Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index rose at the open on Monday led by materials companies as gold prices hit a more than one-week peak and trade tensions between the United States and China boosted appetite for safe-heaven assets.
At 9:30 a.m. EDT, the Toronto Stock Exchange’s S&P/TSX composite index was up 11.40 points, or 0.07 per cent, at 16,241.44.
Health care stocks were the biggest gainers, up 1 per cent with Aphria up 4.9 per cent, Cronos up 3.9 per cent and Canntrust up 2.6 per cent.
Industrials were up 0.5 per cent. Transcontinental, Richelieu Hardware and Bombardier all gained 1 per cent.
Consumer staples and tech stocks rose 0.5 per cent each.
With the U.S. markets closed for the Memorial Day holiday, trading is likely to be muted. U.K. markets are also closed.
This week, energy and climate change will be on the agenda as G20 energy minister meet in Vancouver where they will push for faster adoption of low-carbon technologies, as worldwide investment in energy efficiency and renewable power stalled last year.
The ongoing trade dispute between China and the U.S. continues to keep investors wary.
U.S. President Donald Trump said on Monday he was “not yet ready” to make a deal with China, hinting that the world’s biggest economies are far from a trade agreement.
China on Friday denounced U.S. Secretary of State Mike Pompeo for fabricating rumours after he said the chief executive of China’s Huawei Technologies Co Ltd was lying about his company’s ties to the Beijing government.
Elsewhere, Trump’s visit to Japan was overshadowed by trade tensions. Trump pressed Japanese Prime Minister Shinzo Abe to even out a trade imbalance with the United States.
Overseas, the big news was a confirmation of merger talks between Fiat Chrysler and Renault, which led auto stocks and markets higher.
European parliamentary elections saw pro-Europe parties cling to a majority.
The pan-European STOXX 600 added 0.4 per cent with all major European indices in the black, although trading volumes were thin. Germany’s DAX was up 0.47 per cent and France’s CAC gained 0.27 per cent.
Auto stocks climbed 1.8 per cent as Italian-American car maker Fiat Chrysler confirmed it had made a “transformative merger” proposal to French peer Renault in a deal which would create the world’s third-biggest car maker. Shares of both companies rallied. Renault’s stock was up as much as 14 per cent.
Markets were also buoyed as pro-European parties retained a firm grip on the EU parliament, provisional results from the bloc’s elections showed, though euroskeptic opponents saw strong gains.
Investors had been worried about euroskeptic parties gaining a 30 per cent vote share – the level at which they could seriously disrupt European governance and the region’s ability to show unity in addressing key concerns like a global trade war.
But while far-right, nationalist or anti-EU groups came out on top in Italy, Britain, France and Poland, they failed to alter dramatically the balance of pro-European power in the EU assembly.
“The impression of a fragmented political system remains, but perhaps when all is said and done, the message will be that Brexit has reduced appetite to leave the EU,” said Kit Juckes, FX strategist at Societe Generale.
The gains followed a stronger showing in Asian markets, where shares rose but remained near four-month lows. The MSCI world equity index, which tracks shares in 47 countries, was ahead by 0.1 per cent.
Japan’s Nikkei 225 index advanced 0.3 per cent after visiting President Trump said he expects a deal with Tokyo on trade after a Japanese election in July.
Trump has been seeking a bilateral trade deal with Japan after withdrawing from the Pacific Rim trading block, the Trans-Pacific Partnership. The two sides are working to close gaps over trade in farm products and autos and auto parts.
China’s Shanghai index was up 1.4 per cent and Hong Kong’s Hang Seng fell 0.24 per cent.
Commodities
Oil steadied on Monday, trading below US$69 a barrel, as concern over the U.S.-China trade dispute and global economic outlook offset support from Middle East tensions and supply cuts.
Figures on Monday showed that profits for Chinese industrial companies shrank in April while new orders for U.S.-made capital goods fell more than expected in a further sign that the economy is slowing.
The main factor preventing crude prices from rising on the geopolitical news is the concern about the global economy, said Petromatrix oil analyst Olivier Jakob.
“The macroeconomic outlook does not look good,” Jakob said.
Brent crude, the global benchmark, was up 5 cents at US$68.74 a barrel, having fallen by about 4.5 per cent last week. U.S. West Texas Intermediate crude was down 36 cents at US$58.27.
Both crude contracts registered their biggest weekly price declines of the year last week. Public holidays in the United States and Britain on Monday limited participation, keeping volumes low.
Rising tension between the United States and Iran, with Washington’s announcement on Friday that it would deploy more troops to the Middle East, has had little impact on the market so far.
“This move further increases tensions in the regions, but with the U.S. and U.K. markets closed today and most of the geopolitical tension likely already priced in to the market, effects on crude prices may remain subdued,” JBC Energy said in a report.
Gold hit a more than one-week peak on Monday as trade tensions between the United States and China lifted appetite for assets seen as a haven from risk, while weak U.S. economic data boosted hopes for a rate cut from the Federal Reserve.
Spot gold inched up 0.1 per cent to US$1,285.60 per ounce. The metal touched US$1,287.32 earlier in the session, its highest since May 17.
U.S. gold futures were 0.2 per cent higher at US$1,285.60 an ounce.
“Some of the comments made by Trump over the trade talks with China were not overly optimistic,” ING analyst Warren Patterson said.
“The continued uncertainty around trade is helping to support prices... that uncertainty is increasing demand for safe-haven assets.”
Currencies and bonds
Despite a rise in commodity prices, the Canadian dollar was down slightly and trading at the 74.33 US cents level.
The U.S. currency traded at 109.45 yen, up 0.15 per cent, underpinned by Japanese players’ bargain-hunting.
Buying interest from Japanese investors is strong when the dollar dips near 109 yen, said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities.
“Data shows Japanese investors bought a large amount of foreign bonds a few weeks ago when the dollar fell near 109 yen. There’s demand from Japanese companies that need dollar for their M&A deals,” he said.
Still, the U.S. currency is not far from a three-month low of 109.02 touched two weeks ago, hit amid worries about escalating tensions between Washington and Beijing over trade and technology.
The dollar has been also capped against the yen as U.S. President Donald Trump is seen putting pressure on Japan to take measures to reduce its trade surplus with the United States.
Trump, who arrived in Tokyo on Saturday, tweeted on Sunday that much of the trade negotiation with Japan will wait until after the country’s election in July.
The euro held firm in early Monday trade after pro-European Union parties withstood more fragmentation than before to hold on to two-thirds of seats in the EU parliament elections, limiting gains in nationalist opponents.
The common currency traded at $1.1211 in Asian trade, near its highest levels in 1 1/2 weeks, and off a two-year low of $1.11055 touched on Thursday.
Other corporate news
Canadian Utilities said it is selling its Canadian fossil-fuel-based electricity generation business for $835-million. The company will keep Ashcor Technologies, its Oldman River hydro facility and its international projects.
Nasdaq withdrew its offer for Oslo Bors on Monday, giving pan-European exchange Euronext free rein to pursue its bid for the Norwegian stock market operator after a five-month battle. Euronext secured approval from Norway’s Ministry of Finance this month to buy more than 50 per cent of Oslo Bors for 158 Norwegian crowns per share, effectively blocking Nasdaq’s bid. Both had valued one of Europe’s few independent stock market operators at around 6.8 billion Norwegian crowns (US$783-million).
Earnings include: Leucrotta Exploration Inc.
Economic news
U.S. markets closed (Memorial Day)
With files from Reuters