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Equities

Canada’s main stock index opened higher Monday boosted by gains in energy and materials stocks. South of the border, indexes gained after the previous session’s shard selloff with retail investors turning their attention to silver.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 212.32 points, or 1.22 per cent, at 17,549.34.

In the U.S. , the Dow Jones Industrial Average rose 72.1 points, or 0.24 per cent, at the open to 30054.73. The S&P 500 rose 16.9 points, or 0.46 per cent, at the open to 3731.17, while the Nasdaq Composite rose 155.5 points, or 1.19 per cent, to 13226.178 at the opening bell.

On Friday, all three fell roughly 2 per cent, capping the worst week since October as retail investors took on hedge funds to push up frequently shorted stocks like GameStop and AMC.

Early Monday, silver appeared to be the next target, with spot silver posting its third day of gains and touching an eight-year high in Asian trading.

“The rise in silver doesn’t seem far-stretched just yet,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said. “So far, it is not exactly the GameStop anomaly, but it is a hint that the retail traders who just discovered the strength of their unity are out there, looking for new targets – and apparently bigger ones.”

Meanwhile, investors are bracing for another big earnings week.

Wall Street will get results from Amazon and Alphabet on Tuesday. Snap, Exxon and Pfizer are among other companies set to report their latest results through the week.

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Bay Street investors will get results from the oil patch, with Imperial Oil reporting on Tuesday and Suncor reporting after Wednesday’s close. Investors will be looking to see how the companies view the coming months, with demand concerns amid the COVID-19 pandemic weighing against optimism over recent crude price gains.

The week’s big economic news comes Friday with January jobs reports in both Canada and the United States.

In December, Statistics Canada reported that the economy shed 52,700 positions, marking the first decline since the spring. Economists are expecting to see the loss of about 10,000 positions in the January report.

Overseas, major European markets were higher by afternoon with the pan-European STOXX 600 advancing 1.39 per cent. Germany’s DAX gained 1.48 per cent while France’s CAC 40 rose 1.09 per cent. Britain’s FTSE 1000 was up 1.1 per cent.

In Asia, Japan’s Nikkei rose 1.55 per cent. Hong Kong’s Hang Seng rose 2.15 per cent.

Commodities

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Crude prices gained as optimism over new vaccines helped offset demand concerns sparked by continued restrictions aimed at curbing the spread of the virus.

The day range on Brent so far is US$54.60 to US$55.70. The range on West Texas Intermediate is US$51.64 to US$52.71.

“Despite some vaccine concerns over efficacy, oil is nudging higher as Saudi Arabia’s voluntary 1 million-barrel-a-day production cuts, announced in January, took effect today,” Axi chief global market strategist Stephen Innes said.

“OPEC voluntary and U.S. shale non-voluntary production cuts have helped stabilize oil during the winter of despair and contributed to drawing OECD inventory bullishly for oil prices.”

He said the Biden administration’s plan to pause new oil and gas leases on federal lands has also been bullish for prices, although traders “will be very reluctant to push oil prices higher in this extended lockdown environment.”

Meanwhile, Goldman Sachs said in a note on Sunday that Brent crude could rise to US$65 a barrel by July amid a tight market and slow rebound in demand.

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Goldman said data indicated a deficit of 2.3 million barrels per day (bpd) in the fourth quarter of 2020 driven by higher demand and lower supplies from producers outside the OPEC+ group. It forecast a deficit of 900,000 bpd in the first half of 2021, a higher level than its previous prediction of 500,000 bpd, according to Reuters.

In other commodities, silver rallied for its third straight session, hitting an eight-year high as retail investors in Asia followed up buying by U.S. counterparts last week.

Spot silver jumped 8.7 per cent to US$29.36 an ounce, having earlier hit its highest since February 2013 at US$30.03.

Silver has risen nearly 19 per cent since Thursday when posts began circulating on Reddit urging individual investors to buy silver mining stocks and exchange-traded funds (ETF) backed by physical silver bars, in a GameStop-style squeeze, according to Reuters.

Currencies

The Canadian dollar was trading above 78 US cents as its U.S. counterpart wavered on global markets amid improving risk sentiment.

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The day range on the loonie is 78.01 US cents to 78.36 US cents.

There were no major Canadian economic releases due Monday morning.

Against a basket of peers, the U.S. dollar traded flat. The index that measures its strength has been largely range-bound in recent weeks, after bouncing from a nearly three-year low of 89.206 at the start of the year.

The pound was the biggest gainer in the G10 group of currencies, up 0.3 per cent on the day at US$1.3732.

The yen traded flat at 104.76 yen per U.S. dollar.

The euro fell 0.2 per cent to trade at US$1.2111.

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More company news

Dorel Industries Inc. said Monday a buyer group aiming to take the company private has increased the transaction price to $16 a share from the original $14.50 a share.

Intact Financial says former Bank of Canada senior deputy governor Carolyn Wilkins has joined its board.

German pharmaceutical giant Bayer has agreed to help CureVac produce its experimental COVID-19 vaccine, the latest drugmaker to offer up manufacturing capacity as pressure mounts to boost supplies. The drugmaker expects to produce 160 million doses of CureVac’s shot in 2022 at its Wuppertal site in western Germany, head of pharma Stefan Oelrich told a news conference on Monday.

The chief executives of ExxonMobil Corp and Chevron Corp held preliminary talks in early 2020 to explore combining the two largest U.S. oil producers in what would have been the biggest merger of all time, according to people familiar with the matter told Reuters. The discussions, which are no longer active, are indicative of the pressure the energy sector’s most dominant companies faced as the COVID-19 pandemic took hold and crude prices plunged.

Ryanair expects to fly between 20% and 25% of its normal capacity between April and June, climbing to between 50% and 70% between July and September, Group Chief Executive Michael O’Leary told investors in a call on Monday. Traffic could then rise to 70-90% or even 100% of pre-COVID-19 levels during its winter season from October to March, he said.

EU antitrust enforcers have claimed a court made legal errors when it scrapped their order for iPhone maker Apple to pay 13 billion euros ($15.7 billion) in Irish back taxes, in a filing to have the verdict overturned. The Commission is appealing to the Luxembourg-based Court of Justice of the European Union following a ruling last year by the General Court, which said the EU executive had not met the requisite legal standard to show Apple had enjoyed an unfair advantage.

Economic news

(9:30 a.m. ET) Canada Markit Manufacturing PMI for January.

(9:45 a.m. ET) U.S. Markit Manufacturing PMI for January.

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

With Reuters and The Canadian Press

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