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Equities

Indexes on both sides of the border jumped at the start of trading Monday with investors remaining optimistic about the global economic rebound despite spiking cases of coronavirus infections in some regions.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 160.1 points, or 1.03 per cent, at 15,756.85.

The Dow Jones Industrial Average rose 168.72 points, or 0.65 per cent, at the open to 25,996.08, while the S&P 500 opened higher by 25.28 points, or 0.81 per cent, at 3,155.29.

The Nasdaq Composite gained 152.75 points, or 1.50 per cent, to 10,360.38 at the opening bell, notching up another record high.

The gains came even as the U.S. continues to see a rise in new infections. Reuters reports that, in the first four days of this month, 15 states reported record increases in new cases of COVID-19. Roughly 3 million Americans have been infected by the virus and 130,000 have died, according to figures compiled by the wire service.

Outside the U.S., the Australian state of Victoria prepared to close its border on Monday with neighbouring New South Wales after cases hit a new daily high. In Europe, Spain suspended access to a northern county as a result of fears of an outbreak.

“Despite facing negative headlines on a daily basis, some market participants are already dreaming about new record [market] highs,” Milan Cutkovic, market analyst with AxiCorp, said in an early note.

“Whether this is achievable or not, remains to be seen, but the most hated rally in history has proven many times to be resilient and should not be underestimated.”

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However, he also noted that massive stimulus measures won’t be able to sustain the rally forever.

“What investors need to see to remain confident is that the current pandemic remains mostly under control and that there will not be another lockdown as we experienced a few months ago,” he said.

In this country, investors get the Bank of Canada’s latest business outlook survey shortly after the start of trading, which should give a look at conditions at the start of the recovery.

“The previous iteration was conducted before the COVID-19 lockdown, and while most categories saw some softening, they clearly did not reflect the full lockdown impact,” RBC chief currency analyst Adam Cole said.

“Therefore, universal deterioration in the fixed data questions is essentially guaranteed, especially on the investment intentions, capacity pressures, employment and inflation expectations components. Given the survey period, the BoC’s comments should reflect some indication of the reopening, and these should be even more closely watched than usual.”

Overseas, Europe’s major markets were higher by afternoon.

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The pan-European STOXX 600 added 1.41 per cent. Britain’s FTSE 100 gained 1.77 per cent. Germany’s DAX added 1.76 per cent. France’s CAC 40 rose 1.70 per cent.

In Asia, the Shanghai Composite Index spiked 5.7 per cent. Hong Kong’s Hang Seng jumped 3.81 per cent. Japan’s Nikkei ended up 1.83 per cent.

“Asian stocks kicked off the week on a strong positive note [with] hopes for more policy support being pretty much the only explanation to the early week optimism,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

“China will release June economic data over the next two weeks and expectations are solid rebound in activity and higher inflation,” she said. “Yet, it is unsure whether today’s bullish run is caused by the solid data expectations, or simply speculation.”

Commodities

Crude prices were steady alongside rising equity markets as hopes for a continued global economic rebound offset concerns over rising cases of new coronavirus infections.

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The day range on Brent is US$42,74 to US$43.71. The range on West Texas Intermediate is US$40.20 to US$41.08.

“The exuberance being seen across global equity markets, appears to be helping to boost oil markets this morning, with Brent crude prices closing back in on last month’s three-month highs,” David Madden, market analyst with CMC Markets U.K., said.

Crude prices were also underpinned by expectations that strong market momentum will continue despite flare ups around the world in new infections.

In Asia, the China Securities Journal said that country’s capital markets are attracting money, setting the stage for s solid bull market.

On the economic side, new figures released on Monday showed that orders for German industrial goods rose by 10.4 per cent in May, rebounding from their biggest drop since records began in 1991 the previous month.

Sentiment was also helped by signs of declining U.S. production. Recent figures released showed that the number of U.S. oil and natural gas rigs fell for the ninth week.

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In other commodities, gold prices edged higher.

Spot gold was up 0.1 per cent at US$1,776.29 per ounce. U.S. gold futures fell 0.3 per cent to US$1,785.

Currencies

The Canadian dollar was relatively steady in early going, supported by higher crude prices and improved risk sentiment.

The day range on the loonie was 73.71 US cents to 73.96 US cents.

“Markets have a clear risk-positive bias this morning,” RBC chief currency strategist Adam Cole said.

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Just after the North American open, markets get the Bank of Canada’s business outlook survey, which should offer a look at conditions as the economy began to reopen.

The week’s other big release comes on Friday with Statistics Canada’s report on hiring in June.

Mr. Cole said RBC is expecting to see about 650,000 jobs added last month following May’s surprise increase of 290,000 positions.

Last week, markets got a boost when the United States reported a record 4.8 million new jobs last month, far exceeding forecasts.

On global markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, slid 0.4 per cent to 96.82, its lowest level since July 2.

Britain’s pound edged higher to US$1.2509 amid reports British Finance Minister Rishi Sunak plans to raise the property tax threshold and temporarily cut the value-added tax (VAT) in the hospitality sector, Reuters reported.

The euro rose 0.5 per cent to US$1.1303 after a new report showed orders for German industrial goods rose by 10.4 per cent in May.

The Australian dollar rose 0.4 per cent to 69.75 US cents after advancing more than 1 per cent last week. The Reserve Bank of Australia’s next policy meeting is set for Tuesday.

More company news

Britain’s Cineworld said on Monday it plans to make a counter-claim against Cineplex for damages and losses following a failed takeover. The Canadian company has sued the British cinema operator alleging breaches of obligations. Cineworld said it did not breach any obligations or duties.

Uber Technologies Inc said on Monday it has offered to buy food-delivery app Postmates Inc in a $2.65 billion all-stock deal.

Berkshire Hathaway Inc said its energy unit will buy Dominion Energy Inc’s natural gas transmission and storage network for US$4-billion. The transaction announced on Sunday includes more than 12,390 km of natural gas transmission lines and 900 billion cubic feet of gas storage.

Ford Motor Co. on Monday rolled out the product and marketing strategy for its new family of Bronco SUVs designed to take a bite out of Fiat Chrysler Automobiles’ profitable Jeep franchise. Ford’s Bronco lineup, launching later this month, will include two- and four-door models, as well as a smaller Bronco Sport.

Economic news

(10 a.m. ET) U.S. non-manufacturing ISM index for June.

(10:30 a.m. ET) Bank of Canada Business Outlook Survey and Survey of Consumer Expectations for Q2.

With Reuters and The Canadian Press

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