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At the open: TSX starts at seven-week high – The Globe and Mail

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Canada’s main stock index opened at a seven-week high on Tuesday, steered by rising optimism among investors over measures taken to ease coronavirus-led lockdowns across the globe.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 110.13 points, or 0.75%, at 14,752.24.

U.S. stock markets jumped at the open on Tuesday on another round of upbeat quarterly earnings reports, even as investors braced for a likely slide in consumer confidence data later in the day.

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The Dow Jones Industrial Average rose 223.39 points, or 0.93%, at the open to 24,357.17.

The S&P 500 opened higher by 31.48 points, or 1.09%, at 2,909.96, while the Nasdaq Composite gained 95.52 points, also 1.09%, to 8,825.69 at the opening bell.

World stocks jetted to their highest in almost six weeks on Tuesday as plans to ease coronavirus lockdowns in a number of major economies helped offset more chaos in oil markets and warning of mounting bad credit at HSBC and Santander.

Oil major BP had said it had suffered a near 80% plunge in profits too but with Wall Street rising higher it was the relatively good news, rather than the bad or plain ugly that investors seemed focused on.

Plans to ease major economies out of coronavirus lockdowns were continuing, reassuring UBS earnings lifted European banks nearly 6% while Italy’s bonds recovered further after it had dodged a damaging credit rating downgrade on Friday.

“The general mood seems to be definitely more positive today,” said CMC markets senior analyst Michael Hewson, highlighting that investors now viewed the peaks of coronavirus infections in Asia, Europe and North America as behind them.

“They are banking on a v-shaped recovery (in the global economy)… so the line of least resistance is for stock markets to go higher especially when central banks have got their pedals hard to the floor.”

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The near 2% jump in European stocks and the rise from Wall Street later meant MSCI’s 49-country index of world stocks was extending the more than 25% rebound it has made since hitting near four-year lows last month.

Oil remained total carnage though. U.S. WTI, which went negative last week, was down 10% having dived as much as 20% earlier after a scramble by the United States Oil Fund (USO) , the largest oil-focused U.S. exchange-traded product, to shift its holdings had underscored the dwindling capacity to store excess supply.

Benchmark brent Brent went down a more manageable 5% and had largely recovered by the time U.S. trading began, but it was still at only $20 a barrel which is way below where even the most efficient producer countries can balance their finances.

Petrocurrencies were whiplashed too. Canada’s dollar and the Norweigen crown both recovered from early falls with the crown tearing up as much as 1.4%.

Russia’s rouble also bounced back 0.5%, while Brazil’s battered real sprang up 1.2% along with Mexico’s peso and a host of other emerging market currencies that only tend to well when investors are feeling confident.

“Normally, a lower oil price disproportionately boosts consumer sentiment. However, the storage problem is due to reduced oil demand – if you are not putting petrol in your car, you will not notice the price,” UBS Chief Economist Paul Donavan said.

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“The good news is that the money saved by not buying petrol now may be spent later in the economic bounceback.”

Away from wild oil, there were signs that the market volatility gauges that have been triggered by the rapid spread of the coronavirus over the last few months were also easing.

The U.S. stock market’s so-called fear gauge, the VIX , was at its lowest in a month and the U.S. dollar was softer against other major currencies like the euro which stood up at $1.0880..

Markets are looking for any forward guidance from the U.S. Federal Reserve, which meets later on Tuesday and is due to issue a statement on Wednesday. The European Central Bank then meets on Thursday.

The Fed has led the global monetary policy response to the coronavirus pandemic by cutting interest rates to zero and aggressively buying bonds and corporate credit – a programme it extended overnight to include municipal debt of smaller U.S. cities.

Analysts said it was unlikely that the Fed would make further major policy moves, given the scope and depth of recent action to counter the economic damage caused by COVID-19.

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Sweden’s central bank had opted not to take its interest rates back into negative territory on Tuesday, sending its currency up 0.5% and to its highest in over a month.

