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Canada’s main stock index rose in a broad-based rally at open on Monday, extending gains from the first quarter as surprise factory data from China spurred a demand for equities globally.
The Toronto Stock Exchange’s S&P/TSX composite index was up 85.79 points, or 0.53 per cent, at 16,187.88.
The Canadian dollar was nearly unchanged against its U.S. counterpart on Monday, steadying near an earlier 11-day high as oil prices rose and a surprise recovery in China factory activity boosted investor sentiment.
Stocks and the price of oil, one of Canada’s major exports, were boosted by data showing a pick-up in China’s manufacturing activity and further hints of progress in U.S.-China trade talks. U.S. crude prices were up nearly 1 percent at $60.71 a barrel.
The Canadian dollar was trading nearly flat at 1.3346 to the greenback, or 74.93 U.S. cents. The currency touched its strongest intraday level since March 21 at 1.3339.
The nearly two-week high for the loonie came after data on Friday showed surprising strength in the domestic economy.
U.S. stocks opened higher on Monday, as a surprise recovery in China factory activity and further signs of progress in the U.S.-China trade talks helped extend last quarter’s upbeat mood.
The Dow Jones Industrial Average rose 146.42 points, or 0.56 per cent, at the open to 26,075.10.
The S&P 500 opened higher by 14.23 points, or 0.50 per cent, at 2,848.63. The Nasdaq Composite gained 70.92 points, or 0.92 per cent, to 7,800.24 at the opening bell.
On Friday, the S&P 500 posted its best quarterly gain in a decade amid trade optimism.
The TSX, however, closed lower weighed down by energy and financial stocks.
Markets have been on edge in recent weeks after U.S. bond yields inverted, which has been a harbinger of a coming recession.
In Toronto, investors will be keeping watch on marijuana stocks as a number of new stores are able to open their doors in Ontario.
Oil and gasoline stocks could see a reaction with the start of the carbon tax in a Ontario, Manitoba, N.B and Saskatchewan, which is expected to increase gas prices at the pump.
Overseas, European stocks posted their best daily gains since mid-February, with the pan-European STOXX 600 index up 0.8 per cent in early deals. Germany’s trade-sensitive DAX outperformed with a 1 per cent rise helped by gains in auto maker stocks.
Britain’s FTSE rose 0.6 per cent and France’s CAC gained 0.6 per cent.
MSCI’s All-Country World Index, which tracks shares in 47 countries, was up 0.4 per cent on the day. It had just posted its best quarter since 2010.
“Investors’ sentiment seems to be tilting to the side of optimism at the beginning of the second quarter, following a robust manufacturing report from China,” said Konstantinos Anthis, head of research at ADSS.
China’s official purchasing managers’ index (PMI) released on Sunday showed factory activity unexpectedly grew for the first time in four months in March.
A private business survey, the Caixin/Markit PMI, released on Monday also showed the manufacturing sector in the world’s second biggest economy returning to growth.
“This news helps ease market participants’ worries over the odds of an upcoming recession on a global scale, even though there are plenty of signs suggesting caution,” Anthis said.
In Asia, Japan’s Nikkei rose 1.4 per cent, China’s Shanghai index rose 2.6 per cent and Hong Kong’s Hang Seng gained 1.8 per cent.
Commodities
Oil rose on Monday, building on its largest first-quarter gains in nearly a decade, as tight supply and positive signs for the global economy supported prices.
Brent crude for June delivery was up 96 cents, or 1.42 per cent, at US$68.54 a barrel, having risen 27 per cent in the January-March period.
U.S. West Texas Intermediate futures rose 56 cents, or 0.93 per cent, to US$60.70 a barrel, after gaining 32 per cent in the first quarter.
Positive Chinese factory gauges and signs of progress in Sino-U.S. trade talks have boosted sentiment, helping to buoy regional stock markets.
“Oil continues to move higher, with risk appetite on the rise in global markets,” BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.
Gold prices eased on Monday as stock markets rallied after upbeat Chinese economic data soothed some concerns about the global economy and boosted risk appetite, although losses were limited by a sliding U.S. dollar.
Spot gold was down 0.1 per cent at US$1,290.22 per ounce, after touching its lowest since March 8 at US$1,286.35 on Friday.
U.S. gold futures fell 0.2 per cent to US$1,295.80 an ounce. “We have a positive environment in the equity markets so risk is on and that’s a negative for gold,” Julius Baer analyst Carsten Menke said.
The dollar index was lower, however, limiting gold’s losses as it makes holding the metal cheaper for buyers holding other currencies.
“We have to look through the noise and at the bigger picture. We still think the global economy is slowing in the 12-18 month horizon, especially in the U.S., which should help gold in the longer term,” Menke said.
Gold has gained more than 11 per cent since touching more than 1-1/2-year lows last August on a dovish U.S. Federal Reserve and global growth concerns.
Investors are now waiting for U.S. retail sales and manufacturing PMI data due later in the day.
Currencies and bonds
Rising oil prices boosted the loonie, which was trading at the 75 US cent level.
The dollar could see some movement later this week after employment figures are released on Friday, with expectations for a decline in jobs after strong gains in the last six months, said Elsa Lignos, global head of FX strategy with RBC Europe Ltd. in a note.
"Technically, Friday’s break below $1.3371 (74.78 cents US) exposes support at $1.3337 (74.97 cents U.S.) and $1.3242 (75.51 cents US) , with resistance at $1.3468 (74.25 cents US).
The U.S. dollar fell 0.2 per cent against a basket of currencies to 97.104.
The greenback had benefited from the flagging pound, which was on track to post its fourth day of losses in the wake of the Brexit saga.
But sterling was 0.2 per cent higher to the dollar at US$1.3060 on Monday, after taking its latest knock after British lawmakers rejected Prime Minister May’s Brexit deal for a third time on Friday.
The U.S. 10-year Treasury yield was up slightly at 2.44 per cent, while the Canada 10-year bond yield was up slightly at 1.65 per cent.
Stocks to watch
The largest shareholder in Knight Therapeutics Inc. plans to launch a proxy fight Monday for control of the $1-billion drug company, following a year-long activist campaign against Canadian pharmaceutical entrepreneur Jonathan Goodman. Medison Biotech Ltd., a pharmaceutical company based in Israel, owns about 7 per cent of Montreal-based Knight. On Monday, Medison is expected to propose six new directors and the reappointment of its own chief executive to the company’s board. Knight has a seven person board that includes Medison CEO Meir Jakobsohn.
Johnson & Johnson’s baby shampoo samples failed quality tests conducted by the northwestern Indian state of Rajasthan, according to a public notice from the state’s drugs watchdog, findings that were rejected by the U.S. drug maker. This comes just a few months after Indian authorities launched an investigation into J&J’s Baby Powder to see if it contains cancer-causing asbestos. J&J said in late February it had resumed production of baby talc after government tests found no asbestos in the product. Its shares were up 0.1 per cent in premarket trading.
Southwest, Delta and United airlines all said early Monday that they are experiencing system-wide outages. Southwest said the outage was disrupting flights and they are working to fix the problem.
U.S. President Donald Trump on Friday signed a new permission for TransCanada Corp. to build the long-delayed Keystone pipeline for imports of Canadian oil, replacing his previous permits in a fresh attempt to get around the blocking of the $8 billion project by a court in Montana.
Canaccord Genuity Group Inc. on Sunday said it will restructure its capital markets business in the United Kingdom, with uncertainty looming over the country as it prepares to exit from the European Union.
Earnings include: AGT Food & Ingredients Inc.; MAG Silver Corp.; Prometic Life Sciences Inc.
With files from Reuters