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Equities
Canada’s main stock index started higher Tuesday, helped by firmer crude prices and new figures showing Canadian factory activity accelerated in August to its fastest pace in two years. On Wall Street, the Dow and S&P 500 struggled to find direction while gains by Apple Inc. helped bolster tech stocks.
At 9:48 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 5.12 points, or 0.03 per cent, at 16,519.56.
Ahead of the start of trading, a new report showed that the IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) rose to a seasonally adjusted 55.1 in August, its highest level since the same month two years ago, from 52.9 in July. A reading above 50 indicates expansion in the sector.
In New York, the Dow Jones industrial average was down 59.99 points 28,370.06. The S&P 500 index was up 0.44 of a point at 3,500.75, while the Nasdaq composite was up 57.29 points at 11,832.75.
“Solid economic figures from China are giving investors hope that a V-shaped recovery will be possible in the US and Europe as well,” Milan Cutkovic, market analyst with AxiCorp, said.
“Furthermore, there appears to be a strong willingness from European leaders to prevent another full lockdown, despite the rising number of new corona cases across the continent.”
Early Tuesday, a new report showed factory activity in China expanded at its fastest rate in almost a decade. Similar reports out of Europe also showed the factory sector on the road to recovery although concerns lingered about investing and hiring. European markets pared early gains after Germany said it expects the negative impact of the COVID-19 pandemic to be less severe this year but also said it sees a weaker rebound for the economy next year.
Also tempering sentiment was a report putting the euro zone’s unemployment rate at 7.9 per cent in July.
On the corporate front, shares of Zoom Video spiked more than 40 per cent in morning trading after the video conferencing company raised its annual revenue forecast by more than 30 per cent and topped quarterly estimates in the most recent three-month reporting period as more users moved to paid subscriptions.
Zoom, which reported its latest results after Monday’s close, said it now has 370,200 institutional customers with more than 10 employees, up about 458 per cent from the same quarter a year earlier. The number of large customers - those generating more than US$100,000 in revenue in the past year - more than doubled in the fiscal second quarter.
Apple shares, meanwhile, jumped more than 2 per cent in early trading on reports that the company has asked suppliers to make at least 75 million 5 iPhones for later this year.
In this country, The Globe’s David Milstead reports BlackBerry Ltd. and Fairfax Financial Holdings Ltd. have once again restructured a debt refinancing deal to avoid a shareholder vote after the Toronto Stock Exchange withdrew its approval of the transaction. BlackBerry said it cut the size of a convertible-debt offering from US$535-million to US$365-million, thus limiting the number of shares that Fairfax, already a major shareholder, would own if it were to swap its bonds for stock.
After the close of trading, Quebec-based retailer Alimentation Couche-Tard reports its latest results.
Overseas, major European markets were mixed by midday. The pan-European STOXX 600 edged up 0.02 per cent. Germany’s DAX gained 0.34 per cent. France’s CAC 40 gained 0.03 per cent. Britain’s FTSE 100 slid 1.34 per cent.
In Asia, markets finished mixed. Japan’s Nikkei finished down 0.01 per cent. Hong Kong’s Hang Seng edged up 0.03 per cent. The Shanghai Composite Index gained 0.44 per cent.
Commodities
Crude prices moved higher in early going, helped by a weaker U.S. dollar but tempered by ongoing concern about rising coronavirus infections around the globe.
The day range on Brent so far is US$45.47 to US$45.93. The range on West Texas Intermediate is US$42.77 to US$43.23. Both benchmark contracts fell about 1 per cent on Monday.
Prices were helped Tuesday by a weaker greenback, which was trading down against a basket of currencies after touching its weakest level since 2018.
AxiCorp global market strategist Stephen Innes said Tuesday’s moves were tempered by continuing COVID-19 concerns.
“Oil is trading heavy at the open as a surge in coronavirus infections hitting the world’s major economies weighed on the prospect for a demand recovery even as China’s economic activity improves,” he said.
“COVID cases topped 6 million in the U.S, and the U.K. added the most infections since early June, threatening a lackluster demand rebound as fewer people take to the roads and travel remains depressed.”
Later in the session, investors will get the first of two weekly U.S. inventory reports with new figures from the American Petroleum Institute. Analysts polled by Reuters are expecting to see a decline in crude stocks of about 2 million barrels for the week to Aug. 28.
In other commodities, spot gold was up 0.8 per cent at US$1,985.64 per ounce, after hitting its highest since Aug. 19 at US$1,989.42 earlier in the session. U.S. gold futures rose 0.8% to $1,994.40.
“With the greenback expected to remain weak, we expect gold to grind higher and revisit the US$2,000 an ounce level initially,” Jeffrey Halley, a senior market analyst at OANDA, said.
Currencies
The Canadian dollar was hovering just below 77 US cents in early going as its U.S. counterpart weakened against its global counterparts.
The day range for the loonie is 76.65 US cents to US$76.95 US cents.
“USD is down across the board in G10,” RBC FX strategy associate Daria Parkhomenko said in an early note.
The U.S. dollar index - which measures the U.S. currency against a basket of rivals - was down 0.2 per cent at 91.954 after earlier hitting its lowest since April 2018.
Elsewhere, the euro reached as high as US$1.1997 in Asian trading hours, its highest since May 2018 and leaving it up 7.5 per cent in three months, according to Reuters.
Britain’s pound gained 0.4 per cent to US$1.3422, the highest since December. Against Japan’s currency the greenback eased 0.2 per cent to 105.74 yen.
More company news
Barrick Gold Corp has lost a court challenge in Papua New Guinea over rights to a highlands gold mine and intends to appeal to the country’s Supreme Court, the miner said on Tuesday, prolonging a dispute that has halted output as gold prices soar. Papua New Guinea refused to extend Barrick’s lease over the remote Porgera mine in April, and this week the National Court dismissed Barrick’s request for a review of that decision.
Tesla Inc said on Tuesday it plans to raise up to US$5-billion through a share offering.
McDonald’s Corp has been sued by 52 Black former franchise owners who accuse the fast-food giant of racial discrimination by steering them to depressed, crime-ridden neighborhoods and setting them up for failure. In a complaint seeking up to $1-billion of damages, the plaintiffs said McDonald’s has not offered profitable restaurant locations and growth opportunities to Black franchisees on the same terms as white franchisees, belying its public commitment to diversity and Black entrepreneurship, Reuters reports.
Calfrac Well Services Ltd. says a U.S. court has sided with the company in its fight with Texas-based Wilks Brothers LLC as it seeks to complete its recapitalization plan. The Calgary-based company says the U.S. court ruling to recognize its reorganization proceedings underway in an Alberta court stops the latest Wilks Brothers’ effort to obstruct the plan.
Maersk will cut jobs in a major shake-up that will affect a third of the shipping giant’s staff as it seeks to integrate its seaborne container and in-land logistics businesses, it said on Tuesday. Maersk, which handles about one in five containers shipped worldwide, has been under pressure from investors to speed its transformation from an unwieldy conglomerate but has proved resilient in the face of the COVID-19 pandemic.
Economic news
930 a.m.( ET) Canada’s Markit manufacturing PMI for August.
945 a.m. (ET) U.S. Markit manufacturing PMI for August.
10 a.m (ET) U.S. manufacturing ISM PMI report.
10 a.m. (ET) U.S. construction spending for July. It’s expected to rise 1%.
1 p.m. (ET) U.S. Treasury Secretary Mnuchin testifies on coronavirus measures.
With Reuters and The Canadian Press
Terry Weber