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Canada’s main stock index opened higher on Monday, led by gains in energy shares on the back of higher oil prices.
At 9:30 a.m. ET The Toronto Stock Exchange’s S&P/TSX composite index rose 31.90 points, or 0.20 per cent, to 16,028.11 at open.
Energy stocks rose 1.3 per cent with Encana up 2.5 per centy, Baytex Energy up 0.9 per cent and Cenovus Energy up 1.3 per cent.
Utilities stocks rose 1.2 per cent and tech stocks were up 1.1 per cent. Canadian IT consultancy CGI Inc. said it had made a 4.32 billion Swedish crown (US$459-million) cash offer for Swedish peer Acando. CGI shares rose 0.7 per cent.
Materials stocks rose 0.8 per cent after Barrick Gold and Newmont Mining agreed on terms of a joint venture in Nevada that will see Barrick drop its US$17.8-billion hostile bid for Newmont. Barrick’s shares rose 2.7 per cent in Toronto and Newmont’s U.S-listed shares slipped 0.3 per cent.
Under the deal, Barrick will hold a 61.5 per cent stake in the joint venture, while Newmont will own 38.5 per cent. The two big gold miners have operated independently in Nevada for decades, but previously had been unable on agree on a way to co-operate.
In the materials sector, West Fraser Timber was also up 4.6 per cent.
The Dow Jones Industrial index opened sharply lower on Monday after a fatal plane crash in Ethiopia caused a sharp drop in the shares of Boeing Co. and capped gains in the broader markets.
The Dow Jones Industrial Average fell 242.24 points, or 0.95 per cent, at the open to 25,208.00.
The S&P 500 opened higher by 4.54 points, or 0.17 per cent, at 2,747.61. The Nasdaq Composite gained 34.42 points, or 0.46 per cent, to 7,442.56 at the opening bell.
Boeing Co., the best performing Dow component this year by a wide margin, tumbled 10.6 per cent, and appeared on track for its worst day in nearly two decades after many airlines grounded the company’s new 737 MAX 8 passenger jet following the second deadly crash in just five months.
The Ethiopian Airlines plane carrying 149 passengers and eight crew crashed on Sunday shortly after takeoff from Addis Ababa Bole International Airport on Flight ET302 bound for Nairobi.
In October, 189 people died when a 737 Max 8 flown by Lion Air dived into the Java Sea soon after taking off from Jakarta on a short-haul flight.
Shares of American Airlines Group Inc, Southwest Airlines Co and JetBlue Airways Corp also fell on the news. Canadian airline stocks also fell with Air Canada down 1.2 per cent and WestJet off 0.2 per cent.
“Boeing without any question is going to be the theme for the Dow index today, given its enormous weighting, but I don’t see a spillover to any other indexes except airlines,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Markets shrugged off data which showed U.S. retail sales unexpectedly rose in January, lifted by an increase in purchases of building materials and discretionary spending, but receipts in December were much weaker than initially thought.
This comes on the heels of data from last week that showed U.S. employment growth almost stalled in February, which added to global growth fears fanned by a sharp fall in China’s exports and as the European Central Bank slashed growth forecasts for the region.
The S&P 500 index ended the week 2.2 per cent lower, its biggest weekly decline since the market tumbled at the end of 2018, weighed by concerns of a slowing economy. The benchmark index is now nearly 7 per cent away from its record high hit on Sept. 20.
“There are lingering economic concerns from last week,” Frederick added.
“When you go into a downtrend like you had in the last five sessions, sometime you get pauses and this is a pause, but to get the momentum to shift to the other direction you need a positive catalyst and I don’t see one on the horizon.”
China and the United States are still working day and night to achieve a trade deal that matches the interests of both sides, including eliminating tit-for-tat tariffs, a senior Chinese official said on Saturday.
Apple Inc rose 2.3 per cent after Bank of America Merrill Lynch upgraded the iPhone maker’s shares to “buy” from “neutral” saying the pull back in its stock presented a buying opportunity.
