Gold hit an eight-month high while world stock markets were mixed ahead of further U.S.-Sino trade talks, a raft of technology company results starting with Apple later on Tuesday and an impending Federal Reserve decision on interest rates.
The U.S. dollar was little changed and oil prices rose after Washington slapped sanctions on Venezuela’ state-owned oil firm in a bid to curb its crude exports as traders prepared for major events such as a key Brexit vote later in the day.
Investors expect the U.S. central bank to show a more cautious stance when policymakers release a statement on Wednesday after a two-day meeting. U.S. economic data in December that was softer than expected and a sharp downturn in financial markets are likely to keep the Fed from raising rates.
Canada’s main stock index gained on Tuesday, as energy shares were buoyed by higher crude prices and precious metal mining stocks were supported by rising gold prices.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 84.52 points, or 0.55 per cent, at 15,463.14.
The materials sector led the way, increasing 2 per cent after gold prices gained. First Quantum Minerals Ltd. rose 5.2 per cent, while Barrick Gold Corp. increased 5 per cent.
The energy sector rose 0.9 per cent. Canadian Natural Resources Ltd. rose 1.6 per cent, while Vermilion Energy Inc. jumped 2.2 per cent.
Leading the index were SNC-Lavalin Group Inc., up 6.5 per cent and Iamgold Corp., up 5.8 per cent.
Lagging shares were Canopy Growth Corp., down 7 per cent, Cascades Inc., down 4.3 per cent, and Aurora Cannabis Inc., lower by 3.4 per cent.
Equity markets in Europe rose as investors bid up stocks considered safer during times of economic uncertainty, such as utilities. However, a gauge of global stock performance edged lower as stocks on Wall Street fell amid a ream of mixed earnings reports and caution due to the U.S.-China trade spat.
MSCI’s gauge of stocks across the globe rose 0.06 per cent, while the FTSEurofirst 300 index of leading regional shares closed 0.8 per cent higher.
Wall Street was mixed on Tuesday, with technology shares dipping ahead of Apple’s quarterly report while a rebound in 3M and other industrials elevated the Dow Jones Industrial Average.
The Dow Jones Industrial Average rose 51.74 points, or 0.21 per cent, to 24,579.96, the S&P 500 lost 3.85 points, or 0.15 per cent, to 2,640 and the Nasdaq Composite dropped 57.40 points, or 0.81 per cent, to 7,028.29.
The S&P industrials index, which took a beating after a warning from Caterpillar’s on Monday, rebounded 1.1 per cent, helped by better-than-expected reports from 3M Co and defense companies.
Amazon.com Inc, Facebook Inc and Microsoft, all part of a wave of upcoming quarterly reports later this week, fell more than 2 per cent each.
The S&P technology index lost 0.94 per cent.
Analysts on average expect S&P 500 companies’ aggregate earnings per share to rise 14.2 per cent in the fourth quarter. But with U.S. corporate tax cuts now a year old, 2019 earnings are seen rising a more moderate 5.6 per cent.
The information glut this week will make it hard for people to reach a conclusion but the trade talks with China, which begin Wednesday, are the overriding issue for the world economy, said David Kelly, chief global strategist at JPMorgan Funds in New York.
What Washington, and possibly Beijing, fail to understand is that the uncertainty about trade is slowing the global economy, which will show up in East Asian PMI manufacturing data for January to be released on Thursday, Kelly said.
“The biggest tax levy by Washington is an uncertainty tax, and it’s the biggest threat to the markets and the economy this year,” Kelly said.
Tensions were high after U.S. officials announced criminal charges against China’s telecom giant Huawei for violating U.S. sanctions against Iran.
For Asia, the blow was cushioned by promises of more Chinese stimulus but Beijing had berated Washington for blocking tactics in its World Trade Organization appeal against U.S. tariffs.
Amid the uncertainty, safe-haven gold broke through $1,310 an ounce in spot prices to reach its highest since last May.
U.S. gold futures settled up 0.4 per cent at $1,308.90 per ounce.
Market participants will have catalysts for trading all week, with more than one-fifth of companies on the benchmark S&P 500 index reporting results, including Amazon, Microsoft and Facebook.
Apple, which issued a profit warning this month due to weak demand from China, is due to report after the market closes.
U.S. Treasury yields fell across maturities as investors anticipated strong demand for $78 billion of new issues on sale later in the day and on data showing U.S. consumer confidence at its lowest since July 2017.
Benchmark 10-year U.S. Treasury notes rose 8/32 in price to push their yield down to 2.717 percent.
The dollar index rose 0.02 percent, while the euro fell 0.05 percent to $1.1427. The Japanese yen weakened 0.02 percent versus the greenback at 109.38 per dollar.
Oil prices gained more than 2 per cent on Tuesday after the United States imposed sanctions on state-owned Venezuelan oil company PDVSA, a move likely to reduce the OPEC member’s crude exports and relieve some global oversupply worries.
International Brent crude oil futures were up $1.39 to settle at $61.32 a barrel, a 2.32-per-cent rise, while U.S. West Texas Intermediate (WTI) crude futures increased $1.32 to settle up $53.31 a barrel, or 2.54 per cent.
Venezuela is among the world’s largest heavy crude oil producers, and the United States has been its biggest client, taking about half the country’s export volumes..
The Trump administration’s restrictions on Venezuelan crude, aimed at driving President Nicolas Maduro from power, stop short of banning U.S. companies from buying oil from the Latin American country. However, proceeds from such sales will be put in a “blocked account” that should deter PDVSA from shipping crude to the United States.
“Today’s price advance looked like a delayed reaction to yesterday’s Venezuelan headlines as traders may have had second thoughts about the impact on domestic oil supplies,” said Jim Ritterbusch, president of Ritterbusch and Associates in a note.
Additionally, “possibilities that some Gulf coast refiners may need to pay up for alternative stocks from such places such as Saudi Arabia that has already suggested that they will be steering cargoes away from the U.S.,” he wrote.