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Equities
Canada’s main stock index advanced in early trading Monday, buoyed by gains in energy shares as crude prices rebounded. On Wall Street, key indexes also turned higher after seeing losses last week with investors looking ahead to a key meeting of Federal Reserve policymakers later in the week.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 72.97 points, or 0.36 per cent, at 20,411.99, with the energy sector jumping 2.6 per cent.
The Dow Jones Industrial Average rose 40.89 points, or 0.12 per cent, at the open to 35,160.97.
The S&P 500 opened higher by 8.62 points, or 0.19 per cent, at 4,450.29, while the Nasdaq Composite gained 62.32 points, or 0.42 per cent, to 14,776.98 at the opening bell.
“The upcoming week is all about the Federal Reserve’s symposium in Jackson Hole, Wyoming,” OANDA senior analyst Ed Moya said.
“A couple months ago, this gathering was eyed as a potential time for the Fed to formally announce its plan on tapering asset purchases, but now it will determine if Fed Chair Powell is ready to join the tapering crowd at the Fed or slow them down.”
He said growth worries and fears over the spread of the Delta variant now have this symposium positioned as a stop gap until the September Fed policy meeting.
“At best, investors expect Fed Chair Powell to give clues on how close the economy is to delivering substantial progress with the labor market recovery and if he can signal a formal taper announcement is coming at the next policy meeting,” Mr. Moya said.
The symposium, which is being held in a virtual format, begins on Thursday and concludes Saturday.
In this country, investors get results from Canada’s biggest banks.
On Tuesday, Bank of Nova Scotia and Bank of Montreal will be first to report financial results for the three months that ended July 31. Royal Bank of Canada and National Bank of Canada release results on Wednesday, followed by Toronto-Dominion Bank and Canadian Imperial Bank of Commerce on Thursday.
The Globe’s James Bradshaw reports that Canada’s banks are starting to see demand for loans return but the Delta variant has created a new wave of uncertainty about the economic rebound. Investors are expected to look past profits for signs that businesses and consumers are starting to borrow again – an important barometer to show that the economy is recovering.
TSX-listed shares of Trillium Therapeutics spiked in morning trading after Pfizer Inc said it would buy shares of the company that it does not already own in a deal that values the cancer drugs maker at $2.26-billion. Pfizer, which acquired a $25-million stake in Trillium last year, will buy the remaining outstanding shares for $18.50 a piece, representing a 203.8-per-cent premium to the stock’s last closing price.
Overseas, the pan-European STOXX 600 was up 0.51 per cent by midday.
Britain’s FTSE 100 rose 0.35 per cent. Germany’s DAX and France’s CAC 40 advanced 0.27 per cent and 0.90 per cent, respectively.
In Asia, Japan’s Nikkei rose 1.78 per cent. Hong Kong’s Hang Seng ended up 1.05 per cent higher.
Commodities
Crude prices gained after seven straight days of losses, helped by a softer U.S. dollar but tempered by continued concerns about the spread of the Delta variant.
The day range on Brent is US$64.60 to US$67.37. The range on West Texas Intermediate is US$61.74 to US$64.19. Both benchmarks were up more than 3 per cent in the predawn period.
Last week, Brent lost 8 per cent while WTI fell 9 per cent. Both saw their weakest prices in more than nine months.
“Oil prices have been in freefall as Wall Street turns cautious over delta variant jitters and as Fed taper expectations boost the [U.S.] dollar,” OANDA’s Ed Moya said in a note.
“Now that crude prices have hit the lowest levels since May, OPEC+ is getting nervous over their strategy to ramp up output. Oil producers want to boost supply but want to make sure they avoid taking this market away from its deficit.”
Despite concerns about the impact of rising COVID-19 infections in some regions, demand continues to improve. Reuters reports that U.S. production rose to 11.4 million barrels a day last week, while drilling firms added rigs for the third consecutive week.
In other commodities, gold prices gained as the U.S. dollar slid.
Spot gold rose 0.2 per cent to US$1,785.00 per ounce, while U.S. gold futures were up 0.2 per cent at US$1,786.50.
Currencies
The Canadian dollar gained as risk sentiment improved in the broader market and the U.S. dollar paused after seeing its biggest weekly gain in two months.
The day range on the loonie is 77.87 US cents to 78.53 US cents. In the predawn period, the dollar was near the upper end of that spread.
“The CAD remains almost entirely contingent on external drivers for direction at the moment — that is to say, the broader USD tone and the overall risk tone — and, with a light domestic calendar ahead for the week, that seems unlikely to change,” Shaun Osborne, chief FX strategist for Bank of Nova Scotia, said.
“A calmer risk environment should, however, allow the CAD to rebound somewhat more from last week’s sell-off and CAD bargain-hunters to take advantage of what are still the CAD’s lowest levels since the start of the year.”
There were no major Canadian economic releases on Monday’s calendar.
On world markets, the U.S. dollar index, which measures the greenback against a group of currencies, slid 0.1 per cent to 93.638 but was within striking distance of an early November high of 93.734 hit on Friday, according to figures from Reuters.
The index gained about 1 per cent last week.
The euro rose 0.1 per cent to $1.1711, off Friday’s 9 1/2-month low of US$1.1664.
In cryptocurrencies, bitcoin topped US$50,000 for the first time since mid-May.
Economic news
Euro zone PMI and consumer confidence
(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for July.
(8:30 a.m. ET) U.S. Markit PMIs for August.
(10 a.m. ET) U.S. existing home sales for July. The Street is forecasting an annualized rate decline of 0.3 per cent.
With Reuters and The Canadian Press