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Equities

Canada’s main stock index gained in early trading Tuesday on strength in financial and energy stocks. On Wall Street, tech shares remained under pressure at the open while bank stocks continued to gain on news that Federal Reserve chair Jerome Powell has been nominated for a second term.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 24.67 points, or 0.12 per cent, at 21,445.44.

In the U.S., the Dow Jones Industrial Average rose 0.67 points at the open to 35,619.92. The S&P 500 opened lower by 4.46 points, or 0.10 per cent, at 4,678.48, while the Nasdaq Composite dropped 45.25 points, or 0.29 per cent, to 15,809.50 at the opening bell.

“The reappointment of Powell signals a steady-as-she goes approach, sending U.S. yields sharply higher, along with the U.S. dollar, while gold prices plunged,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“It also means that the direction of travel when it comes to upcoming Fed policy over the next few months is unlikely to see a significant shift away from what is currently expected when it comes to looking at the data, an acceleration of the taper program, as well as bringing forward expectations over the timing of a possible rate rise, a policy course that may well not have been the case with a [[Fed Governor Lael] Brainard nomination,” he said.

On Monday, U.S. President Joe Biden said he would nominate Mr. Powell for a second term as the head of the powerful U.S. central bank while Ms. Brainard would be nominated as vice-chair. On Tuesday afternoon, Mr. Biden is set to speak about the U.S. economy.

In this country, investors get earnings from George Weston ahead of the start of trading. Alimentation Couche-Tard Inc. reports after the close of trading.

George Weston reported revenue of $16.19-billion in the latest quarter, up from $15.81-billion in the same period last year. On an adjusted basis, George Weston says it earned $2.39 per diluted share, up from $2.32 per diluted share a year ago.

South of the border, Best Buy delivers its latest quarterly earnings before markets open. Nordstrom and Gap report after the close.

Canadian investors will also get remarks from Bank of Canada Deputy Governor Paul Beaudry on Tuesday afternoon. Mr. Beaudry will be speaking by videoconference to the Ontario Securities Commission on the topic of assessment of risks to the stability of the Canadian financial system. The speech is set for 1 p.m. ET.

Overseas, the pan-European STOXX 600 was down 0.77 per cent by midday. Britain’s FTSE 100 edged up 0.8 per cent. Germany’s DAX slid 0.67 per cent and France’s CAC 40 was off 0.26 per cent.

In Asia, Hong Kong’s Hang Seng dropped 1.2 per cent. Markets in Japan were closed.

Commodities

Crude prices reversed early losses in the wake of news that the U.S. is set to release strategic reserves in a bid to combat rising energy costs.

The day range on Brent is US$78.56 to US$79.63. The day range on West Texas Intermediate is US$75.41 to US$76.59.

Reuters reported that the United States is expected to announce a loan of crude oil from its emergency stockpile on Tuesday as part of a plan it hashed out with major Asian energy consumers to lower energy prices. The report cited an unnamed source with the Biden administration.

“WTI crude will remain a volatile trade, but much of the downward move has already happened,” OANDA senior analyst Ed Moya said in a note.

The White House confirmed the move early Tuesday morning, saying it would make 50 million barrels of oil available from the U.S. Strategic Petroleum Reserves. The release was being in made concert with other releases from strategic reserves by China, India, South Korea, Japan and Great Britain, the White House said.

Mr. Biden has called on OPEC+ members to raise production to slow rising energy costs. But the group has resisted the suggestion. On Monday, crude prices advanced amid reports that the group could adjust its planned increases if major consuming nations release reserves.

“OPEC+ is pushing back on this coordinated effort which is being led by the US to thwart surging energy costs as the global economic recovery stumbles to runaway inflation fears,” Mr. Moya said.

In other commodities, gold prices held near two-week lows as the U.S. dollar advanced.

Spot gold was little changed at US$1,805.95 per ounce early Tuesday morning, after sliding to its lowest since Nov. 5 on Monday. U.S. gold futures was steady at US$1,805.50.

Currencies

The Canadian dollar continued to decline as its U.S. counterpart managed its best level in 16 months against world currencies after the reappointment of Fed chair Jerome Powell reinforced expectations that U.S. rates could start to rise next year.

The day range on the loonie is 78.48 US cents to 78.87 US cents.

“The CAD is struggling against the tide of a generally stronger USD and weak risk appetite in particular this morning,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note. “Lower crude oil prices are a clear headwind for the CAD.”

Statscan will release an early estimate on Canadian factory sales for October. Markets will be watching for further signs of supply chain issue after a drop in sales in September.

On world markets, the U.S. dollar index was at 96.426, slightly below the 16-month high of 96.603 it reached during Asian trading hours, according to figures from Reuters.

Against Japan’s yen, the U.S. dollar rose to its highest in four and a half years. The dollar-yen move had eased as the day progressed, with the pair down 0.2 per cent at 114.590, compared to the high of 115.160 seen earlier in the session.

The euro was up 0.2 per cent against the U.S. dollar at US$1.1258, after hitting a 16-month low versus the dollar.

In bonds, the yield on the U.S. 10-year note was up at 1.634 per cent in the predawn period.

More company news

Laurentian Bank of Canada says it expects to take a total of $163-million in one-time charges after tax as a result of a review of its business. The Montreal-based bank says it will unveil its new strategic plan during an investor day on Dec. 10 after it reports its fourth-quarter results. The one-time charges include a goodwill impairment charge as well as charges related to the consolidation of its two digital platforms into one.

Zoom Video Communications beat estimates for third-quarter revenue benefiting from the launch of its new offerings as the video-conferencing platform tries to retain users who have started returning to offices and schools. The company’s revenue rose 35% to US$1.05-billion in the third quarter ended Oct. 31, compared with analysts’ estimates of US$1.02-billion, according to Refinitiv data. The results were released after Monday’s close.

Best Buy Co Inc forecast fourth-quarter comparable sales below estimates on Tuesday, as the electronics retailer braces for a hit from likely product shortages during the crucial holiday shopping season. Best Buy forecast fourth-quarter comparable sales between a fall of 2% to a rise of 1%, the mid point of which is below analysts’ estimates a 0.1% rise, according to IBES data from Refinitiv.

Economic news

Euro zone PMI

(8:30 a.m. ET) Canadian manufacturing sales for October.

(9:45 a.m. ET) U.S. Markit PMIs for November.

With Reuters and The Canadian Press

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