economy,” Michael Hewson, markets analyst with CMC Markets U.K., said.

“While April was marked by a collapse in oil demand, as countries across the world locked down simultaneously, the expectation is that May demand could well pick up and that storage capacity could well start to rise, on rising consumption, as the oil surplus starts to fall back.”

Swiss bank UBS said the easing of restrictions would help lead to a balance in supply and demand for the oil market in the third quarter and even projected an undersupply by the fourth, forecasting an end-2020 recovery of Brent to $43 per barrel and $55/bbl by mid-2021, according to a Reuters report.

“The outlook for this and next year is turning brighter: demand should be supported by a recovering global economy,” UBS commodities analyst Giovanni Staunovo said.

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Later Tuesday, markets will get the first of two weekly readings on U.S. crude inventories when the American Petroleum Institute releases its latest figures. The U.S. Energy Information Administration releases its weekly report on Wednesday.

Analysts are expecting to see another weekly build in crude stocks.

Meanwhile, gold prices slid as risk sentiment improved.

Spot gold declined 0.4 per cent to US$1,695.29 per ounce. U.S. gold futures fell 0.7 per cent to US$1,700.90.

“We are holding quite steady around the $1,700 level. On one side, you’ve got easing in lockdowns and that is probably improving investor sentiment and a move away from safe havens towards risk assets,” said ING analyst Warren Patterson.

Currencies

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The Canadian dollar advanced in early going as crude prices rose and global risk sentiment improved.

The day range for the loonie so far is 70.95 US cents to 71.33 US cents with the dollar close to the upper end of that spread at last check.

“Momentum toward easing lockdowns continued, with Hong Kong saying it would ease social distancing measures soon and reports suggesting some businesses could reopen within days,” RBC chief currency analyst Adam Cole said.

“BoC Deputy Governor [Carolyn] Wilkins [in remarks on Monday] continued to characterize the BoC’s asset purchases as addressing market functioning, but said the bank could recalibrate the program to monetary policy objectives if needed.”

On the economics front, Statistics Canada says Canada’s trade deficit widened to $1.4-billion in March from $894-million a month earlier. Exports fell 4.7 per cent, the lowest level since 2018. Imports dropped 3.5 per cent, the government agency said. The loonie held early gains after the release of those numbers.

On global markets, the U.S. dollar gained for the second day with concerns about relations between the U.S. and China lingering but improved risk sentiment limiting the advance.

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Against a basket of world currencies, the U.S. dollar index edged up 0.1 per cent to 99.55, and was near the two-week high of 100.83 seen late last month.

Elsewhere, the euro slipped 0.1 per cent to US$1.0892, hit by a court challenge from German academics to the European Central Bank’s bond buying program.

More company news

Activist investor Bill Ackman’s Pershing Square Capital Management has raised its stake in Tim Hortons-parent Restaurant Brands International to 9.6 per cent from the previous level of 6.6 per cent. Bloomberg reports that Pershing viewed the company’s shares as being “undervalued” and an “attractive investment.” In a filing, Pershing said it planned to hold discussions with Restaurant Brands’ management, board of directors and other shareholders on a range of topics that could include strategic plans and its governance, according to the Bloomberg report.

George Weston Ltd. reported a profit in its latest quarter compared with a loss a year ago when it took a large one-time charge. The retail, bakery and real estate business says the profit available to common shareholders totalled $582-million or $3.78 per diluted share for the quarter ended March 21. That compared with a loss of $488-million or $3.18 per diluted share a year ago when it recorded a fair value adjustment of the trust unit liability of nearly $1.09-billion or $7.07 per share.

MEG Energy Corp. cut its capital spending guidance for a second time due to the COVID-19 pandemic as it reported a first-quarter loss of $284-million. The company now expects its capital spending to total $150-million, down from an estimate of $200-million in March and $250-million in its original guidance released late last year.

German fashion house Hugo Boss expects the impact of the coronavirus pandemic to get worse before it gets better after reporting a 17% fall in first-quarter sales, but added that it was seeing signs of a rebound in China and online. It expects second-quarter sales to fall by at least 50% but said it is confident the retail environment will gradually improve from the third quarter, positively impacting sales and earnings in second half of year.

Industrial materials maker DuPont slashed its capital expenditure by about US$500-million and raised its annual cost-savings target to counter global trade uncertainties brought on by the coronavirus outbreak. The industrial giant now expects to save US$180-million this year from incremental actions it had announced earlier.

U.S. oil refiner Marathon Petroleum Corp reported a loss in the first quarter on $12.4 billion in impairment charges, as widespread lockdowns to contain the spread of the COVID-19 pandemic pummeled demand for oil and gas. Net loss attributable for the largest U.S. oil refiner stood at US$9.2-billion, or US$14.25 per share, for the three months ended March 31, compared with loss of US$7-million, or 1 US cent per share, in the year earlier.

Economic news

Statistics Canada says Canada’s trade deficit widened to $1.4-billion in March from $894-million a month earlier. Exports fell 4.7 per cent, the lowest level since 2018. Imports dropped 3.5 per cent, the government agency said.

The U.S. Commerce Department said that country’s trade deficit increased to US$44.4-billion from a revised US$39.8-billion in February. Economists polled by Reuters had forecast the trade gap increasing to US$44.0-billion in March from the previously reported US$39.9-billion in February.

With Reuters and The Canadian Press

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