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Global stock rally tempers after vaccine euphoria – BNN

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Stocks dropped amid a selloff in big tech and speculation that this month’s rally has outpaced prospects for an economic rebound as coronavirus cases surge. Treasuries fell.

The S&P 500 retreated from a two-month high as the slide in technology shares outweighed gains in industrial and energy companies. The Nasdaq 100 slumped as much as 2.7 per cent on Tuesday. Amazon.com Inc. sank as the online-retail giant faced an antitrust complaint from the European Union, while American depositary receipts of Alibaba Group Holding Ltd. tumbled after China tightened the scrutiny over internet behemoths. Meanwhile, the Dow Jones Industrial Average outperformed as Boeing Co. surged on news that regulators could lift the 737 Max grounding as soon as next week. The Russell 2000 Index of smaller companies climbed 2 per cent.

After all the enthusiasm that lifted global equities and sent havens into a tailspin, some analysts said the moves may have gone too far. The coronavirus shot still has several hurdles to clear, there’s concern over fiscal stimulus, the transition of power to President-elect Joe Biden and surging virus cases. The U.S. reported a record 142,907 new infections on Monday, and Governor Phil Murphy said New Jersey’s jump in cases is “devastating.” Despite the uncertainties, this month’s rally in the S&P 500 put its valuations near the highest levels since the dot-com era.

“You still have a tremendous amount of uncertainty out there, and while equities may continue to climb a wall of worry, the stock market is still subject to the rules of gravity,” said Jonathan Boyar, managing director at Boyar Value Group.

With the Nasdaq Composite Index down for a second straight session, an ominous double-top pattern has formed. That should put all eyes on the 50- and 100-day moving averages as the first and second line of support for the tech-heavy stock gauge. Megacaps extended the slide that accompanied Monday’s rotation out of pandemic favorites and into value stocks, and potentially setting up a test of the 11,000 level around the 100-day line.

Meanwhile, China unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba and Tencent Holdings Ltd. The rules, which sent both stocks tumbling and sparked a wider selloff in the Asian nation’s equities, landed about a week after new restrictions on the finance sector that triggered the shock suspension of Ant Group Co.’s US$35 billion initial public offering.

These are some of the main moves in markets:

Stocks

The S&P 500 fell 0.2 per cent as of 2:57 p.m. New York time.
The Stoxx Europe 600 Index increased 0.9 per cent.
The MSCI Asia Pacific Index was little changed.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1 per cent.
The euro climbed 0.1 per cent to US$1.182.
The Japanese yen was little changed at 105.33 per dollar.

Bonds

The yield on 10-year Treasuries increased three basis points to 0.96 per cent.
Germany’s 10-year yield rose two basis points to -0.49 per cent.
Britain’s 10-year yield climbed three basis points to 0.401 per cent.

Commodities

The Bloomberg Commodity Index gained 1.7 per cent.
West Texas Intermediate crude increased 2.3 per cent to US$41.21 a barrel.
Gold strengthened 0.7 per cent to US$1,876.70 an ounce.

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Canada says U.S. ties could be undermined if Michigan shuts pipeline

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A day before Michigan’s deadline to close down a key crude oil pipeline, Canada on Tuesday issued its strongest remarks so far, saying the move could undermine relations with the United States, its closest ally and trading partner.

Enbridge Inc is preparing for a legal battle with Michigan and courting protests from environmental groups, betting it can ignore the state’s Wednesday deadline to shut down Line 5, which runs under the Straits of Mackinac.

The Canadian government said in a U.S. federal court filing that Michigan had no right to act unilaterally since a 1977 Canada-U.S. pipeline treaty guarantees the free flow of oil between the two nations.

“This case raises concerns regarding the efficacy of the historic framework upon which the U.S.-Canada relationship has been successfully managed for generations,” Ottawa said.

Michigan’s move “threatens to undermine important aspects of that cooperative international relationship”, it added.

The brief said Canada would suffer “massive and

potentially permanent disruption” from a shutdown. Line 5 brings 540,000 barrel-per-day of oil from western Canada to refineries and airports in Ontario, Quebec, Michigan, Ohio and Indiana.

In November, Michigan Governor Gretchen Whitmer gave Enbridge six months to shut down the pipeline that runs four miles (6.4 km) along the bottom of Lake Michigan-Huron, citing fears it could rupture.

The order needs a confirmatory order from a judge to enforce it, and Enbridge and Michigan are disputing whether the issue should be heard in state or U.S. federal court.

The sides are in court-ordered mediation, with the next session scheduled for May 18.

“We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely,” Enbridge spokeswoman Tracie Kenyon said in a statement this week.

Joe Comartin, Canada‘s consul general in Detroit who is arguing on behalf of Ottawa, said litigation could drag on until at least 2024.

“I don’t see a court jumping the gun and ordering it closed … until the litigation and constitutional issues are resolved,” he said by phone.

