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Equities
Canada’s main stock index was higher early Tuesday in the week’s first trading day after being shut during the previous session for the holiday weekend. On Wall Street, major indexes posted a cautious start amid concerns over stimulus talks and rising tensions between the United States and China.
The S&P/TSX composite index was up 147.16 points at 16,316.36.
South of the border, the S&P 500 opened lower by 4.69 points, or 0.14 per cent, at 3,289.92. The Nasdaq Composite dropped 4.91 points, or 0.04 per cent, to 10,897.89 at the opening bell.
The Dow Jones Industrial Average rose 0.21 points at the open to 26,664.61.
Investors were keeping an eye on U.S. stimulus talks. U.S. House Speaker Nancy Pelosi will meet again with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows on Tuesday.
“U.S. policymakers are discussing on the next fiscal stimulus package, and there is a chatter that Monday talks were productive,” Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, said.
“We expect a new fiscal aid package of around $1.5-$2 trillion to get approval in the coming weeks. Call it a market rally, or a stock market inflation, the global equity markets are poised for more gains on hope that more stimulus would support economies, or at least the stock prices.”
Sentiment Tuesday was tempered by continuing tensions between the United States and China after U.S. President Donald Trump said he would ban Chinese app TikTok in the United States unless a tech company like Microsoft buys it.
On the earnings front, U.S. investors get results after the close from Walt Disney Co.
“Disney’s biggest problem is around the closure of their theme parks, movie production and the length of time they may have to wait until they can reopen and restart in terms of somewhere anywhere near full capacity,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“We’ve already seen that where the parks have re-opened that footfall is much lower as consumers avoid large scale events in crowded places. The new streaming service Disney+ is unlikely to fill the gap given the small margins and the fact that it’s also one of the cheapest and the content is still quite limited in its scope.”
In this country, investors will get results from Great-West Lifeco after the close of trading.
Overseas, major European markets were mixed heading into afternoon. The pan-European STOXX 600 was down 0.31 per cent. Britain’s FTSE 100 rose 0.19 per cent. Germany’s DAX fell 0.50 per cent. France’s CAC 40 lost 0.07 per cent.
In Asia, markets followed through on Wall Street’s Monday gains. Hong Kong’s Hang Seng rose 2 per cent. Japan’s Nikkei rose 1.70 per cent. The Shanghai Composite Index was up 0.11 per cent.
Commodities
Crude prices slid in early going, giving back some of the previous session’s gains, as concern over the rising number of coronavirus infections again raises fears for the recovery in demand.
The day range on Brent so far is US$43.52 to US$44.11. The range on West Texas Intermediate is US$40.41 to US$40.99.
On Monday, strong factory reports from Asia, Europe and the United States buoyed prices, with Brent gaining 1.5 per cent and WTI rising 1.8 per cent.
“The big elephant in the room is oversupply as OPEC begins to lift supply cuts at a time of ongoing uncertainty on demand,” AxiCorp chief market strategist Stephen Innes said.
OPEC and its allies begin increasing production this month after record cuts aimed at shoring up the market amid the COVID-19 crisis, adding 1.5 million barrels a day of supply.
Later in the session, markets will get the latest inventory figures from the American Petroleum Institute. More official U.S. government figures follow on Wednesday.
Analysts polled by Reuters are expecting the API report to show that U.S. inventories of gasoline rose by 600,000 barrels. Distillate stockpiles, which include diesel and heating oil, likely grew by 800,000 barrels, while crude stocks fell by 3.3 million barrels in the week to July 31.
In other commodities, spot gold was steady at US$1,976.19 per ounce, US$8.47 short of the record high hit in Monday’s session. U.S. gold futures rose 0.4 per cent to US$1,993.20.
“The coronavirus problem is going to be with us for a while. It seems that economies around the world will be very fragile for an extended period of time,” Edward Meir, analyst at ED&F Man Capital Markets, told Reuters.
Currencies
The Canadian dollar was higher as its U.S. counterpart lost altitude on world markets with investors awaiting a breakthrough in U.S. stimulus talks.
The day range on the loonie is 74.60 US cents to 74.84 US cents.
There were no major economic releases on the Canadian calendar for Tuesday.
“G10 is trading in relatively tight ranges amid limited news flow,” Daria Parkhomenko, RBC FX strategy associate, said in an early note.
On global markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, was down 0.2 per cent after a firmer start to the month. Reuters reports that the U.S. dollar saw its worst month in a decade in July.
The euro - which gained 5 per cent at the U.S. dollar’s expense in July - edged up 0.2 per cent at US$1.17875.
“I think the euro zone recovery will be a lot faster than the U.S. recovery and that growth differential will continue to drive EUR/USD higher,” Marshall Gittler, FX analyst at BDSwiss, said in a note.
In other currencies, the Australian dollar was up 0.3 per cent after that country’s central bank held its key policy rate steady as expected. The central bank also said it expects to see an uneven recovery.
More company news
The Globe’s David Milstead reports money manager CI Financial Inc. is continuing its aggressive and rapid U.S. expansion with a deal that will increase its assets there to more than US$11-billion. CI has announced it will buy Illinois-based Balasa Dinverno Foltz LLC, a private wealth management firm with US$4.5-billion in assets. The companies did not reveal the terms of the transaction.
Ford Motor Co said acting chief operating office Jim Farley will take over as chief executive officer effective Oct. 1. Farley will replace Jim Hackett who is retiring from the company.
BP cut its dividend for the first time in a decade after a record US$6.7-billion second-quarter loss when the coronavirus crisis hammered fuel demand and it sought to win over investors by speeding up its reinvention as a lower carbon company. Its shares rose 6 per cent in early trading on Tuesday.
Diageo Plc, the world’s largest spirits maker, reported a bigger-than-expected decline in underlying net sales on Tuesday as demand for its whiskies, vodka and gin fell in all markets except North America. The Johnnie Walker whisky maker reported an 8.4-per-cent drop in organic sales for the year ended June 30, much lower than the 7.3-per-cent drop analysts had expected, according to company supplied estimates.
German sportswear firm Adidas on Tuesday said its supervisory board had extended the contract of Chief Executive Kasper Rorsted until July 31, 2026. Mr. Rorsted, 58, has been at the helm of Adidas since October 2016. His contract was due to expire at the end of July next year.
German drugs and pesticides group Bayer reported a 9.5 billion euro (US$11.2-billion) net loss for the second quarter, following a US$10.9-billion settlement of U.S. lawsuits claiming that its weedkiller Roundup caused cancer. Bayer on Tuesday also said earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for special items, would be around 12.1 billion euros this year, down from a target of 12.3 billion to 12.6 billion euros issued in February.
Britain’s competition regulator on Tuesday cleared Amazon’s purchase of a 16-per-cent stake in online delivery group Deliveroo, following a provisional nod in June. The Competition and Markets Authority’s (CMA) original clearance in April was on the basis that Deliveroo could go out of business without the Amazon investment, but changed its methodology to just focus on competition after criticism.
Economic news
Canadian manufacturing activity expanded in July for the first time in five months. The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) rose to a seasonally adjusted 52.9 in July from 47.8 in June, extending its recovery from 33.0 in April when businesses were closed to help contain the coronavirus pandemic.
(10 a.m ET) U.S. factory orders for June. The Street is projecting an increase of 5.0 per cent from May.
With Reuters and The Canadian Press
Terry Weber