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Equities

Canada’s main stock index opened higher Monday with energy shares gaining and optimism over the reopening of world economies underpinning investor sentiment

At 9:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 97.64 points, or 0.65 per cent, at 15,011.28.

Energy stocks rose 0.6 per cent as crude prices held onto recent gains. Finacials were also higher, rising 0.7 per cent. Materials stocks, which include gold miners, fell 0.3 per cent alongside declining bullion prices.

U.S. markets are closed for Memorial Day.

“Equities kicked off the week on a mixed note [as] investors, who are increasingly worried with mounting U.S.-China tensions and rising unrest in Hong Kong, remained somewhat optimistic regarding the reopening of businesses across the globe and hope for more monetary and fiscal stimulus,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

She noted that U.S.-China relations continued to remain rocky with Chinese Foreign Minister Wang Yi warning that the U.S. is heading towards a new ‘cold war’.

“Although China remains committed to deliver on its phase-one [trade] deal promises for now, the next round of negotiations with the U.S. will certainly be overshadowed by the renewed political tensions, topped with Hong Kong revolts and the U.S. blame on China having created the virus in a Wuhan lab.,” she said.

In this country, bank earnings will be in focus this week, kicking off on Tuesday with results from Bank of Nova Scotia and National Bank.

Investors are braced for a tumultuous quarter as the the COVID-19 pandemic hit. Markets are expecting to see a big buildup in provisions for credit losses, likely eating into profits. The Globe’s James Bradshaw reported recently that an RBC Dominion Securities analyst predicted that provisions for the quarter ended April 30 could be five times higher than the previous quarter. In that scenario, earnings per share would fall 82 per cent on average from a year ago.

Overseas, major Asian markets ended firmer. Japan’s Nikkei gained 1.73 per cent. Japanese Prime Minister Shinzo Abe said on Monday that Japan will lift a state of emergency for Tokyo and four remaining areas later in the day but that it could be reimposed if the pace of infections rises.

The Shanghai Composite Index gained 0.15 per cent. Hong Kong’s Hang Seng bounced back from early losses to close up 0.10 per cent.

In Europe, France’s CAC 40 gained 1.58 per cent by afternoon. Germany’s DAX rose 2.49 per cent. A gauge of Germany business moral helped lift European markets, recovering in May from the previous month’s sharp decline. The pan-European STOXX 600 was up 1.15 per cent by the second half of the trading day.

Commodities

Crude prices were up modestly in early going as the reopening of world economies bolsters optimism over demand.

The day range on Brent so far is US$34.46 to US$35.44. The range on West Texas Intermediate US$32.48 to US$33.76. Trading was expected to be light on Monday with markets in the U.S. and Britain closed.

Despite gains in recent weeks, both benchmarks are still down more than 40 per cent so far this year.

“The balance has shifted from both demand and supply sides, with demand rebounding more quickly than expected,” Stephen Innes, chief market strategist for AxiCorp, said.

“Naturally, China has had a long head start in reopening the economy. Still, even India and the U.S. show improvement, where lockdowns began much later, and reopening progress is further behind.”

In other commodities, gold prices slipped. Spot gold was down 0.5 per cent at US$1,725.18 per ounce. U.S. gold futures fell 0.6 per cent to US$1,725.60.

“I think the play into stocks and other risk assets has probably supported the risk appetite, and diminished the appeal for gold in the short term,” IG Markets analyst Kyle Rodda said

“There still seems to be the broad issue of gold prices trying to break too far above the $1,740, $1,750 mark.”

Currencies

The Canadian dollar edged higher as crude prices firmed and global equities markets shifted advanced.

The day range on the loonie is 71.37 US cents to 71.55 US cents.

There were no major economic releases scheduled for Monday. Bank of Canada Governor Stephen Poloz is set to deliver the University of Alberta Eric J. Hanson Memorial Lecture at 1:30 p.m. ET. The week’s big Canadian economic release comes Friday with Statscan’s report on first-quarter GDP. Some economists are expecting to see a record contraction of 10 per cent.

“Although many Asian and European markets have been open as normal, public holidays in the U.K. and U.S. have kept overnight markets very quiet,” RBC chief currency strategist Adam Cole said. “Most G10 currencies are flat around Friday’s closing levels.”

On global markets, heightened tensions between the U.S. and China helped lift the U.S. dollar as investors sought out safe-haven currencies.

The U.S. dollar index, which weighs the greenback against a basket of world currencies, rose a fifth of a per cent to 99.98, a one-week high, according to Reuters.

Elsewhere, the euro fell 0.2 per cent to a one-week low against the U.S. dollar of $1.0879.

Britain’s pound was also weaker against both the U.S. dollar and the euro as British Prime Minister Boris Johnson faced a revolt from his cabinet over his backing of senior adviser Dominic Cummings. Weekend reports said Mr. Cummings drove 250 miles during the coronavirus lockdown, sparking calls for him to step down.

More company news

Vermilion Energy Inc. said Anthony Marino has stepped down as president and chief executive officer and as a director of the company, effective immediately. In lieu of filling the role of CEO, Vermilion said it has created an Executive Committee consisting of a minimum of five senior executives from within the Company. Vermillion also said co-found Lorenzo Donadeo has been named executive chairman. Curtis Hicks has been appointed president.

Barrick’s Tanzania subsidiary Twiga Minerals has resumed exports of gold concentrate after receiving clearance for its first shipments since the lifting of a government ban imposed during a tax dispute with the mining company. The dispute originally involved Acacia Mining, which was taken over by Barrick last year. The Tanzanian government imposed a ban on exporting mineral concentrates in 2017 after accusing Acacia of tax evasion.

Bayer said on Monday it had made progress seeking a settlement over claims its glyphosate-based Roundup weedkiller causes cancer, after Bloomberg reported the company reached a verbal agreement on about 50,000 to 85,000 cases. “We’ve made progress in the Roundup mediation discussions under the auspices of Ken Feinberg, but in keeping with the confidentiality of this process, the company will not speculate about settlement outcomes or timing,” a Bayer spokesman told Reuters.

Aston Martin Chief Executive Andy Palmer is leaving the business as part of a management shake-up and will be replaced by Tobias Moers, CEO of Mercedes-AMG, a source familiar with the matter told Reuters on Sunday. The luxury carmaker said in an emailed statement that it is reviewing its management team but declined to comment on Palmer’s fate.

The German government and the management of flagship carrier Lufthansa, which has been hit hard by the coronavirus pandemic, have reached an agreement on state aid worth billions of euros, German news agency dpa reported on Monday. The agreement is still pending approval by the German coronavirus rescue fund’s steering committee as well as Lufthansa’s boards and the EU commission.

Economic news

(1:30 p.m. ET) Bank of Canada Governor Stephen Poloz delivers the University of Alberta Eric J. Hanson Memorial Lecture (videoconference)

With Reuters and The Canadian Press