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Equities
Canada’s main stock index started lower Monday, hit by a dip in energy shares. On Wall Street, the S&P and Nasdaq both touched record highs as worries over the timing of tapering of bond purchases by the Federal Reserved eased.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 24 points, or 0.12 per cent, at 20,620.64.
The energy sector slid 0.3 per cent.
In the U.S., the Dow Jones Industrial Average rose 16 points, or 0.05 per cent, at the open to 35,471.8. The S&P 500 rose 4.4 points, or 0.10 per cent, at the open to 4,513.76, while the Nasdaq Composite rose 36.4 points, or 0.24 per cent, to 15,165.94 at the opening bell.
Market sentiment got a lift after Federal Reserve chair Jerome Powell indicated Friday that, while bond purchases will likely be tapered this year, interest rates weren’t heading higher in the immediate future.
“Powell made clear some important points that gave investors the comfort they craved,” OANDA senior analyst Craig Erlam said. “Most notably that tapering and interest rates are not linked, which is very important if the Fed wants to avoid a mini taper tantrum when they do pull the trigger in the coming months.”
Market attention will now turn to Friday’s U.S. nonfarm payroll figures.
Derek Holt, head of capital markets economics with Scotiabank, says he’s expecting to see a gain of about 650,000 positions in August with the unemployment rate dipping to 5.2 per cent.
“The August report might offer the first test of the US economy’s resilience in the face of rising COVID-19 cases,” he said. “We already know that several activity readings have softened of late and it may be reasonable to expect the same for job growth.”
Canada’s August job figures will be released next week.
In this country, investors get a reading on broader economic growth with the release of June and second-quarter GDP figures from Statistics Canada on Tuesday. Mr. Holt says he expects to see monthly growth of 0.7 per cent in June, in line with Statscan’s earlier guidance, and 2.5-per-cent annual growth in the second quarter.
“The bigger issue is where July GDP lands since we have only a handful of readings to go by,” he said. “It might be a pretty strong start to Q3 given reopening effects and limited data such as hours worked that were up by 1.3 per cent month-over-month, although housing starts slipped a bit and existing home resales fell by 3.5 per cent m/m which drives lower ancillary service activity.”
On the corporate side, markets will get results form Zoom Video after the close of trading.
Overseas, the pan-European STOXX 600 was flat by afternoon. Germany’s DAX gained 0.08 per cent and France’s CAC 40 rose 0.20 per cent. Markets in Britain were closed.
In Asia, Japan’s Nikkei finished up 0.54 per cent. Hong Kong’s Hang Seng rose 0.52 per cent.
Commodities
Crude prices steadied as traders look ahead to the midweek meeting OPEC and its allies to discuss output.
The day range on Brent is US$71.02 to US$72.69. The range on West Texas Intermediate is US$67.67 to US$69.64.
OPEC+ meets on Wednesday to discuss a scheduled 400,000 bpd increase in its oil output as the group looks to continue easing record production cuts make last year.
Reuters, citing unnamed OPEC+ sources, reported Monday that the group is likely to keep output policy unchanged and will continue with a planned modest production increase.
Prices were pressured by a growing expectation that production shutdowns ahead of hurricane Ida in the Gulf would likely be temporary. Ida, which knocked out power to New Orleans, had weakened into a tropical storm over southwestern Mississippi, the U.S. National Hurricane Center said on Monday.
“Every hurricane is different and brings uncertainty for the region that contributes heavily to U.S. output,” OANDA’s Craig Erlam said. “Should it pass without major issues then we could see oil paring some of these gains on Monday.”
Gold prices, meanwhile, slid as risk sentiment improved.
Spot gold was down 0.2 per cent at US$1,813.76 per ounce. Earlier in the session, bullion rose to its highest since Aug. 4 at US$1,822.92.
U.S. gold futures edged 0.2 per cent lower to US$1,816.50.
Currencies
The Canadian dollar was higher, trading above 79 US cents, as its U.S. counterpart held near two week lows against a group of global currencies following dovish comments from Fed chair Jerome Powell.
The day range on the loonie is 79.14 US cents to 79.35 US cents.
There were no major Canadian economic releases on Monday’s calendar. Investors will get June and second-quarter GDP figures on Tuesday and international trade numbers later in the week.
The U.S. dollar index, which weighs the currency’s value against major rivals, hit a fresh two-week low at 92.595 before steadying around 92.66, still a touch lower on the day, according to figures from Reuters
The euro was trading at US$1.1804, steady on the day but close to a three-week high seen in Asian trade at US$1.1810.
Japan’s yen rose to its strongest since last week at 109.70 per U.S. dollar.
More company news
Dozens of United Airlines Holdings Inc jets like the one with engines that lost an engine cover over Colorado in February may not fly until early next year, the Wall Street Journal reported, citing people briefed on the matter. The United Airlines 777-200 flight that suffered an engine failure was heading to Honolulu. The plane landed safely at Denver International Airport soon after takeoff.
Economic news
(10 am ET) U.S. pending home sales.
With Reuters and The Canadian Press
Terry Weber