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Equities
Major North American indexes opened higher Tuesday with renewed optimism over a potential U.S. coronavirus stimulus package helping buoy investor sentiment across global markets.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 27.18 points, or 0.17 per cent, at 16,301.25.
On Wall Street, the Dow Jones Industrial Average rose 50.43 points, or 0.18 per cent, at the open to 28,245.85.
The S&P 500 opened higher by 12.46 points, or 0.36 per cent, at 3,439.38, while the Nasdaq Composite gained 52.95 points, or 0.46 per cent, to 11,531.83 at the opening bell.
Markets were watching ongoing talks between Democrats and White House officials in Washington on a fresh coronavirus relief package. Democrat House Speaker Nancy Pelosi set Tuesday as a self-imposed deadline for a deal.
Ms. Pelosi has said differences remain between the two sides but she remained optimistic that a deal could be reached before the November election. A spokesman for Ms. Pelosi said she and Treasury Secretary Steven Mnuchin “continued to narrow” their differences during a Monday phone call.
Still analysts remained cautious.
“For all the warm words from Democrat House Speaker Nancy Pelosi that she wanted to see a fiscal deal in place before November 3rd, the likelihood of a deal taking place appears no more likely now than it was a week ago, with the window for it happening appearing to be closing fast,” CMC Markets analyst Michael Hewson said.
On the corporate side, shares of Intel Corp. slid in early trading after the company said it has agreed to sell its NAND memory chip business to SK Hynix Inc for US$9-billion in an all-cash deal that would propel the South Korean chipmaker to second in the global rankings. The move marks the latest effort by the U.S. chip giant to divest its non-core businesses.
In this country, auto parts maker Magna International said on Tuesday President Seetarama Kotagiri would take over as chief executive officer in January. Mr. Kotagiri, a 21-year veteran of the company, will succeed Don Walker, who will retire at end of 2020 after holding the top job for 15 years.
On the earnings side, Canadian Pacific Railway Ltd reported a 3.2-per-cent decline in third-quarter profit, hit by lower freight volumes during the COVID-19 pandemic.
Net income fell to $598-million, or $4.41 per share, in the three months ended Sept. 30, from $618-million, or $4.46 per share, a year earlier. Revenue declined by about 6 per cent to $1.86-billion.
After the closing bell, investors will get results from Canadian National Railway.
On Wall Street, Netflix and Snap both report after the close.
“The earnings season is likely to exceed expectations overall, as companies benefited from the economy bouncing back over the summer,” Axi market analysts Milan Cutkovic said in an early note.
Overseas, major European markets turned mixed by afternoon. The pan-European STOXX 600 was off 0.10 per cent. Germany’s DAX fell 0.57 per cent. Britain’s FTSE 100 gained 0.39 per cent. France’s CAC 40 rose 0.20 per cent. Rising coronavirus infections and government restrictions continue to weigh on markets with Reuters reporting that the daily number of new infections hit a record high on Monday in Europe.
In Asia, Japan’s Nikkei closed down 0.44 per cent. The Shanghai Composite Index gained 0.47 per cent and Hong Kong’s Hang Seng ended up 0.11 per cent.
Commodities
Crude prices steadied in early going as spiking coronavirus infections around the world continue to raise concerns about the recovery in demand while an increase in output in Libya added to over-supply fears.
The day range on Brent is US$42.19 to US$42.68. The range on West Texas Intermediate is US$40.48 to US$40.84.
“The prospect of further lockdown measures weighed on the oil markets, with OPEC+ warning of a 'precarious’ outlook for crude demand and hinting at a potential change in policy next month,” Axi chief global market strategist Stephen Innes said.
“The demand outlook remains the great unknown, with increasing social mobility restrictions in Europe. But an OPEC agreement to extend current quotas could protect the downside for oil.”
On Monday, members of the OPEC+ group met and vowed to support the markets amid a resurgence in coronavirus cases globally. However, for now, the group is holding to a deal to curb output by 7.7 million barrels per day (bpd) to the end of the year and then increasing production by 2 million bpd in January.
