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Equities

Major Canadian and U.S. indexes were hovering around break even at the opening bell on Monday as investor concerns over spiking numbers of coronavirus infections continue to weigh on sentiment.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 2.25 points, or 0.01%, at 16,125.73.

The Dow Jones Industrial Average fell 11.66 points, or 0.04 per cent, at the open to 26,660.29, and the S&P 500 opened lower by 0.44 points, or 0.01 per cent, at 3,224.29. The Nasdaq Composite gained 22.83 points, or 0.22 per cent, to 10,526.02 at the opening bell.

Markets continue to be weighed down by spiking infection numbers, although analysts suggest that investor hopes for a vaccine breakthrough are offsetting those worries to a degree.

Over the weekend, the number of U.S. deaths related to COVID-19 topped 140,000. On Sunday, Florida reported 12,000 new cases, the fifth day in a row that the state saw more than 10,000 new infections. Los Angeles mayor Eric Garcetti, meanwhile, said that city could be “on the brink” of new restrictions as it battles the virus. Speaking on CNN, he said another stay-at-home order was an option although he also said the city has been aggressively testing and continues to have hospital space.

“COVID-19 continues to take its human toll with a record daily increase in new cases globally and the US, amid fresh outbreaks and containment measures,” AxiCorp chief market strategist Stephen Innes said. "

“However, the market no longer seems so ball and chained to the grip of COVID-19, but instead, investors’ interest is keenly focused on news around vaccine development.”

Earnings also continue to be a key focus. Wall Street will get results from IBM after the close of trading Monday. Later in the week, tech results continue with earnings from Microsoft and Intel.

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Canadian earnings season kicks on Tuesday with the release of results from Canadian National Railway. Later in the week, investors get results from CP Rail, Suncor, Loblaw and Rogers Communications.

Elsewhere, Walmart Canada announced a $3.5-billion investment over five years in operations in this country. The plan includes renovating 150 stores over the next three years and building two new distribution centres.

Overseas, signs of a possible compromise emerged in talks among EU leaders over a massive coronavirus stimlus plan as negotiations move into a fourth day. Talks were scheduled to resume Monday. Although leaders were divided over the weekend, early signals suggest hope for an eventual agreement. “We are not there yet, things can still fall apart, but it looks a bit more hopeful,” Dutch Prime Minister Mark Rutte said.

Major European markets were mixed by afternoon. The pan-European STOXX 600 edged up 0.30 per cent after a weak start. Britain’s FTSE 100 slid 0.53 per cent. Germany’s DAX rose 0.44 per cent. France’s CAC 40 fell 0.07 per cent.

In Asia, the Shanghai Composite Index jumped 3.11 per cent after China kept its one-year and five-year loan prime rate unchanged. Hong Kong’s Hang Seng slipped 0.12 per cent. Japan’s Nikkei finished up 0.09 per cent after trading in the red earlier in the session.

Commodities

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Crude prices started the week under pressure as concerns about demand continue as coronavirus cases rise in some regions.

The day range on Brent so far is US$42.53 to US$43.16. The range on West Texas Intermediate is US$40.04 to US$40.59.

“While OPEC provides an enduring backstop, the pace of oil price improvement in the face of real virus demand risks will likely remain sluggish, suggesting unless the epi curve flattens and lockdowns are rolled back, there remains more considerable downside than upside price risk through the near term contract,” AxiCorp’s Stephen Innes said.

More than 14.5 million people have been infected by the novel coronavirus globally with the death toll topping 600,000.

Recovering demand continues to be a key factor in prices.

On Monday, Japan reported that oil imports fell 14.7 per cent in June compared with the same month a year earlier.

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While fuel demand has recovered from a 30-per-cent drop in April after countries around the world imposed strict lockdowns, usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections rise, according to Reuters.

Figures released Friday showed that the number of operating oil and gas rigs fell to a record level for the 11th week in a row.

In other commodities, gold prices were steady and held above US$1,800 an ounce.

Spot gold was steady at US$1,808.92 per ounce. U.S. gold futures were little changed at US$1,809.50.

“There are technical indications that the U.S. dollar could strengthen and that might be why we are seeing traders in the gold market taking the lid off the price at the moment,” Michael McCarthy, chief strategist at CMC Markets, said.

Currencies

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The Canadian dollar edged higher as its U.S. counterpart held relatively steady against global currencies.

The day range on the loonie is 73.53 US cents to 73.72 US cents.

“The CAD’s correlation with risk (U.S. stocks) is weakening but remains elevated while its correlation with crude is picking up, suggesting perhaps that the market’s focus is switching to more domestically-relevant drivers which might, eventually, allow for the CAD to catch up with the recent improvement seen in terms of trade (commodity prices) since the spring low,” Shaun Osborne, chief FX strategist with Scotiabank, said.

There were no major Canadian economic releases on the calendar on Monday. On Tuesday, investors get a reading on May retail sales.

RBC chief currency analyst Adam Cole says that bank’s economists “see more upside than downside risks” to Statscan’s early estimate of a 19.1-per-cent gain for the month.

“Our card data points to a similar-sized headline increase in June that would leave retail sales approaching year-ago levels," he said.

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On global markets, the U.S. dollar index was little changed at 95.95.

The British pound was steady at US$1.2572 and 0.1 per cent lower against the euro at 91.05 pence.

The euro pulled back after hitting a 19-week high of US$1.1467 on Monday after EU summit chairman Charles Michel said a coronavirus recovery fund could contain 390 billion euros in grants.

More company news

EBay Inc is in advanced talks to sell its classified-ads unit to Norwegian group Adevinta as the online auction pioneer seeks to refocus on its core marketplace business, the Wall Street Journal reported on Monday. The price of the cash-and-stock deal was not disclosed, but the eBay unit is expected to sell for roughly US$8 billion or more and the agreement could be announced as soon as Monday, WSJ said, citing people familiar with the matter.

Oil major Chevron Corp said on Monday it agreed to buy Noble Energy Inc in an all-stock deal, valuing the Houston-based oil and gas producer at $5-billion. The offer values Noble at $10.38 a share or 0.1191 Chevron share, a 7.5% premium to Noble’s Friday close. The deal would value Noble at roughly $13-billion, including debt.

Canada’s Yamana Gold Inc is in advanced stages of its London Stock Exchange (LSE) listing, the company said on Monday. Yamana, which is already listed in New York and Toronto said it does not intend to raise equity capital along with the LSE listing. The company expects to starts trading in LSE’s Main Market in the next few months.

Ant Group, the fintech arm of Chinese e-commerce giant Alibaba, said on Monday that it had started the process of a concurrent initial public offering on Shanghai’s Nasdaq-style Star Market and the Hong Kong Stock Exchange. The world’s most valuable tech “unicorn” said in a release that the listings will help the company accelerate its goal of digitizing the service industry in China, develop global markets with partners and expand investment in technology and innovation. Ant did not disclose the size, timetable or other details of the offering in the release.

Dollar Tree Inc said Michael Witynski, the company’s enterprise president, has been promoted to chief executive officer, replacing Gary Philbin. The retailer said Mr. Philbin was retiring and would remain as a member of the board through Sept. 23.

Economic news

There were no major releases scheduled.

With Reuters and The Canadian Press

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