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Equities

Canada’s main stock index edged higher at the opening bell Tuesday with mining shares gaining alongside rising gold prices. On Wall Street, the S&P 500 started at at a record high as investors await the midweek release of the minutes from the latest Federal Reserve meeting.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 22.21 points, or 0.11 per cent, at 20,303.67.

In the U.S., the Dow Jones Industrial Average rose 3.8 points, or 0.01 per cent, at the open to 34,790.16. The S&P 500 rose 4.1 points, or 0.09 per cent, at the open to a record high of 4,356.46 , while the Nasdaq Composite rose 22.2 points, or 0.15 per cent, to 14661.548 at the opening bell.

Investors are now awaiting the release on Wednesday afternoon of the Fed’s minutes from its last meeting, looking for clues about the central bank’s plans to unwind its quantitative easing program.

In this country, a Bank of Canada’s quarterly survey showed that Canadian business and consumer confidence continued to improve through the latest round of COVID-19 pandemic restrictions, setting the stage for a hiring and spending spree over the summer that could add fuel to the economic rebound.

The Globe’s Mark Rendell reports that a Bank of Canada quarterly survey conducted in May found most businesses across all regions and sectors plan to hire additional workers to meet an expected surge in demand for products and services. A separate survey of consumers found fears of losing a job fell sharply in the second quarter, while expectations of finding one recovered to close to prepandemic levels.

The Bank of Canada makes its next policy announcement on July 14.

Energy shares will also be in the spotlight after the collapse of talks by OPEC+ members over production hikes drove up crude prices.

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The group had been scheduled to resume talks on Monday but scrapped the meeting after the United Arab Emirates rejected a planned eight-month extension of output curbs. The move cast doubt over the group’s next move with some analysts suggesting there would be no August output increase while others suggested a rescheduled meeting to attempt to address the standoff was likely.

West Texas Intermediate was trading above US$76 a barrel early Tuesday morning, although the momentum waned as the session progressed.

“The immediate consequence of the breakdown in talks is that the oil supply increase the market was expecting won’t be happening,” OANDA market analyst Sophie Griffiths said.

“The additional 500,000 to one million barrels a day increase in production expected won’t be materializing for now. Given the oil market is so tight, prices are unsurprisingly on the rise.”

Overseas, the pan-European STOXX 600 edged up 0.06 per cent by midday. Britain’s FTSE 100 slid 0.21 per cent. Germany’s DAX and France’s CAC 40 fell 0.33 per cent and 0.27 per cent, respectively. A surprise drop in German industrial orders in May weighed on European market sentiment.

In Asia, Japan’s Nikkei finished up 0.16 per cent. Hong Kong’s Hang Seng slid 0.25 per cent.

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Commodities

Crude prices hit multiyear highs in early going as traders await the next move by OPEC and its allies after the failure of the group’s latest production talks.

The day range on Brent is US$77.02 to US$77.84. The range on West Texas Intermediate is US$74.75 to US$76.98. Brent managed its best level since 2018 while WTI managed its highest since 2014. Both benchmarks are up about 50 per cent this year.

Both benchmarks gave back some of the latest gains as the North American open neared.

On Monday, talks by the OPEC+ group fell apart after the United Arab Emirates said it would go along with output increases but rejected a separate proposal to extend curbs to end-2022.

“With large inventory drawdowns expected whether output remains unchanged or increases by 400,000 barrels per day per month (from August), oil prices are likely to remain well supported in the near term,” analysts at bank ING said.

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Analysts are divided on the likely next step with some suggesting that there will be no production increase in August while others say a rescheduled meeting is probable.

In other commodities, gold prices breached US$1,800 an ounce in early going and hit their best level in three weeks.

Spot gold climbed 0.7 per cent to US$1,804.50 per ounce, after hitting its highest level since June 17. U.S. gold futures jumped 1.3 per cent to US$1,806.30 per ounce.

“It’s mainly a weakening U.S. dollar that is boosting gold prices. Gold was sold down heavily after the June FOMC meeting and now that expectations have been priced in, buyers are back to the market,” Margaret Yang, a strategist at DailyFX, said.

Currencies

The Canadian dollar was trading around the 81-US-cent mark early Tuesday as its U.S. counterpart pulled back while investors await the midweek release of the latest Fed minutes.

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The day range on the loonie is 80.91 US cents to 81.28 US cents.

“The CAD is a middle of the pack performer through the overnight session with no discernible impact from stronger commodity prices,” Shaun Osborne chief FX strategist with Scotiabank, said.

“The CAD has barely benefitted from higher crude oil prices as markets probably foresee only near-term price pressures that will not fundamentally alter the currency’s dynamics.”

There were no major Canadian economic releases due Tuesday.

On world markets the U.S. dollar index was down 0.05 per cent at 92.08.

The New Zealand dollar moved higher in the wake of a strong survey of business conditions which raised speculation that a rate hike could be coming later in the year. The New Zealand dollar was up about 0.77 per cent at US$0.7080 after having reach its highest since mid-June, according to figures from Reuters.

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The Aussie rose as much as 1.2 per cent at one point to US$0.7599, after the Reserve Bank of Australia trimmed bond purchases and tweaked its rates outlook.

The euro was flat at US$1.1865.

Britain’s pound rose 0.3 per cent to a one-week high of US$1.3888 after British Prime Minister Boris Johnson announced COVID-19 restrictions would be dropped later this month.

More company news

GFL Environmental Inc. says it has formed the Resource Recovery Alliance to help product and packaging companies meet their responsibilities under Ontario’s blue box recycling program. The company says the alliance will become a producer responsibility organization under the province’s new legislation and will be integrated within GFL’s service offerings. GFL also says it has signed a deal to acquire the Canadian Stewardship Services Alliance, which provides management and administrative services to businesses to meet their recycling obligations.

Weibo Corp chairman Charles Chao and a state investor are in talks to take the Chinese company private in a deal which would value the Twitter-like firm at at least $20-billion and facilitate major shareholder Alibaba Group Holding Ltd’s exit, two sources told Reuters.Chao, whose holding company New Wave is the largest shareholder of Weibo, is teaming up with a Shanghai-based state firm to form a consortium for the deal, said the sources and a separate person, who have direct knowledge of the matter.

Nextdoor, a social network that connects neighbors, said on Tuesday it would merge with a blank-check company backed by Khosla Ventures in a deal valued at $4.3-billion. The deal with special purpose acquisition company (SPAC) Khosla Ventures Acquisition Co II includes a private investment of $270 million from Baron Capital Group, Dragoneer, accounts advised by T. Rowe Price Associates and Cathie Wood’s ARK Invest.

Economic news

(9:45 a.m. ET) U.S. Markit services and composite PMI for June.

(10 a.m. ET) U.S. ISM services PMI for June.

With Reuters and The Canadian Press

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