North American and European stocks edged up on Monday as investors shook off the weekend’s chaotic G7 summit ahead of a week packed with diplomatic events, while a pair of U.S. Treasury Department auctions met with strong demand.
Bullishness on the part of investors that the historic summit scheduled for Tuesday between U.S. President Donald Trump and North Korean leader Kim Jong Un will go well helped the S&P 500 rise, along with gains in utility Sempra Energy.
Mr. Trump, in Singapore for the summit, said the meeting could “work out very nicely” as the countries try to narrow differences on how to end a nuclear standoff on the Korean peninsula.
“No one expects anything concrete to come of the meeting ... but if the tone is positive afterwards, it won’t be a headwind for stocks,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
Canada’s main stock index rose on Monday, boosted by gains in materials and energy shares, while investors shrugged off fears of a global trade war following a chaotic G7 meeting.
The Toronto Stock Exchange’s S&P/TSX Composite index was up 60.60 points, or 0.37 per cent, at 16,263.29.
Energy stocks jumped 0.7 per cent on the day despite a drop in oil prices, while materials stocks rose 0.4 per cent.
Leading the index were MEG Energy Corp., up 6 per cent, Pretium Resources Inc., up 5.2 per cent, and Detour Gold Corp., higher by 4.1 per cent.
Lagging shares were Prometic Life Sciences Inc., down 4.2 per cent, Aurora Cannabis Inc., down 4.1 per cent, and West Fraser Timber Co Ltd., lower by 3.8 per cent.
The Canadian dollar weakened against its U.S. counterpart on Monday after Mr. Trump, who has threatened to scrap the NAFTA trade pact, attacked Canadian Prime Minister Justin Trudeau in their feud over trade, and as oil prices fell.
Mr. Trump fired off a volley of tweets on Monday venting anger on NATO allies, the European Union and Mr. Trudeau in the wake of a divisive G7 meeting in Quebec over the weekend.
Mr. Trump tweeted on Saturday that Mr. Trudeau’s remarks at a news conference, where he said Canada would not be pushed around, “were very dishonest and weak.”
The loonie has been pressured recently by new U.S. tariffs on steel and aluminum imports and slow-moving talks to modernize the North American Free Trade Agreement.
Canada sends about 75 per cent of its exports to the United States and so its economy would be badly hit if NAFTA were scrapped.
The Canadian dollar fell about 0.4 per cent on the news to $1.2977, while the Mexican peso shed 1.17 per cent to 20.531 pesos per U.S. Dollar.
In New York, the Dow Jones Industrial Average rose 5.78 points, or 0.02 per cent, to 25,322.31; the S&P 500 gained 2.97 points, or 0.11 per cent, to 2,782; and the Nasdaq Composite added 14.41 points, or 0.19 per cent, to 7,659.93.
Sempra Energy proved the biggest driver of the S&P’s rally, surging 15.5 per cent, after two key shareholders recommended six new directors for the company’s board and urged a strategic review of its business.
U.S. Treasury yields climbed as the Treasury Department sold $54 billion in new coupon-bearing supply, and on the expectation that the Federal Reserve will raise interest rates on Wednesday.
Demand for the Treasury Department’s $32 billion sale of three-year notes and $22 billion sale of 10-year notes was strong.
Three-year notes sold at a high yield of 2.664 per cent, just below where they traded before the auction. Indirect bidders, which include fund managers, some central banks and other investors, took their largest share of the auction since January.
Benchmark 10-year notes last fell 7/32 in price to yield 2.9589 per cent, up from 2.935 per cent to end last week.
The 30-year bond last fell 10/32 in price to yield 3.0976 per cent, up from 3.082 percent on Friday.
By and large, though, “markets are generally overlooking negative takeaway” from the G7 meeting, said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.
Instead, they are looking ahead to a busy week. Tuesday’s North Korea summit will be followed by meetings of the U.S. Federal Reserve, which is expected to raise rates, and the European Central Bank - as well as a Brexit bill vote in the British parliament.
Also helping calm markets were comments from Italy’s new coalition government that it had no intention of leaving the euro zone and planned to cut debt.
The statements pushed Italian stocks up more than 3.4 per cent, while the pan-European FTSEurofirst 300 index rose 0.72 per cent.
MSCI’s gauge of stocks across the globe gained 0.35 per cent.
The prospect of Italy remaining in the euro zone also sent Italian borrowing costs down sharply, as the euro rallied 0.15 per cent to $1.1784, not far off a two-week high of $1.1840.
The dollar index, which measures the greenback against a basket of other currencies, rose 0.03 per cent
In commodities, oil prices fell in early activity, pulled down by rising Russian production, before regaining momentum later.
U.S. crude rose 0.55 per cent to settle at $66.10 per barrel, while Brent settled at $76.46, unchanged.