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Equities

Canada’s main stock index jumped at the open Monday with higher commodities prices buoying energy and materials shares. South of the border, major indexes gained in early trading amid a calmer bond market and optimism over the rollout of COVID-19 vaccines and U.S. government stimulus.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 172.51 points, or 0.96 per cent, at 18,232.77.

In the U.S., the Dow Jones Industrial Average rose 133.5 points, or 0.43 per cent, at the open to 31065.9. The S&P 500 rose 31.4 points, or 0.82 per cent to 3842.51, while the Nasdaq Composite rose 213.8 points, or 1.62 per cent, to 13406.162 at the opening bell.

“Is the turmoil over? Certainly not,” Ipek Ozkardeskaya, senior analyst with Swissquote, said in an early note.

“The discussions regarding the rising inflation expectations will only get louder after Joe Biden’s $1.9-trillion additional rescue package passed the House on Saturday and is now headed to the Senate.”

On one hand, she said, fiscal stimulus should boost investor sentiment as it will help improving demand and the economic activity.

“On the other hand, the fear of economic overheating could threaten the Fed’s supportive policy despite [Fed chair Jerome] Powell’s full commitment to maintain the financial conditions as loose as possible until a substantial improvement in the U.S. jobs market.”

Last week, the yield on the U.S. 10-year Treasury spiked above 1.6 per cent for the first time in a year before pulling back to around 1.4 per cent by the end of the week.

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Positive vaccine news also underpinned sentiment after an advisory panel for the U.S. Centers for Disease Control and Prevention recommended the use of Johnson & Johnson’s one-shot COVID-19 vaccine for people 18 and older.

In this country, Spin Master releases its latest quarterly results after the close of trading. Later in the week, investors will get results from Loblaw-parent George Weston and Canadian Natural Resources. Both report on Thursday.

Overseas, the pan-European STOXX 600 jumped 1.78 per cent in morning trading. Britain’s FTSE 100 gained 1.77 per cent. Germany’s DAX and France’s CAC 40 rose 1.21 per cent and 1.65 per cent, respectively.

In Asia, Japan’s Nikkei closed up 2.4 per cent. Hong Kong’s Hang Seng gained 1.6 per cent.

Commodities

Crude prices gained on optimism over fresh U.S. stimulus and positive weekend vaccine news.

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The day range on Brent is US$64.69 to US$65.93. The range on West Texas Intermediate is US$61.84 to US$62.92. Both benchmarks rose to their best levels in more than a year last week before slipping on Friday alongside broader market weakness.

“Oil prices are recovering this morning in line with most risk asset on the back of the U.S. stimulus bill passing the House and as central banks continue to sabre rattle to ward off market-implied financial tightening,” Axi chief market strategist Stephen Innes said.

For the week, traders will have a close eye on a planned meeting of OPEC members and their allies. Reports have suggested that Russia is pushing for a production increase while Saudi Arabia favours holding output steady.

“[The] OPEC+ meeting on Mar 4 is an increasingly essential ingredient, and producers face the tricky task of sorting through the various moving parts to form a strategy that makes everyone happy,” Mr. Innes said.

“But let’s not beat around the bush; more supply needs to come onto the market to ensure OPEC+ meets incremental demand and keeps internal discipline ducks in a row.”

On Monday, prices drew some support from weekend news that the U.S. Center for Disease Control and Prevention had recommended use of Johnson & Johnson’s single-dose COVID-19 vaccine for adults.

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That, however, was offset somewhat by mixed manufacturing data our out of Asia. Reuters reports that China’s factory activity growth slipped to a nine-month low in February, while manufacturing in Japan expanded the fastest in more than two years.

In other commodities, gold prices were higher.

Spot gold was up 1.4 per cent at US$1,757.80 per ounce, after rising as much as 1.5 per cent to US$1,759.53 earlier in the session.

U.S. gold futures rose 1.5 per cent to US$1,755.30.

“A reversal of the higher yield trend and a weaker dollar are allowing gold to move higher,” Mr. Innes said.

Currencies

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The Canadian dollar was firmer on improved risk sentiment and rallying crude prices.

The day range on the loonie is 78.51 US cents to 78.59 US cents.

“The CAD is a modest out-performer on the day, helped by a rebound in crude prices following Friday’s sharp sell-off,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Crude prices are steadying ahead of Thursday’s OPEC+ meeting where market participants expect producers to loosen output curbs — although there is a high degree of uncertainty about just how much production cuts will be relaxed.”

There were no major economic releases scheduled for Monday. Markets will now be looking ahead to the release Tuesday of Canada’s fourth-quarter GDP figures. Alvin Tan, RBC Asia FX strategist, says that bank is expecting to see annual growth of 7.5 per cent in the final quarter of the year.

“The likely Q4 growth driver is an inventory change improvement (smaller decline), with consumption tracking close to flat,” he said.

On world markets, the U.S. dollar index rose 0.26 per cent to 91.02 after posting its biggest surge since June on Friday, according to figures from Reuters.

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The euro fell 0.12 per cent to US$1.2056, after dropping 0.9 per cent at the end of last week, the most since April.

Britain’s pound rose 0.17 per cent to US$1.3945. Against the yen, the U.S. dollar hit a six-month high of 106.70.

More company news

CAE Inc on Monday agreed to buy L3Harris Technologies Inc’s military training division for US$1.05-billion to expand its defense business. Flight simulator maker CAE will fund the deal by a private placement of roughly $700-million from two institutional investors.

China isn’t ready to join the United States in approving Boeing’s 737 Max to return to flying following a two-year grounding prompted by a pair of fatal crashes, a regulator said Monday. China was the first country to ground the 737 Max in 2019 after crashes in Indonesia and Ethiopia killed a total of 346 people. American regulators approved the plane in November to resume commercial flights after Boeing updated software and pilots received additional training.

Beyond Meat Inc said on Monday Chief Financial Officer Mark Nelson plans to retire from the plant-based patty maker on May 5.

Economic news

(9:30 a.m. ET) Canadian Markit Manufacturing PMI for February.

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

(10 a.m. ET) U.S. ISM Manufacturing PMI for February. The Street is projecting a reading of 59.5, up from 58.7 in January.

(10 a.m. ET) U.S. construction spending for January. Consensus is an increase of 0.8 per cent from December.

With Reuters, The Associated Press and The Canadian Press

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