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Equities

Canada’s main stock index started lower Tuesday with energy shares tracking crude prices lower. South of the border, Wall Street indexes posted a tepid open in the final day of an otherwise strong quarter with virus concerns capping sentiment.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 47.13 points, or 0.31 per cent, at 15,342.59.

The Dow Jones Industrial Average fell 83.37 points, or 0.33 per cent, at the open to 25,512.43, and the S&P 500 opened lower by 3.04 points, or 0.10 per cent, at 3,050.20. The Nasdaq Composite gained 1.13 points, or 0.01 per cent, to 9,875.29 at the opening bell.

“It will be one of the best quarterly performances for global stock markets for years,” Jasper Lawler, head of research with London Capital Group, said. “The S&P 500 has risen around 17 per cent in the second quarter, its best 3-month performance since 1998.”

MSCI’s all-country index, meanwhile, has gained 18 per cent in the quarter, the best showing in 11 years, he said.

“After such a strong quarter, sellers may have lost some of their conviction but we could start to run out of new buyers in Q3,” Mr. Lawler said.

One of the day’s key events will be testimony from Mr. Powell and U.S. Treasury Secretary Steven Mnuchin on response of the Fed and the Treasury to the coronavirus crisis. They are scheduled to testify before the House Financial Services Committee just after noon.

In prepared remarks ahead of the tesitmony, Mr. Powell described the path to recover as “extraordinarily uncertain”

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In this country, investors got a reading on how badly the economy was hit by the coronavirus crisis in April as lockdowns shuttered many businesses. Statscan said the economy contracted 11.6 per cent in April. Some economists had predicted the decline would come in closer to 13 per cent. In its report, Statscan also said early estimates suggest growth of 3 per cent in May.

On the corporate side, Cineplex Inc. said it is seeking additional financing and possibly the sale of some assets to meet debt obligations. The cinema company also said, if unsuccessful, its status as a going concern could be at risk. The comments came as Cineplex reported its latest results after the close of trading.

Cineplex shares were down more than 15 per cent in morning trading in Toronto.

In the U.S., markets will get earnings from FedEx after the close of trading.

Overseas, major European markets gave up modest early gains by afternoon with the pan-European STOXX 600 dipping 0.25 per cent. Britain’s FTSE 100 fell 0.91 per cent. France’s CAC 40 was down 0.37 per cent. Germany’s DAX was flat.

In Asia, markets finished higher after a stronger-than-expected reading on China’s factory sector. China’s official manufacturing PMI for June came in at 50.9. Markets had been expecting a number closer to 50.4. A reading over 50 indicates expansion.

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The Shanghai Composite Index ended up 0.78 per cent. Hong Kong’s Hang Seng rose 0.52 per cent. In Japan, the Nikkei ended 1.33 per cent.

Currencies

The Canadian dollar was lower as crude prices slid and broader concerns about the rise of coronavirus infections in some regions tempered optimism over the global economic recovery.

The day range on the loonie is 73 US cents to 73.25 US cents.

“The CAD is slightly softer against the USD but has picked up ground against many of its G10 peers on the session as swings in risk sentiment still seem to affect the CAD somewhat less — for better and worse — than its commodity cousins,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.

The Canadian dollar showed little reaction to the April GDP figure, which showed a record contraction of 11.6 per cent for the month. Early estimates from Statscan also point to a 3-per-cent rebound in May.

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On global markets, the U.S. dollar held modest gains against a basket of world currencies. The U.S. dollar index was up 0.27 per cent at 97.686.

Markets continue to keep a close watch on rising coronavirus infections. On Monday, both California and Texas saw record increases. Britain, meanwhile, a reinforced lockdown was imposed in Leicester.

“Markets are jumpy. Tension remains between economic and virus pickup,” Moh Siong Sim, an FX analyst at the Bank of Singapore, told Reuters.

The safe-haven Swiss franc slipped marginally. The U.S. dollar rose 0.1 per cent against the franc to 0.9521 while it also climbed against the Japanese yen and was last up 0.1 per cent at 107.715 yen,

More company news

Quebec-based convenience store operator Alimentation Couche-Tard Inc. beat expectations as it capped its fiscal year with profits nearly doubling in the fourth quarter. The company said it earned US$576.3-million or 52 US cents per share in the latest quarter. That compared with US$293.1 million or 26 US cents per share a year earlier. Couche-Tard results were affected by a pre-tax gain of US$41-million on the sale of its U.S. wholesale fuel business, a US$22.8-million foreign exchange gain and US$4.6-million adjustment on deferred taxes, The Canadian Press reported. Revenues decreased 26.1 per cent to US$9.69 billion.

Royal Dutch Shell said on Tuesday it would write off assets worth up to US$22-billion after the coronavirus crisis knocked oil and gas demand and weakened the energy price outlook. Shell, the world’s largest fuel retailer, said it expected a 40 per cent drop in sales in the second quarter from a year earlier to about 4 million barrels per day (bpd), although that is more than its earlier prediction of a drop to 3.5 million bpd.

McDonald’s Canada says Jacques Mignault has been appointed as its next president and chief executive, effective Aug. 1. Mr. Mignault has been serving as the managing director of McDonald’s Switzerland. He succeeds John Betts, who is retiring.

Lululemon Athletica Inc. has entered into an agreement to acquire in-home fitness company Mirror. The deal is valued at $500-million and will see the Vancouver-based athleticwear brand take over New York-based Mirror, which runs an interactive workout platform that features live and on-demand fitness classes.

Micron Technology Inc on forecast current-quarter revenue above Wall Street estimates, as home-bound employees and students spur demand for its chips that power notebooks and data centers. The chip maker expects revenue in the fourth quarter ended May 28 to be between US$5.75-billion and US$6.25-billion, the mid-point of which was above analysts’ estimates of US$5.48-billion, according to IBES data from Refinitiv.

Economic news

(8:30 a.m. ET) Canada’s monthly real GDP for April.

(9 a.m. ET) U.S. S&P Case-Shiller Home Price Index for April.

(9:45 a.m. ET) U.S. Chicago PMI for June.

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

(12:30 p.m. ET) U.S. Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin testify before House Financial Services Committee on CARES Act.

With Reuters and The Canadian Press

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