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Equities

Indexes on both sides of the border rebounded in early trading Monday after the previous week’s losses with higher crude prices propelling gains on Canada’s main exchange.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 108.63 points, or 0.53 per cent, at 20,741.69.

In the U.S., the Dow Jones Industrial Average rose 57.78 points, or 0.17 per cent, at the open to 34,665.50.

The S&P 500 opened higher by 16.23 points, or 0.36 per cent, at 4,474.81. The Nasdaq Composite gained 95.93 points, or 0.63 per cent, to 15,211.43 at the opening bell.

“For U.S. investors the main concern appears to be a slowing economy coming at a time when inflation appears to be showing little sign of slowing down, and after U.S. producer price index for August saw yet another record high in data released at the end of last week,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“With the US Federal Reserve due to meet next week, and the narrative clearly moving towards a tapering of asset purchases sooner rather than later, there appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe, with the resultant rise in yields and rebound in the U.S. dollar.”

In this country, rail stocks will be front and centre after Canadian Pacific Railway Ltd. said it is close to sealing a US$27.3-billion takeover of Kansas City Southern Railway Co. after the U.S. company dropped its support of a deal with Canadian National.

The Globe’s Jeffrey Jones reports that KCS said on Sunday its board deemed CP’s latest cash-and-stock offer, which values the Missouri-based railroad at US$300 a share, to be superior to CN’s under the terms of their merger agreement. As a result, KCS notified CN that it intends to walk away from their pact.

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Early Monday, CN Rail investor TCI Fund Management unveiled a slate of four proposed directors, saying it wants change at the company.

On Wall Street, investors will have an eye on Apple Inc. this week with the tech giant set to unveil its new iPhones at an event on Tuesday. Reports have also suggested Apple could announce new versions of the company’s AirPods as well as an update to its smartwatch.

On Friday, a U.S. federal court ordered Apple to dismantle a lucrative part of the competitive barricade guarding its closely run app store, but rejected Epic Games’ allegations that Apple ran a monopoly. Epic Games, which brought the suit accusing Apple of unfair competitive practices, said over the weekend that it would appeal the ruling.

In earnings, U.S. investors will get first-quarter results from Oracle Corp. after the close of trading.

Overseas, the pan-European STOXX 600 was up 0.69 per cent in morning trading with energy stocks among the winners. Britain’s FTSE 100 gained 0.48 per cent. Germany’s Dax added 0.65 per cent and France’s CAC 40 gained 0.35 per cent.

In Asia, Japan’s Nikkei rose 0.22 per cent while Hong Kong’s Hang Seng lost 1.5 per cent with Chinese electric vehicle stocks falling after that country’s industry minister said consolidation is necessary in the sector.

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Commodities

Crude prices gained in early going, buoyed by continued U.S. supply concerns in the wake of hurricane Ida.

The day range on Brent is US$72.69 to US$73.68. The range on West Texas Intermediate is US$69.51 to US$70.49.

“When one looks back at oil’s price volatility over last week, what stands out is the short-term gnomes rush from one side of the range to the other on a daily basis,” OANDA senior analyst Jeffrey Halley said in an early report. “So, despite a lot of intra-day noise, prices really went nowhere last week.”

Prices were underpinned by continued concerns about the restart in production in the Gulf of Mexico following storms in the region.

Reuters reports that about three-quarters of the offshore oil production in the U.S. Gulf of Mexico, or about 1.4 million barrels per day, has remained halted since late August.

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Meanwhile, traders are also awaiting the expected release this week of updated demand outlooks from both OPEC and the International Energy Agency. OPEC is expected to lower its forecast as COVID-19 infections continue to rise in some regions.

In other commodities, gold prices were steady as the U.S. dollar firmed.

Spot gold was flat at US$1,787.96 per ounce, while U.S. gold futures fell 0.2 per cent to US$1,789.00.

“There’s the belief that if inflation does run away, the Fed will have to stamp on it and that means faster tapering and interest rate hikes sooner than expected. That won’t be good for gold,” IG Market analyst Kyle Rodda said.

Currencies

The Canadian dollar was modestly higher while its U.S. counterpart advanced against world currencies on growing expectations that the Federal Reserve will taper its bond-buying program in the near future.

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The day range on the loonie is 78.76 US cents to 78.99 US cents.

“Uneasy risk sentiment predominates, and this has been buoying the U.S. dollar,” Alvin Tan, Asia FX strategist with RBC, said in a note.

There were no major Canadian releases on Monday’s calendar. The next big report comes on Wednesday with the release of inflation figures for August.

Mr. Tan says RBC is forecasting a 0.1 per cent month-over-month increase in headline inflation, taking the annual rate to 4 per cent.

On world markets, the U.S. dollar index rose 0.3 per cent to 92.880 in early European trading hours, its highest level since August 27. It was last up 0.2 per cent, according to figures from Reuters. Fresh U.S. inflation figures are due Tuesday ahead of next week’s policy announcement by the Fed.

The euro fell 0.3 per cent to US$1.17750, its lowest level in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases.

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The yen also fell back around 0.2 per cent and was last at 110.090.

More company news

The Globe’s Susan Krashinsky Robertson reports a lawsuit over the scuppered deal to buy Canada’s largest movie theatre chain will test the obligations companies must meet in merger and acquisition agreements that are derailed by disasters – such as a global pandemic. On Monday, U.K.-based Cineworld Group PLC and Toronto’s Cineplex Inc. will square off before the Ontario Superior Court of Justice, in a legal fight over who is to blame for the dissolution of the $2.18-billion deal. Both companies are accusing the other of acting in “bad faith” and of breaching the terms of the deal.

Beijing wants to break up Alipay, the hugely popular payments app owned by Jack Ma’s Ant Group, and create a separate app for the company’s highly profitable loans business, the Financial Times reported on Sunday. The plan will also see Ant turn over the user data that underpins its lending decisions to a new credit scoring joint-venture, which will be partly state-owned, the newspaper reported, citing two people familiar with the process.

Uber will appeal a Dutch court ruling that drivers are employees of the company and not independent contractors that make use of its platform, the company said on Monday. “We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent,” the company’s manager for Northern Europe, Maurits Schoenfeld, said in a statement. Earlier, the Amsterdam District Court sided with labour union FNV and found that drivers for the company are employees and entitled to the rights that implies.

Credit reporting agency TransUnion said on Monday it would buy information services company Neustar Inc for $3.1-billion in cash from a private investment group led by Golden Gate Capital.

Amazon Canada will hire 15,000 new warehouse and distribution workers in communities across the country this fall to support its ongoing Canadian expansion plans, the e-commerce giant said Monday At the same time, Amazon also announced it will increase the starting wage for its front-line, hourly employees in Canada 27 per cent to $21.65 an hour from $17 an hour.

Crescent Point Energy Corp. is raising its quarterly dividend after what it says has been significant progress in improving its balance sheet strength and sustainability. The company says it will now pay a quarterly dividend of three cents per share starting with its payment for the fourth quarter.

Economic news

(2 p.m. ET) U.S. budget balance for August.

With Reuters and The Canadian Press

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