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Equities

Canada’s main stock index rallied at Monday’s opening bell with materials stocks getting a boost from higher gold prices. South of the border, Wall Street’s main indexes rebounded from last week’s steep losses with investors focused on this week’s U.S. election.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 105.04 points, or 0.67 per cent, at 15,685.68.

In the U.S., the Dow Jones Industrial Average rose 189.68 points, or 0.72 per cent, at the open to 26,691.28. The S&P 500 opened higher by 26.24 points, or 0.80 per cent, at 3,296.20, while the Nasdaq Composite gained 98.86 points, or 0.91 per cent, to 11,010.45 at the opening bell.

“October proved to be a turbulent month for global markets, and investors should better buckle up for a continuation of the roller coaster ride in November,” Milan Cutkovic, market analyst at Axi, said in an early note.

“In Europe, the number of countries moving into a second lockdown is increasing. Austria and the U.K. announced new restrictions as previous measures failed to prevent a surge in new COVID-19 cases.”

As for the U.S. election, he said, neither a win by Donald Trump or Joe Biden should trigger a dramatic price move.

“For markets, it is far more important that there is no contested election,” he said.

As the U.S. campaign enters its final day, a NBC/Wall Street Journal poll released over the weekend gave Mr. Biden a 10-point lead over Mr. Trump.

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Uncertainty over the U.S. election and the potential for a contested result has roiled markets in recent weeks. Last week, the VIX volatility index rose to its highest level in four months and was last up almost 1 point at nearly 38.4.

In this country, key events come later in the week with the release of August international trade numbers on Wednesday and October employment figures on Friday. On the jobs front, economists are expecting to see the addition of about 100,000 new jobs with the jobless rate dipping to 8.7 per cent from 9 per cent in September.

On Thursday, telecoms BCE Inc. and Telus Inc. will both release third-quarter results. Retailer Canadian Tire releases its latest earnings the same day.

Overseas, major European markets advanced in early afternoon trading with the pan-European STOXX 600 gaining 1.24 per cent. A positive reading on European manufacturing helped investors look past looming lockdowns in several countries, including Britain. IHS Markit’s final Manufacturing Purchasing Managers' Index climbed to 54.8 in October from September’s 53.7, its highest reading since July 2018 and ahead of the 54.4 flash estimate. Anything above 50 indicates growth.

Britain’s FTSE 100 was up 1.13 per cent. Germany’s DAX gained 1.60 per cent. France’s CAC 40 advanced 1.73 per cent.

In Asia, indexes finished higher after new figures showed growth in China’s manufacturing activity last month. Japan’s Nikkei gained 1.39 per cent. Hong Kong’s Hang Seng jumped 1.46 per cent. The Shanghai Composite Index gained 0.02 per cent.

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Commodities

Crude prices continued to decline on concerns over the impact of COVID-19 lockdowns in Europe on demand and uncertainty over Tuesday’s presidential election in the United States.

The day range on Brent is US$35.74 to US$37.37. The range on West Texas Intermediate is US$33.64 to US$35.28.

Both benchmarks had been down by as much as US$2 a barrel early in the session but recouped some losses alongside strengthening global markets and positive readings on factory activity in China and Europe.

“Assuming the [oil] market closes down today, that will be the fourth straight day of declines,” Stephen Innes, chief global market strategist at Axi, said.

“There are two primary drivers of price action this morning and a laundry list of secondary ones.”

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The two key factors, he said, are the resumption in lockdowns in Europe and the fact that the market was caught off guard by the resumption of Libyan supply. He noted that Libya’s output has risen from 100,000 barrels a day to around 800,000 barrels a day.

“Combined with the prospect of higher Iranian production in the event of a Biden victory, OPEC supply is becoming a concern,” Mr. Innes said.

In other commodities, gold prices edged higher.

Spot gold rose 0.4 per cent to US$1,884.98 per ounce, while U.S. gold futures were up 0.2 per cent at US$1,884.00 per ounce.

