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Equities

Canada’s main stock index gained in early trading Tuesday with energy shares climbing alongside spiking crude prices, although the rise was offset to a degree by weakness in mining stocks. On Wall Street, technology stocks bounced higher after the previous session’s sharp rout.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 40.87 points, or 0.2 per cent, at 20,093.12.

In the U.S., the Nasdaq Composite gained 57.38 points, or 0.40 per cent, to 14,312.86 at the opening bell, while the S&P 500 opened higher by 9.41 points, or 0.22 per cent, at 4,309.87.

The Dow Jones Industrial Average rose 32.33 points, or 0.10 per cent, at the open to 34,035.25.

“I am expecting global stock markets to wildly chase their tails this week, lost on the noise and swings of market sentiment until, hopefully, the U.S. Non-Farm Payrolls restores some directional order on Friday,” OANDA senior analyst Jeffrey Halley said.

“The game of blink surrounding the mid-month [U.S.] debt ceiling legislation deadline is introducing a heightened uncertainty. Although if a cliff is driven off, the Fed will surely be there to open the spigots once again, never bad for stock markets.”

On Tuesday, markets got international trade figures for both Canada and the United States.

Statistics Canada said Canadian exports rose 0.8 per cent in August, while imports fell 1.4 per cent. As a result, this country’s trade surplus widened to $1.9-billion in August from $736-million in July. Economists had been forecasting declines in both imports and exports with the trade balance seen holding steady.

“The fact that the wider-than-expected surplus was largely the result of more weakness in goods imports than anticipated will likely blunt any impacts from the data on the Canadian dollar,” CIBC senior economist Royce Mendes said.

On the corporate side, the Canadian government has invoked a 1977 treaty with the United States to trigger formal government-to-government negotiations over the fate of Enbridge Inc.’s Line 5, which faces a threat of shutdown from the State of Michigan. The move comes after court-ordered mediation between Enbridge and Michigan broke down last month.

On Wall Street, shares of social media giant Facebook Inc. were up more than 1 per cent in morning trading after a massive outage knocked the company’s Facebook, Instagram and WhatsApp services offline for part of the day Monday. Services gradually returned later in the day.

Overseas, the pan-European STOXX 600 was up 0.62 per cent by afternoon. Britain’s FTSE 100 rose 0.55 per cent. Germany’s DAX added 0.45 per cent while France’s CAC 40 gained 0.55 per cent.

In Asia, Japan’s Nikkei closed down 2.19 per cent following Wall Street’s lead. Early in the session, the index fell more than 3 per cent to briefly enter correction territory before recouping some lost ground. Hong Kong’s Hang Seng rose 0.28 per cent.

Commodities

Crude prices continued to hold near multiyear highs after OPEC and its allies opted against increasing output at its latest policy meeting.

The day range on Brent is US$81.19 US$81.94. The range on West Texas Intermediate is US$77.47 to US$78.10. Both benchmarks rose more than 2 per cent on Monday with Brent hitting its best level in three years. WTI touched its highest level since 2014 on Monday.

Crude prices are up more than 50 per cent so far this year.

The latest gains came after the OPEC+ group agreed to stick to its current output plan, which will see increases of 400,000 barrels a day every month through to next spring. The group had faced pressure to increase production levels amid rising demand and spiking prices.

“Crude prices seem poised to head higher, but thin conditions in China and an overall risk-off environment may keep the rally on hold temporarily,” OANDA senior analyst Ed Moya said.

Later in the session traders will get the first of two weekly U.S. inventory reports with fresh figures from the American Petroleum Institute. More official U.S. government numbers follow on Wednesday morning.

Five analysts surveyed by Reuters estimated on average that crude inventories declined by about 300,000 barrels in the week to Oct. 1.

In other commodities, gold prices were down as tentative risk sentiment bolstered the U.S. dollar.

Spot gold fell 0.6 per cent to US$1,758.27 per ounce, after hitting US$1,770.41 on Monday, its highest since Sept. 23. U.S. gold futures shed 0.6 per cent to US$1,757.30.

Currencies

The Canadian dollar was modestly lower as its U.S. counterpart held near its best level in a year against a basket of world currencies.

The day range on the loonie is 79.17 US cents to 79.48 US cents.

“The currency remains firmly driven by the commodities backdrop which should remain fairly supportive in the weeks ahead (all else equal) with limited signs that the global energy crunch will be resolved soon,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“However, we’ve seen in recent days a clearer risk-off reaction in equity markets to the economic risks posed by energy shortages and we may soon reach a point where the Canadian dollar begins to trade more closely with the downbeat mood in stocks than with the continued climb in commodity prices.”

Canadian investors will get international trade data before the North American open.

On global markets, the U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.13% to 93.957, moving back toward Thursday’s peak at 94.504, its highest since late September 2020, according to figures from Reuters.

The U.S. dollar rose 0.25 per cent to 111.19 yen, while the euro slid 0.21 per cent to US$1.15965.

Britain’s pound traded flat at US$1.3612.

The Australian dollar fell 0.34 per cent to US$0.7263, retreating further from Monday’s four-day high of US$0.73045. The New Zealand dollar declined 0.34 per cent to US$0.6939, also backing away from a four-day peak at US$0.6981.

In bonds, the yield on the U.S. 10-year note was up slightly at 1.488 per cent in the early premarket period.

More company news

PepsiCo Inc raised its full-year revenue forecast on Tuesday, as the easing of pandemic restrictions boosts demand for sodas at theaters and restaurants. The company said it was expecting fiscal 2021 organic revenue to rise about 8%, compared with its prior forecast of a 6% increase.

Facebook whistleblower Frances Haugen will appear before the U.S. Congress Tuesday, where she is set to sharply criticize her former employer as “one of the most urgent threats” facing the country, and to demand transparency about its operations in order to better regulate it. Ms. Haugen, a former product manager on Facebook’s civic misinformation team, says the social media giant keeps its algorithms and operations a secret. “The core of the issue is that no one can understand Facebook’s destructive choices better than Facebook, because only Facebook gets to look under the hood,” she said in written testimony prepared for the hearing.

Johnson & Johnson said on Tuesday it had submitted data to the U.S. Food and Drug Administration for emergency use authorization of a booster shot of its COVID-19 vaccine in people aged 18 years and older. The filing comes after the FDA last week scheduled an Oct. 15 meeting of its expert advisory committee to discuss whether to authorize a second shot of J&J’s single-dose vaccine.

Economic news

(8:30 a.m. ET) Canada’s merchandise trade balance for August.

(8:30 a.m. ET) U.S. goods and services trade balance for August.

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

With Reuters and The Canadian Press

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