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Canada’s main stock index rose to a record high on Tuesday, as heavyweight energy and mining sectors bounced back from steep losses, although investors remained on edge due to rising COVID-19 cases worldwide.

The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 58.32 points, or 0.29%, at 20,495.74. It earlier reached a record high of 20,541.44.

The energy sector jumped 2.9% after tumbling more than 2% on Monday, with oil prices rising on signs of strong demand in Europe and the United States, despite higher coronavirus cases in Asian importer-nations.

The materials sector, which includes precious and base metals miners and fertilizer companies, rose 0.2% after marking its worst day in three weeks, as concerns over Chilean supply supported copper prices, and precious metal prices stabilized.

Wall Street rose on Tuesday, with both the blue-chip Dow and benchmark S&P 500 closing at record highs, as economically sensitive value stocks gained with the U.S. Senate’s passage of a $1 trillion bipartisan infrastructure package.

The bill, which now heads to the House of Representatives, could provide the nation’s biggest investment in decades in roads, bridges, airports and waterways. Senators also began voting on a follow-up $3.5 trillion spending package that Democrats plan to pass without Republican votes.

“The market is looking at it as part one is a done deal, the market is OK with that,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

“I do not believe the market is going to be OK with $3.5 trillion but there is still the possibility they are able to block it, or slow it, and have more conversation so the market isn’t focusing on that one yet.”

Energy, industrials and materials , which stand to benefit from an economic recovery, were among the top performing S&P sectors, while names such as Caterpillar, Deere and Vulcan Materials each rose about 2% as they are poised to reap the gains of infrastructure projects.

The iShares US Infrastructure ETF rose 1.45% and the Global X US Infrastructure Development ETF advanced 2.19%.

Energy shares were buoyed as recently beaten down crude prices jumped nearly 3%.

The Dow Jones Industrial Average rose 162.82 points, or 0.46%, to 35,264.67, the S&P 500 gained 4.4 points, or 0.10%, to 4,436.75 and the Nasdaq Composite dropped 72.09 points, or 0.49%, to 14,788.09.

With new coronavirus cases rising in the United States, progress on the infrastructure package should support the recovery in the world’s largest economy.

The rapid spread of the Delta variant has pushed COVID-19 cases and hospitalizations to a six-month high, with cases averaging 100,000 for three days in a row - up 35% over the past week.

Investor will also watch inflation numbers this week for more insight into the Federal Reserve’s monetary policy plans, in the wake of comments from two Fed officials on Monday that inflation was already at a level that could satisfy one portion of the requirement for the beginning of rate hikes.

AMC Entertainment gave up early gains and ended the session 6.07% lower even after beating second-quarter revenue estimates as moviegoers returned to its theaters after a year of closures and restrictions.

Kansas City Southern gained 7.47% after Canadian Pacific Railway Ltd raised its offer for the U.S. railroad operator by about $2 billion to $27.29 billion.

The U.S. dollar also scaled a four-month high versus the euro as investors looked ahead to U.S. inflation numbers on Wednesday for indications of when the world’s largest economy might start to withdraw stimulus.

MSCI’s gauge of stocks across the globe gained 0.16%, trading just off the record high it hit last week.

European shares extended gains for a seventh straight session as investors took comfort from strong earnings reports and economic recovery prospect.

The pan-European STOXX 600 index rose 0.35%

“Domestically and globally, we’re seeing economies recovering from the pandemic. It’s a good period for investing,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

Sentiment was further boosted by the U.S. Senate passing a $1 trillion bipartisan infrastructure bill that could provide the United States with its biggest investment in decades in roads, bridges, airports and waterways.

Activity, meanwhile, was heating up in bond markets.

Indications in recent days of an improving labor market have prompted investors to rethink the outlook for U.S. monetary policy, halting recent sharp falls in both U.S. and European bond yields.

U.S. 10-year Treasury yields scaled their highest in over three weeks, rising as high as 1.336% in London trade and extending the longest run of gains since early February.

The benchmark 10-year Treasury yield, which reached 1.346%, its highest level since July 15, last fell 8/32 in price to yield 1.3439%, from 1.317% late on Monday.

Speculation is mounting that Federal Reserve Chair Jerome Powell could signal it is ready to start easing monetary support in a speech to be delivered at the annual Jackson Hole conference of central bankers.

“Expectations have clearly shifted for Fed Chair Powell to turn hawkish at Jackson Hole and make a formal announcement on tapering asset purchases at the September FOMC meeting,” said Ed Moya, senior market analyst at OANDA in New York.

Adding fuel to the debate, two Fed officials said on Monday that while the labor market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.

Data on Monday showed that U.S. job openings shot up to a fresh record high in June and hiring also increased.

That followed Friday’s nonfarm payroll report showing jobs increased by a larger-than-anticipated 943,000 in July.

While signs of economic recovery in the United States are reviving reflation trade bets, investors remain wary of the lingering risks posed by COVID-19.

China on Monday reported more COVID-19 infections in what seems to be its most severe resurgence of the disease since mid-2020, as some cities added rounds of mass testing in a bid to stamp out infections.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4% after trading much of the day in the red as worries weighed about the spread of the Delta variant.

With tapering expectations gaining traction, the dollar extended its gains made on Friday and Monday.

The dollar index rose 0.07%, with the euro down 0.13% to $1.1722.

Oil prices rose, recouping some of the losses in the previous session when prices slipped to a three-week low.

U.S. crude oil futures settled at $69.29 per barrel, up $1.81 or 2.72%. Brent crude futures settled at $70.63 per barrel, up $1.59 or 2.3%.

U.S. gold futures settled up 0.3% at $1,731.70.

Reuters

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