Canada has been lobbying https://www.reuters.com/business/energy/frustrated-canada-presses-white-house-keep-great-lakes-oil-pipeline-open-2021-04-26 Washington officials to keep the pipeline open in what is likely to be an election year in Canada, but the White House has so far not weighed in.

Ontario estimates the city of Sarnia, across the border from Michigan, could lose 5,000 refinery and chemical plant jobs. Industry lobbyists say thousands of U.S. jobs are in danger.

Environmentalists and indigenous groups opposed to Line 5 say the potential job losses are exaggerated. They plan “Evict Enbridge” rallies in Mackinaw City, Michigan, on Wednesday and Thursday.

“We are very hopeful to hear from the governor that there will be accountability measures for operating that pipeline,” said Beth Wallace of the National Wildlife Federation.

Michigan is reviewing what it could do if Enbridge keeps operating past the deadline, said a spokeswoman for the Michigan Attorney General.

Canadian crude market forward prices suggest most traders do not expect Line 5 to shut in coming months, but the lack of certainty is concerning, said one Calgary-based market source.

(Reporting by David Ljunggren and Nia Williams; Editing by David Gregorio and Marguerita Choy)

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Enbridge vows to keep pipeline open, girds for legal fight with Michigan

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Canadian pipeline company Enbridge Inc is squaring off for a legal battle with Michigan and courting protests from environmental groups, betting it can ignore the U.S. state‘s Wednesday deadline to shut its oil pipeline that runs under the Straits of Mackinac.

“We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely,” Enbridge spokeswoman Tracie Kenyon said in a statement this week, ahead of Michigan’s deadline for shutting the line.

Line 5 is a link in Enbridge’s network to bring oil exports from western Canada to refineries and airports in Ontario, Quebec, Michigan, Ohio and Indiana. In November, Michigan Governor Gretchen Whitmer gave Enbridge six months to shut down the 540,000 barrel-per-day pipeline that runs four miles along the bottom of Lake Michigan-Huron, citing fears it could rupture and spill.

The state’s order still needs a confirmatory order from a judge to enforce it, and Enbridge and Michigan are disputing whether the issue should be heard in state or U.S. federal court.

The sides are in court-ordered mediation, with the next session scheduled for May 18.

Joe Comartin, Canada‘s consul general in Detroit who is arguing on behalf of the country’s federal government, said litigation could drag on until at least 2024.

“I don’t see a court jumping the gun and ordering it closed … until the litigation and constitutional issues are resolved,” he said in an interview.

The Canadian government has been lobbying officials in Washington to keep the pipeline open in what is likely to be an election year in Canada, but the White House has so far not weighed in on the matter.

The Ontario government estimates that the city of Sarnia, just across the border from Michigan, could lose 5,000 refinery and chemical plant jobs. Industry lobbyists say thousands of jobs are also at risk in the United States.

Environmentalists and indigenous groups opposed to Line 5 say the potential job losses are exaggerated, and are planning “Evict Enbridge” rallies in Mackinaw City, Michigan, on Wednesday and Thursday.

“Past May 12, Enbridge will be operating illegally as per state laws. We are very hopeful to hear from the governor that there will be accountability measures for operating that pipeline,” said Beth Wallace of the National Wildlife Federation.

Michigan is reviewing what remedies would be available to the state if Enbridge keeps operating past the deadline, said Lynsey Mukomel, a spokeswoman for the Michigan Attorney General.

Canadian crude market forward prices suggest most traders do not expect Line 5 to shut in coming months, but the lack of certainty is concerning, said one Calgary-based market source.

“We are looking at all our options and we will leave no stone unturned in defending Canada‘s energy security,” Natural Resources Minister Seamus O’Regan told an emergency parliamentary debate on the pipeline last Thursday.

“We will be ready to intervene strategically at precisely the right moment,” he continued, without giving details.

 

(Reporting by David Ljunggren and Nia Williams; Editing by David Gregorio)

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U.S. State Dept approves potential sale of AEGIS Combat System to Canada

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The U.S. State Department has approved the potential sale to Canada of 4 AEGIS Combat Systems made by Lockheed Martin in a deal valued at up to $1.7 billion, the Pentagon said on Monday.

The Pentagon said the sale of the powerful missile and radar systems to the NATO ally would “significantly improve” network-centric warfare capabilities for U.S. forces operating globally alongside Canada‘s.

AEGIS systems are primarily used aboard ships though they have been adapted for land use.

The package would include four shipsets worth of the AEGIS Combat System and three shipsets of the MK 41 Vertical Launch System as well as support equipment, spares and technical support, the Pentagon said.

The Pentagon’s Defense Security Cooperation Agency notified Congress of the possible sale on Monday.

Despite approval by the State Department, the notification does not indicate that a contract has been signed or that negotiations have concluded.

 

(Reporting by Mike Stone in Washington; editing by Grant McCool)

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