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Equities
Canada’s main stock index opened steady Tuesday with gains in energy shares offset by declines in financial stocks despite better-than-forecast profits from both Bank of Nova Scotia and Bank of Montreal. On Wall Street, the Nasdaq opened at a record high with sentiment getting a boost from waning concerns about the timing of the Federal Reserve’s tapering of bond purchases.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 7.27 points at 20,484.53. Energy stocks gained 1 per cent while financials were off 0.2 per cent.
In the U.S. the Dow Jones Industrial Average rose 47.0 points, or 0.13 per cent, at the open to 35382.72. The S&P 500 rose 4.9 points, or 0.11 per cent, to 4484.4, while the Nasdaq Composite rose 35.5 points, or 0.24 per cent, to 14978.142 at the opening bell.
“Some have suggested that the U.S. FDA granting full regulatory approval of the Pfizer BioNTech vaccine helped oil the wheels for the move higher to new records for U.S. stocks, however this feels like adding a narrative to fit the price action,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“The move higher was already underway well before that news came out and while it won’t have hurt the move looks to have had its origins in Friday’s comments from Dallas Fed President Robert Kaplan’s admission that he might adjust his views on a taper if the current surge in Delta cases prompts a U.S. economic slowdown in the coming months.”
Market are awaiting the Jackson Hole symposium later in the week. looking for indications from Fed chair Jerome Powell about the timing of the central bank’s move to begin pulling back asset purchases.
In this country, bank earnings begin with results due from Bank of Nova Scotia and Bank of Montreal.
Bank of Nova Scotia said net income excluding one-off items rose to $2.6-billion, or $2.01 a share, in the three months ended July 31, compared with $1.3-billion, or $1.04, a year earlier. Analysts had expected $1.90 a share, according to IBES data from Refinitiv. Scotiabank reported overall net profit of $2.5-billion, or $1.99 a share, up from $1.3-billion or $1.04, a year earlier.
Meanwhile, Bank of Montreal reported net income excluding one-off items of $2.29-billion, or $3.44, in the three months ended July 31, up from $1.26-billion, or $1.85, a year earlier. Analysts had expected $2.94 a share, according to IBES data from Refinitiv.
Scotiabank and BMO shares were up just after the opening bell in Toronto.
Canada’s other big banks report later in the week.
Overseas, the pan-European STOXX 600 was down 0.15 per cent at midday. Britain’s FTSE 100 fell 0.32 per cent. Germany’s DAX was up 0.33 per cent while France’s CAC 40 slid 0.53 per cent.
In Asia, Hong Kong’s Hang Seng jumped 2.46 per cent on strength in tech shares. Japan’s Nikkei rose 0.87 per cent.
Commodities
Crude prices gained for a second straight day as full approval of the Pfizer/BioNTech COVID-19 vaccine in the United States eased investor concerns about the potential impact of rising infections on demand.
The day range on Brent is US$68.53 to US$69.76. The range on West Texas Intermediate is US$65.41 to US$66.53.
Both benchmarks advanced more than 5 per cent on Monday after seeing the worst week of losses in nine months.
“Crude prices roared back after the Pfizer COVID vaccine got full FDA approval, opening the door for more vaccine mandates which will help get the U.S. to herd immunity,” OANDA senior analyst Ed Moya said.
“The crude demand outlook will get a boost here now that the delta variant appears to be peaking in the South and as China lowers local COVID cases to zero.”
Later in the session, markets will get weekly inventory figures from the American Petroleum Institute, followed by more official U.S. government numbers on Wednesday morning.
A Reuters poll showed analysts are expecting to see a weekly decline in U.S. crude and gasoline stocks while distillate inventories are expected to have increased.
In other commodities, gold prices eased but still held above US$1,800 an ounce.
Spot gold slid 0.1 per cent to US$1,803.53 per ounce, after jumping about 1.4% on Monday.
U.S. gold futures were flat at US$1,806.30.
“Gold is starting to look very attractive again as Treasury yields remain grounded over expectations that the Jackson Hole Symposium will show a wait-and-see approach before committing to tapering asset purchases,” Mr. Moya said.
“Cases are spiking in Wyoming and that has triggered a code red which restricts meetings. Jackson Hole will be virtual again and that makes it unlikely the Fed will want to signal they are ready to slow the pace of asset purchases.”
Currencies
The Canadian dollar was firmer, trading around 79 US cents, as its U.S. counterpart held steady near a five-day low.
The day range on the loonie is 78.97 US cents to 79.30 US cents.
There were no major Canadian releases on Tuesday’s calendar.
“FX markets have consolidated yesterday’s risk-on/USD lower moves in quiet overnight markets with little new news,” RBC chief currency strategist Adam Cole said.
On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was flat on the day at 93.004. It hit a five-day low of 92.947 on Monday and had its largest one-day drop since May, according figures from Reuters.
Against the yen, the U.S. dollar was up 0.1 per cent with the pair trading at 109.805 yen per U.S. dollar.
The euro was down around 0.1 per cent against the greenback, at US$1.1738.
In cryptocurrencies, bitcoin, which rose above US$50,000 for the first time since May on Monday, dipped below that level and was up 0.5 per cent on the day at around US$49,800.
McDonald’s said it had taken milkshakes and bottled drinks off the menu at all of its British restaurants as it battled the supply chain issues that are hitting businesses across the retail and hospitality sector. The company did not specify what the issues were but said it was working hard to return the items to the menu as soon as possible. “Like most retailers, we are currently experiencing some supply chain issues, impacting the availability of a small number of products,” a McDonald’s UK and Ireland spokesperson said in a statement on Tuesday.
Best Buy Co Inc raised its full-year comparable sales forecast, as the electronics retailer expects demand to be resilient compared to analysts’ fears of a drop in growth from a pandemic-induced sale surge last year. Best Buy said it expects full-year comparable sales to rise 9 per cent to 11 per cent, compared to its previous forecast of an increase of 3 per cent to 6 per cent.
Peloton Interactive said it would launch a new treadmill in the United States next week, which will have safety features including a digital passcode to unlock the belt before a workout and a physical safety key. The new treadmill will be available in the United States, Canada and the United Kingdom from August 30, the fitness equipment maker said.
Economic news
(10 a.m. ET) U.S. new home sales for July. The consensus estimate is an annualized rate rise of 3.6 per cent.
With Reuters and The Canadian Press