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Equities
U.S. stock futures jumped Tuesday as markets looked to continue November’s gains, with stimulus hopes and solid
Indexes on both sides of the border gained early Tuesday as optimism over a potential COVID-19 vaccine and solid economic numbers buoyed sentiment.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 277.2 points, or 1.61 per cent, at 17,467.45.
In the U.S., the Dow Jones Industrial Average rose 158.86 points, or 0.54 per cent, at the open to 29,797.50.
The S&P 500 opened higher by 24.24 points, or 0.67 per cent, at 3,645.87, while the Nasdaq Composite gained 114.63 points, or 0.94 per cent, to 12,313.36 at the opening bell.
“November was a highly volatile trading month, but ended on a strong note,” Axi market analyst Milan Cutkovic said. “The continuation of the winning streak is fuelling hopes that investors will not have to miss out the Santa Clause rally this year either, despite significant hurdles.”
“Markets hate uncertainty, and while major challenges still lie ahead, investors are far less nervous than they were only a few weeks ago thanks due to the progress in the fight against the coronavirus as well as less political risks in the U.S.,” he said.
Early Tuesday, sentiment got a boost after new figures showed activity in China’s factory sector grew at its fastest pace in a decade in November. The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) rose to 54.9 from October’s 53.6, with the gauge staying above the 50-level that separates growth from contraction for the seventh straight month.
As well, the OECD said the global economy is improving despite the impact of a second wave of coronavirus infections in many regions, helped by optimism over vaccine candidates and a strengthening recovery in China. The global economy will grow 4.2 per cent next year, after shrinking 4.2 per cent this year, the Organization for Economic Cooperation and Development said in its latest Economic Outlook. The 2021 forecast is slightly below the organization’s earlier outlook but the contraction expected this year is modestly better than previously expected.
In prepared comments ahead of planned testimony before a congressional hearing on Tuesday, Federal Reserve chair Jerome Powell also said the U.S. is entering a “challenging” few months as the pandemic surges.
In this country, Canada’s biggest banks begin reporting their latest quarter.
Bank of Nova Scotia beat analysts’ estimates for fourth-quarter profit. Canada’s third-biggest bank said adjusted net income fell to $1.9-billion, or $1.45 a share, in the three months through Oct. 31, from $2.31-billion, or $1.82 a share, a year earlier. Analysts had expected $1.22 a share.
Bank of Montreal reported a 33-per-cent rise in quarterly profit. Net income attributable to equity holders of the bank rose to $1.58-billion, or $2.37 per share, in the fourth quarter, from $1.19-billion, or $1.78 per share, a year earlier.
RBC and National Bank report on Wednesday and TD and CIBC follow on Thursday.
Canadian investors got a reading on economic growth in the third quarter. Statistics Canada said the economy grew at an annual rate of 40.5 per cent, short of the 47 per cent economists had been forecasting. In September, the economy grew by 0.8 per cent month-over-month. The government agency also offered an early reading on growth in October with an estimated increase of 0.2 per cent.
Oversea, the pan-European STOXX 600 was up 0.69 per cent by afternoon. Britain’s FTSE 100 jumped 1.73 per cent. Germany’s DAX was up 0.88 per cent and France’s CAC 40 rose 0.90 per cent.
In Asia, Japan’s Nikkei closed up 1.3 per cent. Hong Kong’s Hang Seng gained 0.86 per cent. The Shanghai Composite Index ended the session up 1.77 per cent.
Commodities
Crude prices steadied following early losses after OPEC and is allies delayed a meeting on whether to extend current production caps until later in the week.
The day range on Brent so far is US$47.39 to US$48.30. The range on West Texas Intermediate is US$44.81 to US$45.70. Both contracts were modestly higher in early going after recording gains of roughly 27 per cent last month.
The OPEC+ group had been scheduled to conclude a two-day meeting on Tuesday, but the session was delayed until Thursday. Reports suggest major players had not been able to reach an agreement on whether to postpone planned production increases which are set to take effect in January.
“What was once a rubber stamp extension deal is proving to be a bigger speed bump than many had thought, even more so with the winter of discontent looming,” Axi chief global market strategist Stephen Innes said.
“Still, the market remains optimistic that cooler heads prevail, and the quota extension will go through on Thursday.”
OANDA currency analyst Kenny Fisher noted in a report that the last time OPEC+ failed to reach a deal was in March, which was followed by an historic plunge in prices.
“So producers are not taking any chances and allowing a few days to break the impasse,” he said.
“Before the meeting, the consensus was that OPEC+ would deliver a 3-month extension to oil production cuts, but compliance issues and rising U.S. production have put an end to that notion.”
In other commodities, gold prices rose after nearing their lowest level in almost five months during the previous session.
Spot gold rose 0.5 per cent to US$1,785.10 per ounce. U.S. gold futures gained 0.4 per cent to US$1,788.50.
Elsewhere, three-month copper on the London Metal Exchange gained 0.4 per cent to US$7,610 a tonne, just off Monday’s peak of US$7,708.50, which was its highest since March 2013.
Currencies
The Canadian dollar was firmer, trading above 77 US cents, amid improved risk sentiment and weakness in its U.S. counterpart against global currencies.
The day range for the loonie was 76.88 US cents to 77.26 US cents.
“Markets are generally risk-positive,” RBC chief currency strategist Adam Cole said.
Ahead of the North American open, the loonie will get the latest reading on September and third-quarter GDP, with markets expecting a sharp rebound.
On global markets, the U.S. dollar index, which weighs the greenback against a selection of world currencies, was down 0.2 per cent at 91.74 .
Euro/U.S. dollar was up 0.4 per cent at US$1.1968, close to US$1.2004, its highest since Sept. 1, according to figures from Reuters.
The British pound rose 0.5 per cent against the U.S. dollar to a three-month high of US$1.3409. It was last up 0.4 per cent on the day.
More company news
Tesla Inc will join the S&P 500 index in a single part, S&P Dow Jones Indices announced on Monday following a consultation with investors about the best way to add one of Wall Street’s most valuable companies. Adding companies with extremely high stock market values to the S&P 500 is exceedingly rare, and S&P Dow Jones Indices has said that the inclusion of the electric-car maker will generate a massive amount of trading by index funds.
Amazon said on Tuesday independent businesses selling on its platform crossed US$4.8-billion in worldwide sales from Black Friday through Cyber Monday, an increase of more than 60% from a year earlier. In its first indication of performance for the year’s peak online shopping days, Amazon said more than 71,000 small- and medium-sized businesses worldwide had surpassed $100,000 in sales this holiday season to date.
Economic news
(8:30 a.m. ET) Canada’s Real GDP for Q3.
(8:30 a.m. ET) Canada’s monthly Real GDP for September.
(9:30 a.m. ET) Canadian Markit Manufacturing PMI for November.
(9:45 a.m. ET) U.S. Markit Manufacturing PMI for November.
(10 a.m. ET) U.S. ISM Manufacturing PMI for November.
(10 a.m. ET) U.S. construction spending for October.
(10 a.m. ET) U.S. Fed Chair Jerome Powell and Treasury Secretary Stephen Mnuchin appear before the Senate Banking Committee regarding the pandemic response.
With Reuters and The Canadian Press
Terry Weber