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Equities
Canada’s main stock index opened higher Tuesday, helped by rising energy shares on the back of gains in crude prices. South of the border, optimism over U.S. stimulus talks helped lift the Dow and the S&P 500 in early trading while the Nasdaq struggled to gain traction.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 37.41 points, or 0.23 per cent, at 16,447.6.
The Dow Jones Industrial Average rose 65.60 points, or 0.23 per cent, at the open to 28,214.24, while the S&P 500 opened just slightly higher by 0.11 point at 3,408.74.
The Nasdaq Composite dropped 17.95 points, or 0.16 per cent, to 11,314.53 at the opening bell.
Sentiment was underpinned by continued hopes that U.S. lawmakers were making progress on talks for a new stimulus package to offset the impact of the COVID-19 pandemic. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke for an hour on Monday about a package but didn’t reach an agreement. They were reportedly set to meet again today.
“The longer the stimulus delays go on, the more frantic the market will get, especially with the stimulus buyers worried about a narrowing in the polls after the President’s release from the hospital,” AxiCorp chief global market strategist Stephen Innes said. “When a market is prepared for chaos, expect a lack of market chaos. Extreme volatility is a product of surprises, not desired outcomes.”
U.S. President Donald Trump’s health also continues to be on the market’s radar after he returned to the White House from hospital on Monday evening.
In this country, investors got a reading on international trade in August from Statistics Canada. The government agency said Canada’s trade deficit narrowed slightly to $2.4-billion from $2.5-billion in July. After two strong months, imports fell 1.2 per cent. Exports fell about 1 per cent.
On the corporate side, Bonterra Energy Corp. says its board of directors has unanimously rejected a takeover offer by rival Obsidian Energy Ltd. Bonterra’s board said the offer is not in the best interests of the company and urged shareholders to reject the proposal.
In Europe, the pan-European STOXX 600 reversed early losses to climb 0.23 per cent by early afternoon.
Britain’s FTSE 100 rose 0.23 per cent. Germany’s DAX added 0.53 per cent. France’s CAC 40 gained 0.64 per cent.
In Asia, Japan’s Nikkei gained 0.52 per cent. Hong Kong’s Hang Seng closed up 0.90 per cent.
Commodities
Crude prices gained on concerns that refineries in the Gulf of Mexico could be hit by a storm in the region and the continuing impact of a labour disruption in Norway.
The day range on Brent is US$41.22 to US$41.73. The range on West Texas Intermediate is US$39.10 to US$39.62. Prices rallied 5 per cent on Monday as concerns about the health of U.S. President Donald Trump eased and optimism grew over the possibility of a U.S stimulus package.
On Tuesday, prices were underpinned by supply concerns as a continuing strike in Norway shut six offshore oil and gas fields. As well, oil platforms in the Gulf were evacuated as Tropical Storm Delta moved toward the Louisiana and Florida coast, according to Reuters.
“Traders bought back into the oil market yesterday as the wider mood in the markets was optimistic because of the Trump story,” CMC Markets analyst David Madden said. “Oil workers in Norway went on strike and that played a role too, but there were fears of industrial action recently.”
Later in the session, investors will get the first of two weekly U.S. inventory reports when the American Petroleum Institute releases its latest tally.
Five analysts polled by Reuters estimate, on average, that crude stocks rose by 400,000 barrels in the week to Oct. 2, while gasoline inventories likely fell by 900,000 barrels and distillate stockpiles.
More official figures will be released Wednesday morning by the U.S. Energy Information Administration.
In other commodities, gold prices eased on Tuesday as equity markets steadied.
Spot gold fell 0.1 per cent to US$1,910.50 per ounce. It had hit US$1,918.36 on Monday, highest since Sept. 22.
U.S. gold futures were down 0.1 per cent at US$1,917.80.
Currencies
The Canadian dollar was steady as risk sentiment improved and its U.S. counterpart slipped against global currencies on rising optimism over the possibility of a U.S. COVID-19 stimulus package.
The day range on the loonie is 75.34 US cents to 75.51 US cents.
“Risky assets continued to rally into the U.S. close as it was confirmed that President Trump had left hospital and returned to the White House,” RBC chief currency strategist Adam Cole said. “Subsequent moves have been very limited.”
On world markets, the U.S. dollar index fell slightly to 93.39. It is now down more than 1 per cent from the two-month high seen at the end of last month.
Euro/dollar was trading up 0.1 per cent at 1.1792.
The British pound also rose 0.1 per cent, to US$1.2991, with hopes that a Brexit deal can be reached pushing the currency towards US$1.30.
The U.S. dollar was down 0.1 per cent versus the Japanese yen at 105.65, according to Reuters.
More company news
Australian gold miner Newcrest Mining said on Tuesday it has received conditional approval to list on the Toronto Stock Exchange (TSX) and will begin trading on Oct. 13. The listing comes after Newcrest last year acquired 70 per cent joint venture interest in the Red Chris mine in British Columbia, Canada from Toronto-listed Imperial Metals Corp .
The European health regulator has started a real-time review of the COVID-19 vaccine being developed by Pfizer and BioNTech, days after launching a similar assessment process for AstraZeneca’s vaccine. The European Medicines Agency (EMA) said on Tuesday its human medicines committee was evaluating the first batch of non-clinical data on the vaccine from laboratory studies, and will continue to do so until enough data is available for a final decision.
Southwest Airlines will cut pay for nonunion workers in January and says union workers must also accept less pay or face furloughs next year as the pandemic continues to hammer the airline business. Chairman and CEO Gary Kelly said Monday that unless the federal government gives airlines more money, Southwest will have to sharply cut spending to avoid losing billions of dollars every quarter until a coronavirus vaccine is widely available. Air travel is down nearly 70% from a year ago.
Johnson & Johnson will pay more than US$100-million to settle over 1,000 lawsuits that allege the company’s Baby Powder caused cancer, Bloomberg news reported on Monday, citing people with knowledge of the pacts. J&J faces more than 19,000 lawsuits from consumers and their survivors claiming its talc products caused cancer owing to contamination with asbestos, a known carcinogen. The company has maintained that its talc is safe.
Alphabet Inc’s Google on Tuesday announced Google Workspace as the new name for its package of business tools including email and document editing, replacing the G Suite brand introduced in 2016. The rebranding coincides with the launch of features that integrate the various services, such as the ability to have a video chat with co-workers display in a small box at the corner of a document-editing window.
Economic news
8:30 a.m. ET) Canada’s merchandise trade deficit for August.
(8:30 a.m. ET) U.S. goods and services trade deficit for August.
(10 a.m. ET) U.S. Jobs Openings and Labor Turnover Survey for August.
(10 a.m. ET) U.S. Fed Chair Jerome Powell speaks on the economic outlook to the National Association for Business Economics.
With Reuters and The Canadian Press
Terry Weber