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Equities

Canada’s main stock exchange started higher Tuesday with higher crude prices giving a lift to energy shares. On Wall Street, major indexes managed tentative gains as investors await more detail on fresh U.S. stimulus.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 32.5 points, or 0.18 per cent, at 17,966.95.

In the U.S., the Dow Jones Industrial Average rose 6.3 points, or 0.02 per cent, at the open to 31015.01. The S&P 500 rose 2.0 points, or 0.05 per cent, at the open to 3801.62, while the Nasdaq Composite rose 25.6 points, or 0.20 per cent, to 13062.062 at the opening bell.

“For some time there was chatter that equities were looking lofty so a move to the downside wasn’t exactly a surprise,” CMC Markets analyst David Madden said in an early note.

“In recent sessions, the speculation that President-elect Joe Biden will map out new stimulus plans has dominated the headlines. Also the vaccine news is assisting the upbeat sentiment. Stocks on both sides of the Atlantic fell yesterday, but traders haven’t lost sight of the Biden and vaccination roll-out stories.”

In Washington, Democrats on Monday introduced both a motion calling on Vice-President Mike Pence to strip Mr. Trump of his powers under the 25th Amendment to the Constitution as well as a single article of impeachment, for “incitement of insurrection.”

Rising coronavirus infections and related lockdowns are also tempering investor enthusiasm. On Tuesday, Britain’s policing minister warned that the British public must stick to tough rules to prevent the spread of COVID-19 or the government could bring in even stricter measures. In this country, the Ontario government is expected to impose tighter restrictions on Tuesday even as the province contends with a lockdown imposed in late December.

On the corporate side, Corus Entertainment Inc. reported earnings per share of 37 cents in the latest quarter, unchanged from the same period a year earlier. First-quarter revenue was $420.4-million, down about 10 per cent from last year but ahead of the $417.3-million that analysts had been forecasting.

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Corus shares were up more than 3 per cent in early trading in Toronto.

Overseas, the pan-European STOXX 600 turned modestly lower by afternoon, sliding 0.06 per cent.

Britain’s FTSE 100 slid 0.61 per cent. Germany’s DAX was up 0.12 per cent while France’s CAC 40 slid 0.10 per cent.

In Asia, Japan’s Nikkei rose 0.09 per cent. Hong Kong’s Hang Seng gained 1.32 per cent. China’s Shanghai Composite Index rose 2.18 per cent.

Commodities

Crude prices advanced, with Brent topping US$56 a barrel, bolstered by a move by Saudi Arabia to tighten supply.

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The day range on Brent is US$55.51 to US$56.75. The range on West Texas Intermediate is US$52.07 to US$53.26.

Tuesday’s gains followed a modest pullback at the start of the week and came after Saudi Arabia said it would cut an extra 1 million barrels a day in February and March to head off a build in inventories.

“Oil is not an asset to sit idle, and despite silly speculation the rally is exhausted, nothing could be further from the truth given the lengthy vaccine runway paved with oodles of stimulus,” Axi chief global market strategist Stephen Innes said.

“It hardly signals exhaustion; rather, it should mean the running of the bulls.”

Later in the day, traders will also get the first of two weekly U.S. inventory reports when the American Petroleum Institute releases its latest figures.

Analysts are expecting the report to show that U.S. inventories fell for a fifth consecutive week. Analysts in a Reuters poll expect crude inventories to fall by 2.7 million barrels. More official numbers are due Wednesday from the U.S. Energy Information Administration.

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Gains, however, were tempered somewhat by continued concern about COVID-19-related restrictions around the world. Reuters reports that Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday, putting 4.9 million residents under lockdown.

In other commodities, gold rose, bouncing back after touching a six-week low on Monday.

Spot gold rose 0.8 per cent at US$1,860.10 per ounce. On Monday, prices touched their lowest since Dec. 2. U.S. gold futures gained 0.5 per cent to US$1,860.

“The market seems to have been trying to price the yellow metal bullish January seasonality a little too quickly, leaving room to recover once the liquidation ran out of steam,” Mr. Innes said.

Currencies

The Canadian dollar was firmer as crude prices advanced and risk sentiment improved while its U.S. counterpart held recent gains.

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The day range on the loonie is 78.18 US cents to 78.53 US cents.

There were no major Canadian economic reports due on Tuesday.

“We are not persuaded that the CAD can continue to push broadly higher,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Absent any major domestic data releases, external drivers remain more influential for the CAD at this point,” he said.

On global markets, the U.S. dollar index, which measures it against a basket of currencies, was last at 90.489, unchanged on the day, according to figures from Reuters. It has bounced off lows of 89.206 seen last week.

Against the euro, the U.S. dollar held at $1.2153.

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Both the Australian and the New Zealand dollars gained about 0.3 per cent against the greenback, lifted by a rising appetite for riskier assets.

Bitcoin stabilized at US$36,500 after Monday’s drop. The cryptocurrency’s rally has faltered since it soared to a record high of $42,000 on Jan. 8.

More company news

Intel Corp plans to tap Taiwan Semiconductor Manufacturing Co to make a second generation discrete graphics chip for personal computers that it hopes will help it combat the rise of Nvidia Corp, two sources familiar with the matter told Reuters. The chip, known as “DG2”, will be made on a new chipmaking process at TSMC that has not yet been formally named but is an enhanced version of its 7-nanometer process, the two people familiar the matter said.

German carmaker Volkswagen said on Tuesday that sales of its core brand dropped by 15% to 5.3 million vehicles in 2020 as the outbreak of coronavirus and lockdowns imposed to restrict infections hit car dealerships around the world. Volkswagen said it had seen sales recovering in December compared to previous months, rising by 19.5% in western Europe and 14.7% in North America. It added that demand for its electric models jumped by 158% on the year, to 212,000 vehicles.

Canada’s First Cobalt Corp said on Tuesday it signed a deal with Glencore and has agreed a tentative pact with a unit of China Molybdenum Ltd for cobalt supplies from the Democratic Republic of the Congo. The agreements come after First Cobalt last month secured C$10 million in government loans and grants to accelerate startup and expansion of North America’s first cobalt refinery in the Canadian province of Ontario.

Economic news

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for November.

With Reuters and The Canadian Press

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