Meanwhile, OPEC member Libya, which is exempt from the cuts, is increasing output after armed conflict curbed production earlier this year. According to Reuters, output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters.
Another 70,000 bpd oilfield is expected to restart on Oct. 24, the news agency reported on Tuesday.
In other commodities, gold prices moved in a narrow range as investors remained cautious.
Spot gold fell 0.2 per cent to US$1,900.71 per ounce. U.S. gold futures were down 0.4 per cent to US$1,903.30.
“Sentiment surrounding bullion remains tentative, keeping spot gold around the $1,900-mark, as some...continue to hold out hope that Democrats and the White House can arrive at a deal over the immediate term,” FXTM market analyst Han Tan said.
Currencies
The Canadian dollar was firmer as its U.S. counterpart held steady against world currencies with investors awaiting further news on the potential U.S. stimulus package.
The day range on the loonie is 75.74 US cents to 75.90 US cents.
There were no major Canadian economic releases on the calendar for Tuesday.
On world markets, the dollar index, which weighs the greenback against a group of currencies, was broadly steady at 93.484.
“The CAD continues to reflect broader market risk sentiment,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Yesterday’s Business Outlook Survey showed sentiment had bounced from the Q2 trough but remains near all time lows, with prospects clouded by weak demand and the uncertainty surrounding the health crisis; this is hardly surprising. Canada yesterday announced that it was extending its non-essential travel ban for another month amid second-wave concerns.”
Elsewhere, the euro struggled to rise above the US$1.18 level. Despite broader market optimism on a U.S. stimulus deal, such a package would still have to be passed by the U.S. senate, where it could meet with opposition.
Those concerns pushed the euro lower in early trades, with the single currency down 0.1 per cent at US$1.17600 after it briefly popped to a one-week high of US$1.1794 in the previous session, according to Reuters.
Britain’s pound, meanwhile, held onto small gains made on Monday at US$1.2941.
More company news
Laurentian Bank said it has named Rania Llewellyn as its next president and chief executive officer. She will be the first woman to lead a major Canadian bank. She takes over the role on Oct. 30. Laurentian said Ms. Llewellyn joins the bank after a 26-year career at Scotiabank.
The Wall Street Journal reports that the U.S. Justice Department will file an antitrust suit against Alphabet Inc.'s Google on Tuesday. The report says the suit will argue it engaged in anticompetitive conduct to preserve monopolies in search and search advertising.
Moderna Inc Chief Executive Officer Stéphane Bancel expects interim results from its COVID-19 vaccine trial in November and that the U.S government could give an emergency use nod in December, the Wall Street Journal reported. Speaking at the newspaper’s annual Tech Live conference, Bancel also said sufficient interim results from the study takes longer to get and that the government’s permission to use the vaccine may not come until next year.
Swedish regulators on Tuesday banned the use of telecom equipment from China’s Huawei and ZTE in its 5G network ahead of the spectrum auction scheduled for next month. The Swedish Post and Telecom Authority (PTS) said the setting of the license conditions followed assessments by the Swedish Armed Forces and security service.
Cathay Pacific Airways Ltd will cut around 6,000 jobs, or 18 per cent of its workforce, and axe regional brand Cathay Dragon to help it weather the coronavirus pandemic, the South China Morning Post reported on Tuesday, citing sources. The airline said in June it was reviewing its strategy in light of the travel downturn, with “tough decisions” to be announced during the fourth quarter and analysts expected it would announce major job cuts.
Procter & Gamble Co raised its full-year sales forecast on Tuesday as the consumer products giant benefited from a surge in demand for Bounty paper towels, Tide detergent and other cleaning supplies due to the COVID-19 pandemic. P&G said it expects full-year sales to rise 3 per cent to 4 per cent, compared with a prior forecast of a 1 per cent to 3 per cent increase.
Economic news
(8:30 a.m. ET) U.S. housing starts for September. The Street is expecting an annualized rate rise of 2.5 per cent.
(8:30 a.m. ET) U.S. building permits for September. The consensus projection is an annualized rate increase of 3 per cent.
With Reuters and The Canadian Press
Terry Weber