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Equities

Canada’s main stock index opened at a record high Tuesday as investors look ahead to the midweek Bank of Canada policy announcement. On Wall Street, key indexes were largely treading water in early going with economic concerns offsetting rising expectations that the Federal Reserve will delay tapering asset purchases.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 55.94 points, or 0.27 per cent, at 20,877.37.

In the U.S., the Dow Jones Industrial Average rose 4.15 points, or 0.01 per cent, at the open to 35,373.24.

The S&P 500 opened lower by 0.05 points at 4,535.38, while the Nasdaq Composite gained 12.47 points, or 0.08 per cent, to 15,375.98 at the opening bell.

“Friday’s U.S. jobs data was a big miss, with only 235,000 new nonfarm jobs added in the month of August versus more than 700,000 penciled in by analysts,” Ipek Ozkardeskaya, senior analyst with Swissquote, said.

“But bad news was mostly interpreted as good by the global equity markets, as the soft data revived the expectations of a delay in Federal Reserve (Fed) QE tapering.”

In this country, the Bank of Canada makes its next policy decision on Wednesday morning. Analysts aren’t expecting any move amid the current federal election campaign, although the central bank will likely have to acknowledge recent weaker-than-expected economic data.

“While last week’s soft Q2 GDP and weak July nowcast has some expecting an adjustment to forward guidance, it would be very unusual for the BoC to do that in a non-MPR meeting,” Elsa Lignos, global head of FX strategy with RBC said. “By October, we’ll have full July GDP (including more data on services) plus the August nowcast. So while we expect the statement and [Bank of Canada Governor Tiff] Macklem’s progress report to acknowledge the weakness, we think the overall tone will come across less dovish than expected.”

On Friday, Canadian investors will get a reading on August employment. Economists are expecting the numbers to show a continued recovery with the addition of about 67,000 new jobs, adding to gains seen in June and July.

Overseas, the pan-European STOXX 600 was off 0.25 per cent by midday.

Britain’s FTSE 100 slid 0.19 per cent. Germany’s DAX and France’s CAC 40 fell 0.14 per cent and 0.02 per cent, respectively.

In Asia, Japan’s Nikkei rose 0.86 per cent. Hong Kong’s Hang Seng added 0.73 per cent.

Commodities

Crude prices were down after Saudi Arabia cut crude contract prices for Asia, sparking concerns over slower demand.

The day range on Brent is US$72.11 to US$72.81. The range on West Texas Intermediate is US$68.69 to US$69.42.

Reuters reports that state oil group Saudi Aramco notified customers on Sunday that it will cut October official selling prices (OSPs) for all crude grades sold to Asia by at least $1 a barrel.

However, prices were also underpinned by strong trade data out of China, which showed exports grew at a faster pace in August on solid global demand.

Shipments from the world’s biggest exporter in August rose 25.6 per cent year-on-year, building on July’s gain of 19.3 per cent. Analysts had been looking for an increase of about 17 per cent in August.

“The impressive China trade data has lifted fears over the China slowdown,” OANDA senior analyst Jeffrey Halley said.

Gold prices, meanwhile, slid, hit by a firmer U.S. dollar and solid sentiment on global equity markets.

Spot gold fell 0.3 per cent to US$1,817.51 per ounce, while U.S. gold futures were down 0.8 per cent at US$1,819.20.

“Gold investors must now hope that U.S. traders return to the office [on Tuesday] and start selling U.S. dollars meaningfully to keep hopes of higher prices alive,” Mr. Halley said.

Currencies

The Canadian dollar was slightly weaker as its U.S. counterpart held steady against world currencies but still remained near a one-month low.

The day range on the loonie is 79.52 US cents to 79.89 US cents.

There were no major Canadian economic releases on Tuesday’s calendar. Investors are looking ahead to Wednesday’s Bank of Canada policy announcement and Friday’s August jobs report.

“The CAD is under-performing on the session, reflecting weak risk appetite and lower crude oil prices,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Spot is holding within recent trading ranges, however, and we expect light trading—and limited CAD weakness—to prevail after the long weekend and ahead of tomorrow’s BoC policy decision.”

On world markets, the U.S. dollar index, which weighs the greenback against a group of global currencies, steadied at 92.23 and within striking distance of an early August low of 91.941 hit on Friday.

The euro traded at US$1.1884, just below Friday’s one-month peak of US$1.1909 but still well-supported ahead of the European Central Bank’s policy meeting on Thursday, according to figures from Reuters.

More company news

Enbridge Inc said on Tuesday it will buy logistics firm Moda Midstream Operating, LLC from private equity firm EnCap Flatrock Midstream for $3-billion in cash.

Boeing faces a standoff with one of its biggest customers after Ireland’s Ryanair said it had ended talks over a purchase of 737 Max 10 jets worth tens of billions of dollars due to differences over price. The rare decision to go public over big-ticket airplane negotiations comes after months of wrangling that had already delayed a deal for the largest version of the 737 Max when Ryanair reordered a smaller model in December.

Deutsche Telekom has struck a $7-billion share-swap deal with SoftBank Group to increase its stake in U.S. unit T-Mobile and sold its Dutch unit in a major shake-up that strengthens the German group’s transatlantic focus. As a result of the two deals announced on Tuesday, Deutsche Telekom will raise its stake in T-Mobile US by 5.3% to 48.4%, bringing CEO Tim Hoettges closer to his goal of securing direct control over the $170 billion U.S. telecoms operator. SoftBank will in return receive cash and a 4.5% stake in Deutsche Telekom, establishing a direct shareholding relationship after the Japanese group sold its U.S. Sprint unit to T-Mobile in a deal that closed in early 2020.

Economic news

Euro area second quarter GDP, Germany July industrial production and September ZEW economic survey.

With Reuters and The Canadian Press