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Equities

Canada’s main stock index dipped in early trading Monday despite a rise in crude prices as OPEC and its allies look to resolve an output dispute. U.S. markets are closed.

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At 9:49 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 13.86 points, or 0.07%, at 20,212.25.

Members of the OPEC plus group are scheduled to meet again Monday after a vote Friday to increase production by about 2 million barrels a day from August to December and extend remaining output cuts to the end of 2022 ran into objections from the United Arab Emirates.

“If the OPEC+ fails to find an agreement and the crisis deepens at the heart of the cartel, then the oil prices will fall free, and we could see a serious dive which could throw the price of a barrel to US$50/55 region, as there would be a dramatic, structural change in the supply side of the game,” Ipek Ozkardeskaya, senior analyst with Swissquote, said in a note.

In this country, investors will get the release of the Bank of Canada’s business outlook and consumer expectation surveys just after the start of trading.

The week’s key Canadian economic report comes on Friday with the release of June employment figures. Economists are expecting to see a gain of about 138,000 jobs for the month with the unemployment rate falling to 7.7 per cent from 8.2 per cent in May.

“We expect June employment to bounce back, with the reference week of June 13-19 likely to capture reopenings in several provinces,” Alvin Tan, Asia FX strategist with RBC, said.

He says that bank’s economists are looking for a monthly gain of about 200,000 jobs after May’s decline of 275,000 positions.

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“As has been the case in previous reopening periods, the headline employment gain should be driven by the hardest-hit sectors (e.g. high-contact services, retail) and demographic groups (e.g. women, youth),” he said. “We also expect a rise in the labour force, meaning that the expected drop in the unemployment rate from 8.2 per cent to 7.6 per cent is more modest than it otherwise would be.”

Last week, markets got a lift when the U.S. Labor Department reported that the U.S. economy generated 850,000 new position last month, more than the 706,000 analysts had been forecasting and up from 583,000 jobs created in May. Still, mixed details helped ease some investor concerns about the likely pace of rate hikes by the U.S. Federal Reserve down the road.

Overseas, the pan-European STOXX 600 was up 0.33 per cent by afternoon. Britain’s FTSE 100 rose 0.59 per cent. Germany’s DAX and France’s CAC 40 edged up 0.07 per cent and 0.34 per cent, respectively.

In Asia, Japan’s Nikkei finished down 0.64 per cent. Hong Kong’s Hang Seng lost 0.59 per cent.

Commodities

Crude prices edged higher as markets await further talks aimed at resolving an output dispute among OPEC members and their allies.

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The day range on Brent is US$75.70 to US$76.52. The range on West Texas Intermediate is US$74.75 to US$75.43. Brent lost 1 US cent last week to mark its first weekly decline in six while WTI gained 1.5 per cent, up for a sixth straight week.

Continued OPEC+talks are scheduled Monday aimed at resolving objections by the UAE to a proposed plan to increase production.

Saudi Arabia’s energy minister on Sunday called for “compromise and rationality” in the talks.

“You have to balance addressing the current market situation with maintaining the ability to react to future developments ... if everyone wants to raise production then there has to be an extension,” Prince Abdulaziz bin Salman told Saudi-owned Al Arabiya television channel.

Elsewhere, U.S. energy companies increased oil and natural gas rig counts for the third week in the last four.

Energy services company Baker Hughes said the number of rigs was up by 5 to 475 in the week to July 2, the most since April 2020, according to Reuters. Rig counts are seen as an indication of future output.

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Currencies

The Canadian dollar was trading around 81 US cents in early going as its U.S. counterpart held steady.

The day range on the loonie is 80.94 US cents to 81.23 US cents.

Canadian investors will get the Bank of Canada’s business outlook and consumer expectation surveys on Monday morning.

“The CAD will remain sensitive to fluctuations in oil prices as we await an output decision from OPEC+, although the CAD has failed to materially benefit from the latest run-up in oil (and other commodities) prices,” Shaun Osborne, chief FX strategist with Scotiabank, said.

On world markets, the U.S. dollar steadied with slight but broad gains in the Asia session. The greenback gained about 0.2 per cent against the New Zealand dollar, which sat at US$0.7022, traded flat at 111.05 yen and climbed by about 0.2 per cent to US$1.1859 per euro, according to figures from Reuters.

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The U.S. dollar index, which weighs the greenback against a group of currencies, was flat at 92.288.

U.S. markets are closed on Monday.

“Friday’s NFP jobs report gave something for everyone in terms of an above-consensus NFP gain, but also an above-consensus unemployment rate,” strategists at ING said in a note to clients.

“U.S. interest rate markets slightly softened their stance on early Fed tightening and the [U.S.] dollar ended slightly softer. Today’s U.S. public holiday suggests trading will be quiet today, although the Fed story will very much re-emerge on Wednesday evening when investors pore through the minutes of the pivotal June 16th FOMC (Federal Open Markets Committee) meeting.”

More company news

Brookfield Business Partners LP and its institutional partners said on Monday they would acquire U.S. car parts maker DexKo Global Inc from private equity firm KPS Capital Partners LP for $3.4-billion. Based in Novi, Michigan, DexKo produces engineered trailer running gear and chassis assemblies and has more than 6,000 employees. KPS Capital Partners acquired DexKo Global from Sterling Group LP in 2017.

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Didi Global Inc says it had no knowledge before its $4.4-billion New York listing last week that China’s cyberspace administration would start to investigate the company and order its app be taken down over its handling of customer data, according to a statement. “Prior to the IPO, Didi had no knowledge of the CAC’s decisions, announced on July 2 and July 4, 2021, with respect to the cybersecurity review and suspension of new user registrations in China, and the removal of the Didi Chuxing app from the app stores in China, respectively,” the company told Reuters on Monday.

The $8.7-billion bid battle for Britain’s Morrisons intensified on Monday when a third private equity group entered the fray, sending the supermarket group’s share price racing ahead of the value of an offer it recommended on Saturday. New York-headquartered Apollo Global Management, which last year missed out on buying Morrisons rival Asda, said it was in the preliminary stages of evaluating a possible offer but had not approached its board.

Saputo Inc. says it has signed a deal to buy British cheesemaker Wensleydale Dairy Products Ltd. for $39-million. Wensleydale operates two facilities in North Yorkshire and employs about 210 people. The company makes a variety of specialty and regional cheeses.

Economic news

(10:30 a.m. ET) Bank of Canada Business Outlook Survey and Survey of Consumer Expectations for Q2.

With Reuters and The Canadian Press

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