U.S. chipmaker Nvidia announced it would buy fellow chipmake Mellanox Technologies for about US$7-billion in cash, the company’s largest acquisition ever. Nvidia’s shares rose 2.2 per cent while Mellanox’s shares gained 8.3 per cent.
In other news, President Donald Trump on Monday will ask lawmakers to hike spending for the military and the wall he wants to build on the U.S.-Mexico border and slash other programs in his 2020 budget.
The Republican president’s proposal, slated for release at 11:30 a.m., is expected to be rejected by Congress.
Commodities
Oil prices rose on Monday, lifted by comments from Saudi Energy Minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showing a fall in U.S. drilling activity.
U.S. West Texas Intermediate (WTI) crude oil futures were at US$56.50 per barrel, up 43 cents, or 0.77 per cent from their last close. Brent crude futures were at US$66.29 per barrel, up 55 cents, or 0.84 per cent.
Falih told Reuters on Sunday it would be too early to change a production curb pact agreed by the Organization of the Petroleum Exporting Countries and allies including Russia before the group’s meeting in June.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.
Oil markets have been supported this year by ongoing supply cuts by the group called OPEC+, which has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.
The group will meet on April 17-18, with another gathering scheduled for June 25-26, to discuss supply policy.
Further underlining the desire of the world’s top exporter to drive down prices, a Saudi official said on Monday that the country plans to cut crude oil exports in April to below 7 million barrels per day.
Gold traded in a tight range on Monday as the dollar firmed, but prices hovered near a more than one-week peak hit last week as poor U.S. jobs data increased concerns about a global economic slowdown.
Spot gold eased about 0.1 per cent to US$1,296.62 per ounce, after briefly breaching the US$1,300 ceiling for the first time since March 1 in the previous session.
It rose 1 per cent on Friday, in its biggest one-day gain since Feb. 19. U.S. gold futures slipped 0.2 per cent to US$1,296.70 an ounce.
Currencies and bonds
The Canadian dollar, having lost ground last week amid the Bank of Canada’s bleak economic outlook, is at about 74.5 US cents.
“With no major domestic data releases this week the C$ will be taking its cues from the U.S. data and risk sentiment,” said Benjamin Reitzes, Bank of Montreal’s Canadian rates and macro strategist.
“The loonie is about flat to start the week despite oil’s gain on the back of Saudi extending their production cuts into April.”
The dollar rose 0.1 per cent against major currencies and traded close to a near three-month peak registered in the previous week.
The U.S. dollar is mostly stronger and that is adding some downward pressure on gold,” said Jeffrey Halley, a senior market analyst at OANDA.
The U.S. 10-year treasury yield was up slightly at 2.654 per cent and the Canadian 10-year bond yield was up at 1.773 per cent.
Stocks to watch
Apple Inc rose 1.7 per cent after Bank of America Merrill Lynch upgraded the iPhone maker’s shares to “buy” from “neutral” saying the pulling back in its shares present a buying opportunity.
Australian gold miner Newcrest Mining Ltd. has the firepower for more acquisitions, its chief executive said, after the company announced a deal to buy a copper and gold mine in Canada for US$806.5-million.
Toronto-Dominion Bank has extended the pay agreement for chief executive officer Bharat Masrani, giving him financial incentives to stick around until the end of 2023. TD revealed in its proxy circular to shareholders that the company’s board asked Mr. Masrani, 62, to be available to serve as CEO past 2020, the year his existing compensation plan assumed he would retire. TD has given him a one-time $1.9-million grant of stock options that he can’t use until December 2023, contingent on his “continuing to be available to serve as CEO,” TD said in the document. The bank has also tweaked his pension to allow him to receive more in retirement.
Earnings include: Algoma Central Corp.; High Arctic Energy Services Inc.; Linamar Corp.
Economic news
(8:30 a.m. ET) U.S. retail sales for January. The Street expects a decline of 0.1 per cent from December (and a 0.2-per-cent increase excluding automobiles).
(10 a.m. ET) U.S. business inventories for December. Consensus is a rise of 0.6 per cent month-over-month.
With files from Reuters