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Equities

Canada’s main stock index started higher Tuesday helped by gains in commodities and a better-than-expected reading on economic growth. On Wall Street, major indexes were treading water as investors keep an eye on moves in the bond market.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 41.86 points, or 0.23 per cent, at 18,341.48.

In the U.S., The Dow Jones Industrial Average fell 0.1 points at the open to 31535.37. The S&P 500 rose 1.8 points, or 0.05%, at the open to 3903.64, while the Nasdaq Composite rose 10.6 points, or 0.08 per cent, to 13599.449 at the opening bell.

“Central banks around the globe managed to reassure markets and eased fears about inflation, and thus prevented a larger sell-off in the stock market,” Axi market analyst Milan Cutkovic said in an early note.

“However, a lack of catalysts could mean that investors will continue to stand on the sidelines until Friday´s [U.S.] non-farm payroll release.”

He said stimulus measures by governments are keeping the rally alive “however, there are mounting concerns on whether the global economy will manage to bounce back from the crisis as quickly as initially expected or not.”

In Canada, investors got a reading on how the economy was performing in the final month of the years. Statistics Canada says the economy grew at an annual rate of 9.6 per cent, better than the 7.5 per cent economists had been forecasting. In December, when parts of the country faced strict restrictions to battle the spread of COVID-19, the economy grew by 0.1 per cent. The agency also said early estimates suggest grow of 0.5 per cent in January.

“The early read on January was a pleasant surprise, with a 0.5 per cent real GDP gain despite what was a partially shuttered economy due to public health constraints that month,” CIBC chief economist Avery Shenfeld said.

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“That seems to set aside earlier fears of an outright downturn in the first quarter, as a relaxation in health restriction suggests that January might have been the worst month for consumers.”

On the corporate side, Loblaw parent George Weston reported adjusted earnings per share of $2.03 in the latest quarter, up from an adjusted profit of $1.69 per diluted share in the fourth quarter of 2019. Revenue for the fourth quarter of 2020, which included 13 weeks, totalled $13.81-billion, up from $12.11-billion a year earlier when George Weston’s fourth quarter only had 12 weeks. Analysts on average had expected an adjusted profit of $1.89 per share and $14.06-billion in revenue, according to financial data firm Refinitiv.

South of the border, shares of Zoom Video Communications Inc. jumped 4 per cent in early trading after the company forecast current-quarter revenue ahead of expectations, with millions of people still using the platform as they work remotely. Zoom forecast current-quarter revenue between US$900-million and US$905-million, compared with estimates of US$829.2-million, according to IBES Refinitiv data.

Overseas, major European markets opened down but steadied as the session progressed. Britain’s FTSE 100 edged up 0.39 per cent just after 5 a.m. ET. Germany’s DAX rose 0.19 per cent and France’s CAC 40 advanced 0.15 per cent.

In Asia, Japan’s Nikkei closed down 0.86 per cent. Hong Kong’s Hang Seng lost 1.21 per cent.

Commodities

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Crude prices were treading water in early going as markets await a meeting of OPEC and its allies on Thursday.

The day range on Brent so far is US$62.51 to US$63.82. The range on West Texas Intermediate is US$59.45 to US$60.82. Both benchmarks fell by more than 1 per cent on Monday.

Markets are increasingly expecting OPEC+ members to agree to raise supply at their meeting later in the week.

“The chief concern weighing on oil markets is the looming OPEC+ meeting on Thursday,” OANDA senior analyst Jeffrey Halley said.

“Expectations are rising that OPEC+ will ease the production cuts further. That is my opinion as well, although OPEC+ has surprised us before. The clamour among some members to refill their coffers, is likely to be a more powerful force then complaints externally about tight supplies.”

Reuters reports that OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to reductions agreed to under the previous OPEC+ pact, ending a run of seven consecutive monthly increases.

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In other commodities, gold prices steadied after touching their lowest level in more than eight months, with easing U.S. Treasury yields helping offset the impact of a stronger U.S. dollar.

Spot gold gained 0.1 per cent to US$1,725.30, having dropped to its lowest since June 15 at US$1,706.70 earlier in the session. U.S. gold futures slipped 0.1 per cent to US$1,721.60.

“Gold’s failure at its breakout point overnight is a strong signal that longer-term bullish positioning is throwing in the towel,” Mr. Halley said.

“Instead of gold finding bargain hunters on previous dips to US$1,800, for example, it is now finding sellers on any meaningful rallies.”

Currencies

The Canadian dollar was down slightly, trading around the 79-US-cent mark, as risk sentiment pulled back and the U.S. dollar hit its best level in a month against a basket of currencies.

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The day range on the loonie is 78.75 US cents to 79.12 US cents.

Investors will we weighing a better-than-expected reading on broad economic growth. Statscan says the economy grew at an annual rate of 9.6 per cent in the final quarter of the year.

On world markets, the U.S. dollar rose to its highest in a month versus a basket of currencies, up 0.3 per cent on the day at 91.326, in its fourth straight session of gains, according to figures from Reuters.

The euro was down 0.3 per cent at US$1.20125, having hit its lowest in nearly a month.

More company news

Target Corp beat analysts’ estimates for holiday quarter sales on Tuesday, powered by the company’s same-day delivery and store pick-up services that helped fulfill resilient demand for home goods, toys and groceries during the pandemic. The company’s comparable sales rose 20.5% in the fourth quarter, comfortably beating analysts’ estimates for a 16.4% rise, according to IBES data from Refinitiv. Sales through its same-day deliveries and store pick-up services surged 212%, as consumers sought quicker ways to get their online purchases.

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Car rental company Hertz Global Holdings Inc said on Tuesday it had filed a proposed plan of reorganization with the U.S. bankruptcy court for the district of Delaware. Under the plan, Knighthead Capital Management LLC and Certares Opportunities LLC will invest about $4.2-billion to buy up to 100% of common stock of reorganized Hertz.

Canopy Growth Corp on Tuesday launched its pot-infused Quatreau beverage line in the United States, as it seeks to secure a firm footing in the country’s rapidly growing cannabis market ahead of expected reforms under President Joe Biden. The Quatreau line of sparkling waters, which come in four variants, would be available for online sales in U.S. states that permit consumption of cannabidiol (CBD), Canopy said.

Economic news

(8:30 a.m. ET) Canadian Real GDP for Q4 and December.

With Reuters and The Canadian Press

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