“The major central banks are at comparatively expansionary levels. All of them have beefed up asset purchases as much as they could. All of them are close to or even at the minimum lower interest rate bound,” wrote Thu Lan Nguyen, an analyst at Commerzbank.

“They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates.”

The ECB has had less room to manoeuvre on rates and announced an enormous bond-buying program. Still, bickering and indecision over a eurozone rescue package has some in the market expecting deeper action still, perhaps as soon as Thursday.

That has seen the euro left behind as expectations for an economic recovery from the pandemic has pressured the U.S. dollar and driven a rally in riskier currencies such as the Australian dollar.

The Aussie dollar briefly spluttered as oil went wacky again but regained its poise to add to its near 20% bounce from a 17-year low struck last month.

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Elsewhere the pound rose 0.6% to $1.25, having earlier been pressured after Prime Minister Boris Johnson warned it was too dangerous to relax a strict lockdown in Britain.

Reuters

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At midday: TSX flat following release of dismal trade data – The Globe and Mail

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Canada’s main stock index was flat on Thursday with bleak trade data for April denting sentiment.

The nation’s exports and imports plunged in April as the coronavirus-fueled lockdowns forced factories and retail stores to shut businesses, Statistics Canada said.

At 11:51 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 1.65 points, or 0.01%, at 15,573.58.

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The energy sector erased early losses and sat 0.1%, despite a slide in oil prices.

The financials sector was up 0.3%. The industrials sector rose 0.2%.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 1% as spot gold futures rose 0.5% to $1,706.05 per ounce, recovering from a slide to a near one-month low of $1,688.89 in the last session. U.S. gold futures were up 0.4% at $1,710.90.

Canada posted a trade deficit of $3.25-billion in April as exports fell by nearly 30% to the lowest level in more than 10 years at $32.7-billion. Analysts had forecast exports would be $42.1-billion.

“This dismal report adds to the evidence that the economy contracted sharply in April,” said Ryan Brecht, a senior economist at Action Economics. “However, the reopening of the economy and recovery in energy prices in May suggests that April will mark the bottoming out of activity.”

On Wednesday, the Bank of Canada said the impact of the coronavirus pandemic on the global economy appears to have peaked, while the Canadian economy seems to have avoided worst-case scenario projections.

The S&P 500 and Nasdaq indexes edged lower in choppy trading on Thursday, as a rally fueled by hopes of a post-coronavirus economic recovery fizzled out even with weekly jobless claims dipping below 2 million for the first time since mid-March.

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Still, the Nasdaq 100 became the first U.S. equity index to reclaim its intraday record high, powered by the NYSE FANG+TM index, which includes Facebook Inc, Apple Inc , Amazon.com Inc, Netflix and Alphabet Inc.

Wall Street’s main indexes have recovered sharply from their March lows and the tech-heavy Nasdaq index is now only 2% below its all-time closing high hit in February.

“In this market, you need to be selective and technology continues to be one of our favorite sectors,” said Larry Adam, chief investment officer at Raymond James in Baltimore, Maryland.

“There’s going to be much more reliance on fundamentals … and (technology-related) are the types of companies that have the earnings growth that will be rewarded by the market.”

A report from the Labor Department showed new claims for state unemployment benefits totaled 1.877 million for the week ended May 30, down from 2.126 million in the prior week. Economists polled by Reuters had forecast 1.8 million initial claims in the latest week.

Focus will now shift to the closely watched employment report for May, due Friday, which is expected to show the unemployment rate rocketing to 19.8%, a post-World War Two record.

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The Dow Jones Industrial Average was up 14.28 points, or 0.05%, at 26,284.17, the S&P 500 was down 7.23 points, or 0.23%, at 3,115.64 and the Nasdaq Composite was down 37.95 points, or 0.39%, at 9,644.96.

