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Equities

Canada’s main stock index rose in early trading Tuesday with the energy sector gaining alongside advancing crude prices. Wall Street’s key indexes, meanwhile, were mostly treading water as the two-day Federal Reserve policy meeting gets underway.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 45.11 points, or 0.22 per cent, at 20,202.76.

In the U.S., the Dow Jones Industrial Average rose 3.35 points, or 0.01 per cent, at the open to 34,397.10, the S&P 500 opened higher by 0.13 points at 4,255.28, while the Nasdaq Composite dropped 7.51 points, or 0.05 per cent, to 14,166.64 at the opening bell.

On Wall Street, the week’s key event kicks off with the start of the Fed’s latest policy meeting. The central bank is set to deliver its decision on Wednesday afternoon followed by a press conference with Fed chair Jerome Powell.

Investors aren’t expecting a move on rates but will watch for hints of future policy changes as well as whether the Fed is changing its view on inflationary pressures, which the bank has suggested are likely transitory.

“Investors will be scrutinizing the announcement and pursuant press conference for any signs the Fed is pivoting away from its stance that the current spike in inflation is temporary,” OANDA market analyst Sophie Griffiths said.

“Equity markets are broadly buying into the Fed’s mantra that the rise in inflation is transitory. Any sign that central banks are looking to rein in monetary policy could spook investors. Clearly, no central bank is thinking of hiking interest rates just yet. However, the time to start reducing bond purchases could be approaching.”

In this country, women’s apparel retailer Aritzia Inc. is looking to break into the men’s market, purchasing a majority stake in athletic-wear designer and manufacturer Reigning Champ. The Globe’s Susan Krashinsky Robertson reports that the Vancouver-based retailer announced the deal on Monday. Aritzia will acquire 75 per cent of the company for cash, in a deal that values Reigning Champ at $63-million in total, according to Aritzia. The remaining 25 per cent stake, held by Reigning Champ’s management, will be converted to Aritzia shares in three instalments that will take place between 2024 and 2026.

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Investors also got a look at the state of Canada’s housing market, with the release of sales and price figures for May from the Canadian Real Estate Association.

Canadian home sales fell 7.4 per cent in May from April, while the average selling price was down 1.1 per cent from the previous month, according to CREA data. It was the second consecutive month of declines after a strong start to the year.

Separately, Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts rose 3.2 per cent in May to 275,916 units in May from 267,449 units in April.

As well, the Canadian government’s auction of 3,500 megahertz spectrum licences, which had been were delayed until this year because of the pandemic, begins on Tuesday. Winners of the auctions will be eventually announced by the spectrum management division of Innovation, Science and Economic Development Canada.

On Wall Street, Oracle reports results after the close of trading.

Overseas, the pan-European STOXX 600 extended recent gains, rising 0.29 per cent by midday. Britain’s FTSE 100 was up 0.55 per cent. Germany’s DAX and France’s CAC 40 advanced 0.59 per cent and 0.51 per cent.

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In Asia, Japan’s Nikkei finished up 0.96 per cent. Hong Kong’s Hang Seng slid 0.71 per cent.

Commodities

Crude prices extended gains into a fourth session as optimism over recovering demand continues and concerns about the return of Iranian supply to market ease.

The day range on Brent is US$72.79 to US$73.56. The range on West Texas Intermediate is US$70.81 to US$71.55.

“Motor traffic is returning to pre-pandemic levels in the U.S. and much of Europe,” OANDA’s Sophie Griffiths said in a note. “Air traffic is also on the rise.”

“OPEC+ is not due to meet for another two weeks,” she said. “Given the current outlook, it’s likely that output will need to be increased to meet rising demand.”

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Meanwhile, indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union, according to a Reuters report.

A return by the U.S. to the deal could open the door to lifting sanctions and allow Tehran to resume exporting crude.

In other commodities, gold prices were moving in a tight range ahead of the Fed meeting.

Spot gold was down 0.1 per cent at US$1,863.36 per ounce, after falling to its lowest since May 17 at US$1,843.99 on Monday.

U.S. gold futures were flat at US$1,865.70 per ounce.

“Investors are being cautious ... with very little appetite at the moment to drive gold in one direction or the other,” CMC Markets UK’s chief market analyst Michael Hewson said.

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Currencies

The Canadian dollar was down slightly in early going as its U.S. counterpart held near multi-week highs against a group of world currencies with markets awaiting the outcome of the latest Fed meeting.

The day range on the loonie is 82.16 US cents to 82.44 US cents.

“Currencies have again traded in extremely tight ranges overnight and majors are all little changed from yesterday’s close in the absence of significant news ahead of tomorrow’s FOMC,” RBC chief currency strategist Adam Cole said.

The U.S. dollar index edged lower in the Asian session and was last down 0.1 per cent at 90.40, hovering near multi-week highs, according to figures from Reuters.

The euro rose 0.15 per cent to US$1.2126, just above a one-month low of $1.2093 it hit last week while the yen hit a seven-session low of 110.02 per U.S. dollar.

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The Australian dollar slid to US$0.7705 after minutes from the Reserve Bank of Australia’s last meeting showed the bank was prepared to keep buying bonds.

More company news

The United States and the European Union appeared close to reaching a deal to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and lift billions of dollars in punitive tariffs. “I’m very positive and convinced that together we will deliver today,” European Commission President Ursula von der Leyen told reporters Tuesday, hours before a meeting in Brussels with U.S. President Joe Biden. A person familiar with the discussions told Reuters that the U.S. and EU officials have reached principles of an agreement to end their 17-year dispute over the aircraft subsidies. The person was not authorized to discuss the matter and spoke on the condition of anonymity.

Hennes & Mauritz AB said Tuesday sales had increased 75 per cent in Q2 and early June, affecting both online purchases and physical stores, adding that 1,300 stores were temporarily closed at the start of the period due to the pandemic. Those who remained open faced coronavirus restrictions, including on opening hours, number of customers and store space, the group said. In Hennes & Mauritz’s large markets, such as France and Germany, stores were closed throughout most of the quarter.

Economic news

(8:30 a.m. ET) Canadian housing starts for May.

(8:30 a.m. ET) Canada’s industrial product price index for May.

(8:30 a.m. ET) U.S. retail sales for May.

(8:30 a.m. ET) U.S. PPI Final Demand for May.

(9 a.m. ET) Canada’s existing home sales and average prices for May.

(9 a.m. ET) Canada’s MLS Home Price Index for May.

(9:15 a.m. ET) U.S. industrial production for May.

(10 a.m. ET) U.S. NAHB Housing Market Index for June.

(10 a.m. ET) U.S. business inventories for April.

With Reuters and The Canadian Press

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