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Equities

Canada’s main stock index rose in early trading Monday, buoyed by gains in energy and materials shares. South of the border, key indexes rebounded after last week’s selloff in the wake of a hawkish shift by the Federal Reserve.

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At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 76.92 points, or 0.38%, at 20,076.51.

In the U.S., the Dow Jones Industrial Average rose 21.99 points, or 0.07 per cent, at the open to 33,312.07.

The S&P 500 opened higher by 6.95 points, or 0.17 per cent, at 4,173.40, while the Nasdaq Composite gained 17.05 points, or 0.12%, to 14,047.42 at the opening bell.

“The move lower in stocks [last week] still looks corrective to me,” OANDA market analyst Kenny Fisher said.

“Interest rates are going nowhere fast, and the world’s central banks have not closed the liquidity spigots,” he said. “That said, the unwinding still has plenty of juice in it, and this week could be a tough one for equities unless some of the Fed doves hit the newswires in force.”

Last week, the Fed surprised the market, suggesting that it could raise rates twice by 2023, a faster pace than investors had been expecting.

A number of Fed officials are scheduled to speak this week, including Fed chair Jerome Powell who is set to testify before Congress on Tuesday. On Monday, markets will hear from St. Louis Fed President Jim Bullard, Dallas Fed President Robert Kaplan and New York Fed President John Williams.

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Mr. Bullard further spooked markets on Friday when he suggested Fed might need to raise rates in late 2022.

In this country, Canadian investors will get a reading on April retail sales on Wednesday. Economists are expecting to see a drop of about 5 per cent for the month as many regions of the country contended with restrictions aimed at curbing the spread of COVID-19.

On the corporate side, Sobeys-parent Empire Co. Ltd. will report its latest results on Wednesday. BlackBerry delivers its quarterly results on Thursday.

Elsewhere, Transat AT says it has ended discussions with Quebec businessman Pierre Karl Péladeau over a possible takeover of the tour operator.

Overseas, the pan-European STOXX 600 recovered early losses and was last trading up 0.30 per cent. Britain’s FTSE 100 rose 0.15 per cent while Germany’s DAX gained 0.68 per cent. France’s CAC 40 was down 0.15 per cent.

In Asia, Japan’s Nikkei sank 3.29 per cent with most sectors in the red. Hong Kong’s Hang Seng lost 1.08 per cent.

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Commodities

Crude prices edged higher in early going on continued optimism over the recovery in demand and a pause in talks over the Iran nuclear agreement.

The day range on Brent is US$73.31 to US$74.23. The range on West Texas Intermediate is US$71.48 to US$72.41. Both benchmarks have marked four weeks of gains, helped by advances in the global vaccination effort.

“Oil’s underlying physical demand picture remains positive,” said OANDA senior analyst Jeffrey Halley said. “Despite the noise in financial markets, the real world is on the right track and will require increasing amounts of energy as it reopens.”

Meanwhile, Reuters reports that negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election. Two diplomats told the news service they expected a break of about 10 days.

An agreement could see the easing of U.S. sanctions on Iranian oil and lead to Tehran exporting another 1 million barrels a day.

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In other commodities, gold prices rebounded after their biggest weekly fall since March 2020.

Spot gold advanced 1.1 per cent to US$1,781.86 an ounce while U.S. gold futures edged up 0.8 per cent to $1,782.90.

“The reversal in some of the strong gains we saw in bond yields last week has supported the market. Adding to that the dollar is trading a tad softer after the recent strength,” Ole Hansen, head of commodities strategy at Saxo Bank, said.

Currencies

The Canadian dollar was higher as its U.S. counterpart held the previous week’s gains in response to the Fed’s hawkish policy shift.

The day range for the loonie is 80.09 US cents to 80.42 US cents. The dollar was last near the upper end of that spread.

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“Given the sharp fall in the CAD following last week’s FOMC decision, we remain cautious on the near-term outlook but we still rather favour looking to fade USD gains and note that the USD’s jump does fit somewhat with the seasonal profile which reveals a temporary, mid-year squeeze higher in the USD downtrend before the sell-off resumes,” Shaun Osborne, chief FX strategist with Scotiabank, said.

There were no major Canadian releases due on Monday.

On global markets, the U.S. dollar index, which weighs the greenback against a group of global currencies, was little changed after jumping nearly 2 per cent last week as the Fed signalled that rates could start rising sooner than expected. The weekly increase was the biggest since March 2020.

The yen strengthened further on Monday, up a quarter of a per cent versus the U.S. dollar at 109.97 per dollar, while the euro was broadly flat, according to figures from Reuters.

In cryptocurrencies, bitcoin saw a drop below US$33,000, as China expanded restrictions on mining to the province of Sichuan.

More company news

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Inter Pipeline Ltd. has rejected a revised hostile takeover offer by Brookfield Infrastructure Partners LP that allows shareholders to receive their payment entirely in cash instead of a mix of cash and shares if they want. The company urged shareholders to reject the offer and support its friendly all-stock deal to be bought by Pembina Pipeline Corp., which would see shareholders receive half a Pembina share for each Inter Pipeline share they hold.

Germany’s antitrust watchdog said on Monday it had launched an investigation into whether Apple was exploiting its market dominance, following similar proceedings into U.S. tech rivals Facebook, Amazon and Google. Based on new competition law rules specifically intended for large digital companies, Germany’s Federal Cartel Office (FCO) said it would assess whether Apple has a “paramount significance across markets” in a first step. “Based on this first proceeding, the (FCO) intends to assess in more detail specific practices of Apple in a possible further proceeding. In this regard, the authority has received various complaints relating to potentially anti-competitive practices.”

Volkswagen will soon decide on the future of its luxury brand Bugatti, Oliver Blume, Volkswagen management board member and CEO of Porsche AG, said on Monday. Volkswagen in March said it was working on a strategic partnership with Croatian electric hypercar maker Rimac, which will likely result in a joint venture between Porsche and Rimac, with Porsche as a minority partner.

Hudbay Minerals Inc said a fatality occurred at its Lalor mine, located in the town of Snow Lake in Manitoba, Canada, and that all underground mining operations at the mine were suspended. “The incident occurred during underground mining operations on the evening of June 19, 2021, when a worker employed by a service provider was fatally injured from a fall while working at height. No other personnel were injured and the scene has been secured,” the company said in a statement on Sunday, adding an investigation was being conducted.

Economic news

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for May.

With Reuters and the The Canadian Press

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