American Airlines Group Inc jumped 24.5% after the airline revealed plans to fly more than 55% of its July 2019 domestic capacity and boost its U.S. flight schedule next month.

Jif peanut butter maker J.M. Smucker Co fell 3.8% after the company forecast a decline in full-year sales on weakness in sales to restaurants and schools.

Charles Schwab Corp gained 1.5% after it received an anti-trust approval from the Department of Justice for its purchase of TD Ameritrade Holding Corp. Shares of TD Ameritrade jumped 3.5%.

EBay Inc jumped 6.3% after it raised its current-quarter revenue and profit forecast, as people stuck at home ordered more from its platform due to the COVID-19 pandemic.

Oil prices fell on Thursday on doubts over the ability of top crude producers to agree to extend record output cuts, heightened by worries over a build in U.S. fuel inventories.

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Brent crude futures were down 48 cents, or 1.2%, at $39.31 a barrel. U.S. West Texas Intermediate (WTI) crude futures dropped 74 cents, or 2%, to $36.55.

Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend cuts of 9.7 million barrels per day (bpd) that major producers agreed to in April. But a suggestion by the Organization of the Petroleum Exporting Countries’ current president Algeria to meet on Thursday was delayed amid talks about poor compliance by some producers.

OPEC and allies led by Russia, a group known as OPEC+, could still hold a ministerial video conference this week if Iraq and others which have not fully complied with existing supply cuts agree to boost their adherence, three OPEC+ sources told Reuters.

Reuters

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Gold shrugs as ECB throws more stimulus into markets to fight COVID-19 – Kitco NEWS

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Editor’s Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today’s must-read news and expert opinions. Sign up here!

(Kitco News) – The gold market is holding steady above $1,700 but is seeing little reaction as the European Central Bank threw more stimulus into financial markets Thursday.

As expected, following its monetary policy meeting, the ECB announced that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

However, in an effort to support the European economy, devastated by the COVID-19 pandemic, the ECB said that its pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion.

“In response to the pandemic-related downward revision to inflation over the projection horizon, the PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households,” the ECB said.

The timeline for the PEPP program will also be extended until at least June 2021.

Andrew Kenningham, chief Europe economist at Capital Economics said that the latest move by the ECB more than meets market expectations.

“It also does enough to justify the view that euro-zone policymakers have got their act together, for now at least, in responding to the coronavirus crisis,” he said.

Along with the emergency spending measures, the central bank said that its regular asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.

The ECB also reiterated that its asset purchase programme will run for as long as the committee deems necessary.

The gold market is not seeing much reaction to the new stimulus measures. August gold Futures last traded at $1,711.20 an ounce, up 0.38% on the day.

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U.S. trade gap widens in April masking steep declines in both exports and imports – MarketWatch

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The numbers: The U.S. trade deficit widened to $49.4 billion in April from a revised $42.3 billion in the prior month, the Commerce Department said Thursday. Economists polled by MarketWatch had forecast a $49.5 billion shortfall. The wider trade gap masks a significant decline in trade flows from the COVID-19 pandemic.

What happened: Exports fell 20.5% to $151.3 in April. The decline was led by civilian aricraft, crude oil, and autos.

Imports dropped 13% to $200.7 billion. The decline was led by passenger cars, semiconductors and consumer goods including pharmaceutical preparation and apparel.

Exports are down 9.5% year-to-date, while imports are off 10.2%. The U.S. services surplus narrowed $1.3 billion to $22.4 billion.

The trade gap with China widened $9 billion to $26 billion in April.

Big picture: The COVID-19 pandemic has depressed trade flows into and out of the United States, economists said. The wider deficit should depress second-quarter gross domestic product even further. Economists surveyed by MarketWatch are expecting GDP to decline at a 27.2% annual rate in the April-June quarter.

Market reaction: Stocks futures indicated a lower opening on Thursday. Stocks have been on a tear lately. with the Nasdaq Composite
COMP,
+0.03%

moving to with 2% of its all-time high.

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