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Canada’s main stock index fell at the open Monday on weakness in financial stocks. South of the border, the S&P 500 managed its sixth consecutive high at the start of trading although the Dow struggled in early going.
Just after the opening bell, the S&P/TSX composite index down 47.82 points at 16,657.97.
On Wall Street, the S&P 500 opened higher by 1.72 points, or 0.05 per cent, at 3,509.73.
The Dow Jones Industrial Average fell 10.21 points, or 0.04 per cent, at the open to 28,643.66 and the Nasdaq Composite gained 23.18 points, or 0.20 per cent, to 11,718.81.
The S&P is up more than 7 per cent for the month while the Dow has gained more than 8 per cent.
“The market continues to run hot after [Federal Reserve chair Jerome] Powell tipped his hat to a lengthy period of easy Fed policy with ’unconventional tools’ - QE and the like - being utilized for longer,” AxiCorp chief global market strategist Stephen Innes said.
“And with a low, neutral fed funds rate, a de-emphasis of inflation overshoots, and a focus on employment, monetary policy will highly be stimulative for a long, long time. Indeed, music to the stock market’s ears.”
In remarks last week, Mr. Powell signalled a significant shift in the Fed’s approach to inflation which would allow the central bank to keep rates low even as price pressures mount.
On the corporate side, Warren Buffett’s Berkshire Hathaway Inc has bought a 5-per-cent stake in each of Japan’s five biggest trading companies, worth over US$6-billion. The long-term investment in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp could see the stakes rise to 9.9%, Berkshire said.
“The five major trading companies have many joint ventures throughout the world and are likely to have more,” Mr. Buffett said in a statement. “I hope that in the future there may be opportunities of mutual benefit.”
In U.S. earnings, Zoom Video reports after the close.
Monday also sees Apple’s 4-for-1 stock split take effect. As well, a shakeup in the Dow goes into play with Exxon, Pfizer and Ratheon all dropping out of the index and Salesforce, Honeywell and Amgen moving in.
In this country, investors will get a pair of key economic releases later in the week when Statistics Canada releases July international trade figures on Thursday and employment numbers on Friday. The jobs report is expected to show a continued improvement in the employment market with economists forecasting a gain of about 375,000 jobs in August. The jobless rate is seen falling to 10 per cent from 10.9 per cent in July.
Overseas, last week’s Fed comments continued to bolster the markets with the pan-European STOXX 600 rising 0.12 per cent by afternoon. Germany’s DAX rose 0.30 per cent and France’s CAC 40 advanced 0.44 per cent. Markets in the U.K. were closed for a public holiday.
In Asia, Japan’s Nikkei advanced 1.12 per cent. The Shanghai Composite Index lost 0.24 per cent. Hong Kong’s Hang Seng finished down 0.96 per cent.
Crude prices gained on a positive report on China’s services sector and a supply cut in Abu Dhabi.
The day range on Brent is US$45.80 to US$46.52. The range on West Texas Intermediate is US$42.90 to US$43.50.
Brent now looks set to posit its six monthly gain in a row while WTI appears headed to a fourth monthly increase.
Reuters reported on Monday that Abu Dhabi National Oil Company told its customers it will reduce October supplies by 30 per cent, up from a 5-per-cent reduction in September, as directed by the United Arab Emirates government to meet its commitment on the recent OPEC+ agreement.
Markets also got a boost from a strong reading on China’s services sector. New figures showed factory activity grew at a slower pace in August, but the services sector grew at a solid clip as the economy rebounds from the COVID-19 shutdown.
“As always, the focus remains on the near term pace of the global economic recovery and the supply/demand dynamic,” AxiCorp’s Stephen Innes said.
“Risks in the near-term remain skewed to the downside, given rising supply and demand uncertainty, which is seemingly keeping prices capped. But with vaccine hopes, robust U.S. economic data, and the ’back to school’ employment bounce, the medium and longer-term outlook points to a tightening market and higher oil prices.”
In other commodities, gold prices slid as the U.S. dollar steadied somewhat.
Spot gold was down 0.2 per cent to US$1,961.54 per ounce, after hitting its highest since Aug. 19 at $1,976.14 in early Asian trading. Gold was down 0.5 per cent so far this month, according to Reuters figures.
U.S. gold futures fell 0.3 per cent to US$1,968.80.
The Canadian dollar was higher, trading in the mid-76-US-cent range, as firmer crude prices and positive risk sentiment buoyed the currency.
The day range for the loonie is 76.26 US cents to 76.53 US cents with the dollar trading near the upper end of that spread in the predawn period.
There were no major Canadian economic reports due Monday. The week’s key events come later in the week with the release of July trade numbers on Thursday and August employment figures on Friday.
“The CAD is a marginal out-performer on the session, helped by firm WTI and a broader sense of bullishness around commodities as investors bet on loose Fed policy and a recovering global economy to support prices.” Shaun Osborne, chief FX strategist with Scotiabank, said.
On global markets, the U.S. dollar was set for a fourth consecutive month of losses in the wake of the Fed’s policy shift.
Against a basket of currencies the U.S. dollar rose 0.1 per cent higher to 92.356 in early trading in Europe and is down 1.2 per cent for the month. If sustained that would be its worst August in five years and make for the longest run of monthly losses since the summer of 2017, according to a Reuters report.
The euro, meanwhile, was little changed at US$1.1903 and looked set for a 1-per-cent monthly gain, which would be its fourth straight month of increases.
More company news
AngloGold Ashanti and Barrick Gold will sell their effective 80% stake in the Morila Gold Mine in Mali, the miners said on Monday, as political crisis grips the West African nation after soldiers seized power in a coup. Australian company Mali Lithium will buy the firm that holds the two miners’ stakes in the mine - the other 20% of which is owned by the government of Mali - for a fee estimated at between $22 million and $27 million, Barrick Gold and AngloGold Ashanti said.
Premium Brands Holdings Corp. said it has acquired Global Gourmet Foods Inc. and signed an agreement to acquire Allseas Fisheries Inc. The combined purchase price for the company’s investments in Global Gourmet and Allseas is approximately $139-million consisting of $115-million in cash, $10-million in Premium Brands common shares and up to $14-million in contingent consideration.
Nestle plans to pay $2-billion to gain full ownership of peanut allergy treatment maker Aimmune Therapeutics, as the Swiss company expands its fast-growing health science business. Nestle said in a statement that its offer for Aimmune values the California-based biopharmaceutical firm, which it has been working with since 2016 and in which it already has a stake of around 25.6%, at $2.6-billion.
United Airlines says it is dropping a $200 fee for most people who change a ticket for travel within the United States. “When we hear from customers about where we can improve, getting rid of fees is often the top request,” United CEO Scott Kirby said in a video posted Sunday.
Statistics Canada says the total value of building permits fell 3 per cent to $7.8-billion in July, mostly as a result of declines in B.C. and Quebec. The value of permits rose in most other provinces, the agency said.
Statscan said the Industrial Product Price Index rose 0.7 per cent in July, driven primarily by higher prices for energy and petroleum products and primary non-ferrous metal products. The Raw Materials Price Index increased 3.0 per cent, mainly as a result of higher prices for crude energy products, the agency said.
With Reuters and The Canadian Press