“We are seeing something of a resurgence in safe-haven buying,” said Harshal Barot, senior research consultant for South Asia at Metals Focus.

Currencies

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The Canadian dollar was steady, trading above the 75-US-cent mark while the U.S. dollar added to the previous week’s advance ahead of Tuesday’s presidential election.

The day range on the loonie so far is 74.80 US cents to 75.16 US cents.

There are no major Canadian economic releases on Monday’s calendar, with trade and employment figures due later in the week.

"Our economists expect the October job report to show a sharp slowdown to just 50,000, from 378,200 in September, Alvin T. Tan, Asian FX strategist with RBC, said.

“The survey week will capture some tightening in social restrictions. This should put further pressure on high-touch industries such as food/accommodation.”

On global markets, the U.S. dollar index, which weighs the greenback against a basket of major currencies, rose to a one-month high of 94.28 and was last up 0.2 per cent on the day, according to Reuters figures.

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“The U.S. election will finally be upon us on Tuesday,” Mr. Tan said. “The most negative outcome for the market would be a prolonged vote count and a contested election.”

He said an analysis by RBC’s U.S. economics team suggests that Mr. Trump faces an uphill battle.

“If we assume polling errors similar to 2016, Biden’s lead in the key battleground states shrinks significantly,” he said. “The problem for Trump is that an outperformance against the polls similar to 2016 would not be enough.”

Elsewhere, Britain’s pound slid after British Prime Minister Boris Johnson announced a one-month lockdown.

Sterling fell to its weakest in 2-1/2-weeks at US$1.2863 , down 0.7 per cent on the day. It was also down by 0.5 per cent against the euro at 90.35 pence.

More company news

Dorel Industries Inc. says it has reached an agreement in principle to be taken private by a group led by Cerberus Capital Management and the family that controls the company’s multiple-voting shares. Under the proposal, which values the company at approximately $470-million, the buyers will pay $14.50 per share for the shares the family does not already hold.

Yamana Gold Inc. says it has signed a deal to buy Monarch Gold Corp.'s Wasamac project and Camflo property and mill through the acquisition of all of the outstanding Monarch shares it does not already own for $152-million in cash and shares. In connection with the plan, Monarch will first spin out to its shareholders its other mineral properties and certain other assets and liabilities to a new company . Following the spin out, each outstanding common share of Monarch will be exchanged for 19.2 cents in cash, 0.0376 of a Yamana share and 0.20 of a share in the new company.

Bank of Nova Scotia says outgoing Air Canada chief executive Calin Rovinescu has joined its board. The Toronto bank’s announcement comes after Mr. Rovinescu announced he will retire from the airline in February as it struggles to rebuild the travel sector amid COVID-19. Mr. Rovinescu has served as the airline’s president and chief executive since April 2009, but also led the company’s restructuring in 2003 and 2004.

Clorox Co raised its full-year sales forecast on Monday, as the bleach maker benefits from a sustained boom in demand for its disinfectants and other cleaning products due to the COVID-19 pandemic. The company said it expects full-year sales to rise in the range of 5% to 9%, compared with a prior forecast of a flat to low single-digit increase, according to IBES data from Refinitiv.

M.A.C brand owner Estee Lauder Cos Inc beat analysts' estimates for first-quarter sales on Monday, benefiting from strong Chinese demand for its premium skincare products. Net earnings attributable to the company fell to $523-million, or $1.42 per share, in the first quarter ended Sept. 30, compared with $595-million, or $1.61 per share, a year earlier. Net sales fell to $3.56-billion from about $3.90-billion a year earlier, but were above expectations of $3.46 billion, according to Refinitiv data.

Economic news

(9:30 a.m. ET) Canada’s Markit Manufacturing PMI for October.

(10 a.m. ET) U.S. ISM Manufacturing PMI for October.

(10 a.m. ET) U.S. construction spending for September.

With Reuters and The Canadian Press

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