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Equities

Canada’s main stock index started higher Monday with rising crude prices fueling energy shares, although weakness in the tech sector capped the advance. On Wall Street, the tech-heavy Nasdaq lost ground in morning trading as technology issues came under pressure.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 41.54 points, or 0.2 per cent, at 20,444.2.

In the U.S. the Dow Jones Industrial Average fell 58.73 points, or 0.17 per cent, at the open to 34,739.27.

The S&P 500 opened lower by 13.36 points, or 0.30 per cent, at 4,442.12, while the Nasdaq Composite dropped 93.52 points, or 0.62 per cent, to 14,954.18 at the opening bell.

Markets continue to nervously watch the situation with China’s Evergrande as it grapples with a huge debt load. Shares of the company’s electric car unit fell on Monday after it warned it faced uncertainty without a cash injection and said it wouldn’t proceed with a share issue.

“Most bad news come from China these days,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.

“The Evergrande debt crisis, the Chinese energy crackdown on missed targets and the ban on cryptocurrencies have been shaking the markets, along with the Fed’s more hawkish policy stance last week, and not only on its QE taper front but also regarding the interest rates.”

Meanwhile, market focus shifts to U.S. fiscal policy this week with the House of Representatives due to vote on a US$1-trillion infrastructure bill and a Sept. 30 deadline looming on funding federal agencies. On Tuesday, Federal Reserve chair Jerome Powell is scheduled to testify before Congress on the response to the pandemic.

In this country, investors get a reading on July GDP on Friday along with an early forecast from Statistics Canada on August growth. In its June report, Statscan offered a surprisingly weak forecast for July, predicting a decline of 0.4 per cent.

Friday’s report markets the last GDP figures before the Bank of Canada’s Oct. 27 policy meeting and monetary policy report.

Daria Parkhomenko, RBC FX strategy associate, says the July report will provide a clearer picture on third-quarter growth for the BoC’s updated projections “with the potential for a delayed final taper step and/or pushed-out forward guidance at the meeting.”

On the corporate side, Canadian investors will get quarterly results from Aurora Cannabis after the close of trading. Last week, Edmonton-based Aurora said it was closing its Aurora Polaris facility, affecting about 8 per cent of its work force.

Overseas, the pan-European STOXX 600 was off 0.13 per cent by midday. Germany’s DAX rose 0.36 per cent after the center-left Social Democrats won the biggest share of the vote in Germany’s national election, beating outgoing Chancellor Angela Merkel’s center-right Union bloc in a closely fought race. France’s CAC 40 gained 0.28 per cent. Britain’s FTSE 100 was down 0.08 per cent.

In Asia, Japan’s Nikkei slid 0.03 per cent. Hong Kong’s Hang Seng edged up 0.07 per cent.

Commodities

Crude prices rose in early going amid supply concerns in some regions and rising demand.

The day range on Brent is US$77.35 to US$78.65. The range on West Texas Intermediate is US$74.16 to US$75.33. Both benchmarks were up more than 1 per cent in the premarket period. Brent crude posted its third week of gains on Friday, while WTI managed its fifth winning week.

“With OPEC+ struggling to meet its present production targets and U.S. shale production returning at a snail’s pace from last year, global energy woes are set to continue as the northern hemisphere winter approaches, leaving the case for higher oil constructive,” OANDA senior analyst Jeffrey Halley said in a note.

Reuters reports that Goldman Sachs raised its forecast for Brent crude by year’s end to US$90 a barrel, citing a faster recovery in demand from the outbreak of the Delta variant and tighter supply.

“While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts,” Goldman said.

In other commodities, gold prices firmed, helped by a subdued U.S. dollar.

Spot gold was up 0.4 per cent at US$1,757.00 per ounce, while U.S. gold futures were up 0.4 per cent at US$1,758.50.

Currencies

The Canadian dollar was trading around 79 US cents, helped by improved global risk sentiment, while the U.S. dollar held near the midpoint of is weekly range against a group of currencies.

The day range on the loonie is 78.98 US cents to 79.30 US cents.

“The risk mood is somewhat constructive judging by the performance of equity markets but we think the risk backdrop remains fragile on the possibility of an economic slowdown due to energy shortages, so the bid for the USD in risk-off trading could see the CAD trade on the defensive in the coming days or weeks,” Shaun Osborne, chief FX strategist with Scotiabank, said.

There were no major Canadian economic releases on Monday’s calendar. The week’s key report comes Friday with Statscan’s July GDP figures.

On world markets, the U.S. dollar index, which measures the U.S. currency against six major rivals, traded in the middle of its range of the past week, edging slightly higher at 93.40.

The euro was little changed at US$1.17205 in the wake of the German election results.

The Australian dollar rose 0.37 per cent to US$0.72835, up from US$0.72205 a week ago, its lowest since Aug. 24, according to figures from Reuters.

The Norwegian crown gained about 0.4 per cent and touched 8.5493 per U.S. dollar for the first time since July 6.

More company news

CIBC says former innovation minister Navdeep Bains will joing the bank as vice-chair of global investment banking effective Oct. 4. “Our clients in the innovation and technology sectors are seeking to expand their opportunities in a rapidly changing environment, and Navdeep’s experience will enhance the perspective and advice we can offer,” Roman Dubczak, managing director and head, Global Investment banking, said in a statement.

Amazon.com Inc is to start offering insurance to small and medium-sized U.K. business customers, the technology giant’s first foray into business insurance in the country, broker Superscript said on Monday. Members of Amazon’s Business Prime program will be able to buy cover from Superscript such as contents insurance, cyber insurance and personal indemnity insurance, which a Superscript spokesperson said would be underwritten by “major U.K. insurers”. They will be offered a discount of 20 per cent to current rates as a way of enticing businesses over to them.

Instagram is pausing work on its version for children younger than 13, called “Instagram Kids,” the Facebook Inc-owned photo sharing app said on Monday.

Alphabet unit Google on Monday criticized EU antitrust regulators for ignoring rival Apple as it launched a bid to get Europe’s second-highest court to annul a record 4.34-billion euro ($5.1 billion) fine related to its Android operating system. Far from holding back rivals and harming users, Android has been a massive success story of competition at work, representatives of Google told a panel of five judges at the General Court in Luxembourg at the start of a five-day hearing.

Economic news

(8:30 a.m. ET) U.S. durable orders and core orders for August.

With Reuters and The Canadian Press

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