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Canada’s main stock index opened higher Monday with energy stocks catching a lift from rising crude prices. South of the border, major indexes started modestly higher attention turns to stimulus talks and rising tensions between the United States and China.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 67.52 points, or 0.41 per cent, at 16,612.
In the U.S., the Dow Jones Industrial Average rose 54.73 points, or 0.20 per cent, at the open to 27,488.21.
The S&P 500 opened higher by 4.76 points, or 0.14 per cent, at 3,356.04. The Nasdaq Composite gained 22.74 points, or 0.21 per cent, to 11,033.73 at the opening bell.
Continuing tensions between the United States and China weighed on sentiment after China’s foreign ministry said early Monday that it would apply sanctions against U.S. officials including Senators Ted Cruz and Marco Rubio. The move came after Washington penalized senior Chinese officials over the treatment of Uighur Muslims in its Xinjiang region.
U.S. stimulus efforts were also at the forefront after U.S. President Donald Trump signed executive orders intended to extend coronavirus relief after congressional leaders failed to make progress on a package last week. The orders would provide a payroll holiday and continue the expansion of unemployment benefits, although at a reduced rate.
“The delay and uncertainties on the U.S. next fiscal boost make some investors nervous, without however impacting the overall optimistic and patient wait for a further fiscal expansion,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in an early note.
“With the virus wreaking havoc on the U.S. economy, policymakers are expected to come to an agreement sooner rather than later.”
In this country, investors got quarterly results from Barrick Gold and Canopy Growth ahead of the start of trading.
Canopy’s shares were up nearly 8 per cent in early trading in Toronto after the cannabis company reported a smaller-than-expected loss in the latest quarter. Canopy’s net loss attributable to the company narrowed to $108.5-million, or 30 cents per share, in the first quarter ended June 30, compared with $185.9-million, or 54 cents per share, a year earlier.
French transport company Alstom said Monday that it would take into account Bombardier Inc.‘s weak results earlier this month as it continues with plans to by that company’s rail operations.
“Alstom remains convinced of the strong strategic rationale for the acquisition of Bombardier Transportation and is confident in its ability to restore in the medium term the profitability and commercial performance of the business,” Alstom said in a statement.
“However, the quarterly announcement points to unexpected and negative developments regarding Bombardier Transportation, which is currently facing challenges, especially when compared to the information available prior to the February 17, 2020 announcement regarding Alstom’s intended acquisition of Bombardier Transportation,” Alstom said.
Overseas, the pan-European STOXX rose 0.31 per cent heading into afternoon trading. Britain’s FTSE 100 gained 0.39 per cent. France’s CAC 40 rose 0.43 per cent. Germany’s DAX was down 0.18 per cent.
In Asia, Hong Kong’s Hang Seng fell 0.63 per cent. The Shanghai Composite Index rose 0.75 per cent. Markets in Japan were closed for a public holiday.
Crude prices gained in early going after Saudi Arabia said it expects improved demand in Asia as lockdown measures ease.
The day range on Brent is US$44.37 to US$44.97. The range on West Texas Intermediate is US$41.17 to US$41.96.
Saudi Arabian Aramco’s Chief Executive Amin Nasser said on Sunday he sees oil demand rebounding in Asia as economies gradually open up after the easing of pandemic lockdowns.
Both Brent and WTI gained more than 2 per cent last week.
AxiCorp global market strategist Stephen Innes said oil markets will be focused this week on planned trade talks between Washington and Beijing. The two sides are set to review the phase one trade deal on Aug. 15.
“The big elephant in the room for oil markets this week is the August 15 trade talks as tail risk has increased in both directions," he said.
“Indeed the fat tail for oil markets is if the trade talks end up in economic fracturing, and could lead Trump to roll back the [phase one] trade deal and even to heap on more tariffs, which would be grim for the nascent economic reopening recovery.”
On the supply side, Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months, according to a Reuters report. The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+.
“Saudi Arabia and Iraq forging better relationships over the oil deal are excellent for the compliance outlook,” Mr. Innes said.
In other commodities, gold prices were lower but still trading above US$2,000 an ounce.
Spot gold was down 0.3 per cent at US$2,029.19 per ounce. U.S. gold futures rose 0.6 per cent to US$2,039.60.
Gold hit a record high of US$2,072.50 on Friday before pulling back roughly 2 per cent as the U.S. dollar strengthened after a better-than-expected reading on U.S. hiring in July.
The Canadian dollar was little changed as global currency markets were treading water and the U.S. dollar managed modest gains.
The day range for the loonie is 74.66 US cents to 74.80 US cents.
“Friday’s Canadian employment data reflected a relatively quicker rebound in the domestic job market versus the US (Canada has regained a little more than 50 per cent of the jobs lost through the pandemic, outstripping the U.S. recovery which has regained a little over 42 per cent of lost jobs) but the CAD has hardly felt the benefit,” Scotibank chief FX strategist Shaun Osborne said.
“Risk sentiment remains somewhat fragile and a headwind for the CAD at the moment and an offset for firmer crude oil prices, it would appear, but the CAD has really struggled to pick up support against the USD all year and is currently the worst-performing G10 currency in YTD terms (with a near 3-per-cent loss).”
There were no major Canadian economic releases on the calendar for Monday.
The dollar index was at 93.5, up 0.1 per cent.
The euro was down 0.2 per cent versus the U.S. dollar, at US$1.17685 , while the safe-haven Swiss franc was had also slipped 0.2 per cent versus the U.S. currency to 0.914, according to Reuters figures.
More company news
Barrick Gold Corp’s quarterly adjusted profit more than doubled on Monday, benefiting from a surge in gold prices and higher copper production. Barrick’s adjusted profit rose to $415-million, or 23 cents per share, in the second quarter ended June 30, from $154-million, or 9 cents per share, a year earlier.
Canadian Natural Resources Ltd said on Monday it will buy smaller rival Painted Pony Energy Ltd for about $461-million (US$344.26 million) including debt, as Canada’s biggest oil and gas producer seeks to expand its Western Canada acreage.
Mall operator Simon Property Group Inc has been in talks with Amazon.com Inc about turning some of its department-store sites into Amazon fulfillment centers, The Wall Street Journal reported on Sunday. The two companies have explored converting retail space formerly occupied by J.C. Penney Co Inc and Sears Holdings Corp into Amazon distribution centers, while in some cases, Simon and Amazon explored buying out occupied space from the retailers, the report said, citing sources.
Hotel operator Marriott International reported its first quarterly loss in nearly nine years, as extended travel disruption due to the COVID-19 pandemic hammered bookings. The company’s loss attributable to stockholders was $234-million, or 72 cents per share, in the second quarter ended June 30, compared with net income of $232-million, or 69 cents per share, a year earlier.
Royal Caribbean Group reported a quarterly net loss, as the cruise operator suffered from a coronavirus-driven halt to sailings that is now on course to last deep into the second half of 2020. The company said it expects its cash burn rate, on average, to be about $250-million to $290-million per month while its operations are suspended. Royal Caribbean posted a net attributable loss of $1.64-billion, or $7.83 per share, in the second quarter ended June 30, compared to a profit of $472.8-million, or $2.25 per share, a year earlier.
(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for June.
With Reuters and The Canadian Press