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Equities
Canada’s main stock index inched higher in early trading Tuesday, helped by a rebound in crude prices after recent losses. Wall Street’s key indexes were also modestly positive as investors weigh suggestions that the Federal Reserve could start tapering asset purchases sooner than expected.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 26.6 points, or 0.13 per cent, at 20,464.02.
In the U.S., the Dow Jones Industrial Average rose 33.3 points, or 0.09 per cent, at the open to 35135.17. The S&P 500 rose 3.4 points, or 0.08 per cent, at the open to 4435.79, while the Nasdaq Composite rose 27.6 points, or 0.19 per cent, to 14887.745 at the opening bell.
The timing of the Fed’s plans to begin tapering bond purchases moved into focus this week after Atlanta Federal Reserve Bank President Raphael Bostic said he is eyeing the fourth quarter for the start of a bond-purchase taper but is open to an earlier move if the job market maintains recent momentum. Boston Federal Reserve Bank President Eric Rosengren, meanwhile, said the bank could announce next month that it will start reducing its US$120-billion in monthly bond purchases in the fall.
“The Fed is...walking with solid steps towards policy normalization,” Ipek Ozkardeskaya, senior analyst with Swissquote, said in an early note.
“It’s not a bad idea with [U.S. President Joe] Biden’s extra stimulus package waiting to be approved by the policymakers, and which would add fuel to the fire in the coming months.”
In this country, the rail sector will be in focus after Canadian Pacific Railway Ltd. raised its offer for Kansas City Southern, setting the stage for a bidding war with Canadian National Railway.
The Globe’s Eric Atkins reports CP said its new cash-and-stock offer for KCS is worth US$27.2-billion, or US$300 a share, up from the previous offer the two sides agreed to in March worth US$25.2-billion or US$275 a share. CP will assume US$3.8-billion in KCS debt. CP did not raise the cash component of US$90 but increased share exchange ratio to 2.884.
Shares of Kansas City Southern were up more than 7 per cent in early trading in New York. CP shares were down about 1 per cent. CN shares were up modestly.
On the earnings front, Canadian investors got results from Hydro-One, Héroux-Devtek, TransAlta and Centerra Gold.
Overseas, the pan-European STOXX 600 was up 0.26 per cent by afternoon. Britain’s FTSE 100 slid 0.07 per cent. Germany’s DAX and France’s CAC 40 gained 0.15 per cent and 0.08 per cent, respectively.
In Asia, Japan’s Nikkei added 0.24 per cent. Hong Kong’s Hang Seng closed up 1.23 per cent.
Commodities
Crude prices recovered some recent losses as investors await new U.S. inventory figures and nervously watch reports of rising COVID-19 infections in some regions.
The day range on Brent is US$68.94 to US$70.34. The range on West Texas Intermediate is US$66.56 to US$68.05. Both benchmarks lost more than 2 per cent on Monday.
OANDA senior analyst Jeffrey Halley says markets are continuing to fret about future consumption patterns caused by Delta-variant restrictions.
“The cases cropping up in China are a genuine concern,” he said. “If they spike markedly, resulting in inevitable firm action from the government, we can expect oil prices to reflect that reality.”
Later Tuesday, markets get the first of two weekly U.S. inventory reports, with the release of figures from the American Petroleum Institute. More official government figures are due from the U.S. Energy Information Administration on Wednesday morning.
Crude oil inventories are expected to have fallen by about 1.1 barrels in the week to Aug. 6, according to the average estimate of six analysts polled by Reuters.
In other commodities, gold prices steadied after two days of sharp selloffs.
Spot gold was up 0.4 per cent at US$1,736.65 per ounce, while U.S. gold futures rose 0.6 per cent to US$1,737.10.
“It seems that gold inflation-hedging abilities in the modern age are confined to hyper-inflation and not bog-standard ‘normal’ inflation, transitory or otherwise,” Mr. Halley said. “Gold’s fate hinges on tomorrow night’s US CPI data.”
Currencies
The Canadian dollar was steady while its U.S. counterpart managed a four-month high against the euro on growing expectations that the Fed could soon begin tapering bond purchases.
The day range on the loonie is 79.42 US cents to 79.65 US cents.
“The CAD is little changed on the session, with the rebound in crude oil and still supportive spreads helping steady the CAD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Risk appetite is relatively stable — despite ongoing concerns about the spread of the delta variant; this may yet be a more challenging issue for markets if investors become more concerned about global growth risks but that is not obviously the case at present.”
There were no major Canadian economic reports on Tuesday’s calendar to offer direction for the loonie.
On world markets, the U.S. dollar index, after rising Friday and Monday on the back of a strong July jobs report, was flat at 93.035.
The euro hit a four-month low against the U.S. dollar, with the pair changing hands at US$1.1726, according to figures from Reuters.
The Swiss franc and Japanese yen were both down 0.1% against the U.S. dollar, as demand for safe-haven currencies fell.
More company news
Centerra Gold Inc. reported a loss of US$851.7-million in its latest quarter as a result of a move by the Kyrgyz Republic to seize control of the company’s Kumtor mine in the central Asian country in May. The Toronto-based company says it recorded a US$926.4-million loss on the change of control of the Kumtor operations. The loss for the quarter ended June 30 amounted to US$2.87 per diluted share compared with a profit of US$80.7-million or 27 cents per share in the same quarter last year.
Fertilizer company Nutrien Ltd raised its full-year adjusted profit outlook, citing robust demand in the global crop and fertilizer markets. Nutrien also raised its full-year 2021 adjusted core EBITDA outlook to between $6-billion and $6.4-billion, from $4.4-billion to $4.9-billion. The Saskatoon, Saskatchewan-based company now expects adjusted net earnings per share outlook to be between $4.60 and $5.10 for the year, from a prior forecast of $2.55 to $3.25. Analysts, on average, were expecting $3.93 per share for full-year 2021, according to Refinitiv IBES data.
Hydro One Ltd. reported a second-quarter profit of $238 million or 40 cents a share in its latest quarter as its revenue edged higher. The result compared with a profit of $1.1-billion or $1.84 per diluted share a year ago when the company recorded a one-time gain of $867-million due to an Ontario court ruling on a deferred tax asset appeal that set aside an Ontario Energy Board decision. Revenue in the quarter was $1.72-billion, up from $1.67-billion in the same quarter last year.
Nuvei Corp. shares jumped in morning trading on the TSX after the payment services provider reported better-than-expected quarterly numbers. Nuvei said quarterly revenue rose 114 per cent to $178.2-million in the most recent quarter, topping market forecasts of $157.8-million. The company reported adjusted earnings per share of 44 cents, ahead of the 35 cents analysts had been expecting, according to Reuters.
Economic news
(8:30 a.m. ET) U.S. productivity for Q2 (preliminary reading).
With Reuters and The Canadian Press