Equities
Markets in Canada and the U.S. opened higher Tuesday with dovish comments from Federal Reserve officials easing interest-rate concerns while fighting in the Middle East injected a degree of uncertainty.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 183.47 points, or 0.95 per cent, at 19,429.54.
In the U.S., the Dow Jones Industrial Average rose 78.76 points, or 0.23 per cent, at the open to 33,683.41.
The S&P 500 opened higher by 4.09 points, or 0.09 per cent, at 4,339.75, while the Nasdaq Composite gained 21.57 points, or 0.16 per cent, to 13,505.81 at the opening bell.
Markets regained some traction after seeing volatility last week after Fed officials suggested that rates might not need to rise further.
“U.S. markets initially opened the week lower, however sentiment turned around after comments from Fed vice chairman Philip Jefferson that the central bank might need to be careful about further rate rises given the recent increase in yields,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“We also heard from Dallas Fed President Lori Logan earlier in the day who made a similar argument that the recent increase in rates, as well as Friday’s strong payrolls report may mean that further tightening may not be required, and which helped U.S. stocks finish the day higher.”
Meanwhile, traders are also keeping a close eye on geopolitical developments as fighting continues in the Middle East. The Globe’s Mark MacKinnon reports that Israel declared on Monday that it was laying “full siege” to the Gaza Strip, as it began a counteroffensive after a bloody invasion of Israeli territory led by the Palestinian militant group Hamas. The effort is complicated by Hamas’s claim that it is holding more than 100 hostages in Gaza, a number that reportedly includes three Canadians.
In Canada, more than 4,000 unionized auto workers are off the job today at three GM facilities in Ontario after late-night contract talks between the company and Unifor failed to reach agreement. The strike includes 4,300 workers at GM’s Oshawa pick-up plant, St. Catharines powertrain factory and Woodstock distribution centre.
Overseas, the pan-European STOXX 600 was up 1.43 per cent by midday. Britain’s FTSE 100 gained 1.51 per cent. Germany’s DAX and France’s CAC 40 advanced 1.43 per cent and 1.32 per cent, respectively.
In Asia, Japan’s Nikkei finished up 2.43 per cent. Hong Kong’s Hang Seng rose 0.84 per cent.
Commodities
Crude prices were steady in early trading after a sharp increase during the previous session as traders weigh the potential impact of the Israel-Hamas war.
The day range on Brent was US$87.11 to US$88.49 in the early premarket period. The range on West Texas Intermediate was US$85.30 to US$86.74.
“Oil prices surged more than 5 per cent on Monday on rising geopolitical tensions in the Middle East,” Swissquote senior analyst Ipek Ozkardeskaya said, noting that the “reaction rally” was easing this morning.
“Rumours that Iran helped Hamas plan the attack added fuel to fire. Iran denied the allegations by the way, but an escalation of tensions between Iran, Israel, hence the U.S., could have severe consequences for global oil production.”
Elsewhere, Reuters reports that Venezuela and the U.S. have progressed in talks that could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions.
In other commodities, gold prices hit a one-week higher early Tuesday amid heightened global uncertainty and dovish Fed comments.
Spot gold climbed to US$1,865.19 per ounce, its highest since Sept. 29, and was last steady at US$1,860.21 by early Tuesday morning. U.S. gold futures climbed 0.5 per cent to US$1,874.10.
Currencies
The Canadian dollar was little changed while its U.S. counterpart held below recent highs against a group of world currencies as traders weigh recent Fed comments.
The day range on the loonie was 73.43 US cents to 73.70 US cents in the early permarket period. The Canadian dollar was up 0.86 per cent against the greenback over the past five days as of early Tuesday morning.
On world markets, the U.S. dollar index, which weighs the greenback against a selection of world currencies, was last up less than 0.1 per cent at 106.05. It remained below last week’s 11-month high of 107.34 and traded at roughly the same position as a week earlier, according to figures from Reuters.
The euro was last up 0.1 per cent at US$1.0577. Last week, the euro hit US$1.0448, its lowest level since December.
Israel’s shekel was pinned at 3.95 to the dollar, just off an almost eight-year low hit on Monday, after the central bank pledged $30 billion to stem the sell-off in the currency, Reuters reported.
In bonds, the yield on the U.S. 10-year note was down at 4.663 per cent in the predawn period.
More company news
PepsiCo Inc on Tuesday raised its annual profit forecast for a third time this year, as the company banks on the multiple price increases it undertook across its major markets and resilient demand for its snacks and beverages. The company’s shares rose nearly 2 per cent in premarket trading. PepsiCo and rival Coca-Cola have been largely shielded from the effects of price hikes due to their near-domination of the global carbonated drinks market, as well as cost-conscious consumers spending on products categorized as “affordable luxuries.” -Reuters
Australia’s antitrust regulator has approved a Brookfield Corp-led consortium’s A$15.35-billion (US$9.76-billion) bid for Origin Energy, clearing the way for one of the year’s largest corporate buyouts in the country to seek shareholder consent. The Australian Competition and Consumer Commission (ACCC) said on Tuesday the purchase of the country’s second-largest power generator was likely to speed up Australia’s renewable energy transition and could lead to a more rapid decrease in greenhouse gas emissions. -Reuters
Economic news
(10 a.m. ET) U.S. wholesale inventories for August.
With Reuters and The Canadian Press