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Premarket: U.S.-China tensions hit world stocks; gold and silver soar – The Globe and Mail

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The euro traded at an 18-month high on Wednesday as financial markets continued to bask in the afterglow of the EU recovery fund agreement deal, while a precious metals boom took silver’s recent gains to 20% and gold to a nine-year high.

News from China that the United States had told it to close its consulate in Houston caused a bout of risk aversion in European trading, but stock markets had been consolidating anyway after their recent surges.

Asian stocks had spent most of the day dithering and Europe’s morning dip added to the list of gyrations keeping traders occupied.

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Silver gained 5% to a six-year high of $23 per ounce before profit-taking struck. Gold’s high of $1,865 an ounce took its gains this month to nearly 20%.

The euro was perched above $1.15 for the first time since early 2019, and despite a minor tick up on the Houston headlines the dollar was at its lowest against a basket of the main world currencies since March.

“With the U.S. struggling with the pandemic, there is a growing divergence of growth expectations with Europe and Asia Pacific,” said RBC analyst Alvin Tan.

“We’ll keep an eye on what is happening in Houston, but the fact is that in a typical up-cycle for the global economy the dollar tends to underperform, of course”.

China’s foreign ministry spokesman Wang Wenbin told a regular daily news briefing that the United States had abruptly told Beijing on Tuesday to close its consulate.

“We urge the U.S. to immediately revoke this erroneous decision,” he said. “Should it insist on going down this wrong path, China will react with firm countermeasures.”

China’s offshore yuan weakened past 7 per dollar on the news and was last at 7.0028. The dollar index inched up 0.2% from March lows it had hit on Tuesday.

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“That headline triggered some profit taking, quite an aggressive one in USDCNY, USDCNH,” said Christy Tan, head of markets strategy for Asia at National Australia Bank in Singapore.

“It’s a timing issue. All this is coming as tensions between the U.S. and China are escalating. This added fuel to fire,” she said.

PEDAL TO THE METALS

The pan-European STOXX 600 extended its early drop to stand down 1% by 0900 GMT. Commodity-linked stocks along with travel and autos provided the biggest drags with falls of around 2%.

S&P 500 futures were down 0.5% following Tuesday’s mixed session on Wall Street, amid concern about rising U.S. coronavirus cases and political disagreement over the next U.S. fiscal aid package.

The United States reported more than 1,000 deaths from COVID-19 on Tuesday, the first time that grim milestone has been passed since June. President Donald Trump warned that things would probably get worse before they got better.

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The euro was last at $1.1515 after going as high as 1.1547, its best since January 2019. The Australian dollar held near a year-high of $0.7144 which was bolstered by upbeat Aussie retail sales data.

Copper prices drooped 1.3% after the Houston headlines . Shanghai and Dalian iron ore futures rose for a second straight session on expectations of strong Chinese demand.

Oil prices remained rangebound, hurt by inventory concerns. Brent futures slipped 0.4% to $44.14 per barrel and U.S. crude fell 0.5% to $41.70 a barrel.

Reuters

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4 more Vancouver flights added to COVID-19 exposure list – CTV News Vancouver

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VANCOUVER —
Another four flights have been added to the BC Centre for Disease Control’s COVID-19 exposures list.

All four either arrived or departed from Vancouver late last month. Three were domestic, while one was international.

The first flight landed in Vancouver from Toronto on July 24. The flight number is Air Canada 119, and rows 12 to 18 are believed to be most at risk of exposure to the virus.

The second flight departed from Vancouver for Edmonton three days later, on July 27. That flight number is WestJet 186. People in rows two to eight may be most at risk of COVID-19 exposure.

The same route – WestJet 186 from Vancouver to Edmonton – also had a COVID-19 exposure on July 30. The highest-risk rows on that day’s flight were rows six to 12.

Finally, a July 29 flight that landed in Vancouver after leaving from Amsterdam was also added to the BCCDC’s list. That flight, KLM 681, had an exposure somewhere in rows 31 to 35.

Since the start of July, 21 domestic flights and 21 international flights have been added to B.C.’s exposures list.  

Anyone on one of the domestic flights should self-monitor for symptoms for 14 days. Anyone arriving internationally is required to isolate and monitor themselves for symptoms for 14 days. 

B.C. health officials no longer directly contact people who were seated near a confirmed case of COVID-19 on a flight. Instead, the BCCDC provides updates on flights with confirmed cases as it becomes aware of them.

A full list of recent exposures can be found on the BCCDC’s website.  

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Inflation Is Back–and the Market Rally Is Back With It – Barron's

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One day after a late-day selloff saw all-three major market indexes end the day in the red, stocks are surging higher.

The
Dow Jones Industrial Average
has risen 264.56 points, or 1%, while the
S&P 500
has gained 1.5%, and the
Nasdaq Composite
has climbed 2.2%. The S&P 500 is just 0.1% from an all-time high.

The big news of the day was the consumer price index, which rose 0.6% in July from June. The core CPI, which also rose 0.6%, experienced its biggest month-over-month game since 1991. This might seem concerning—high inflation is bad right?—but is more likely a reflection of the recovery than anything else. “It is important, up front, to be clear about what I think this is and what it is not,” writes Amherst Pierpont Securities’ Stephen Stanley. “It is NOT the start of a persistent trend of accelerating inflation. It IS a much larger and quicker reversal of the one-off price drops seen during the lockdowns.”

And today, it’s helping the market head higher.

Qualcomm
(QCOM) has gained 5% as it continues to rally following its patent win on Tuesday.

Barrick Gold
(GOLD) has advanced 1.1% after getting upgraded to Buy from Hold at Canaccord.

Deere
(DE) has fallen 0.6% after getting cut to Hold from Buy at Deutsche Bank.

Home Depot
(HD) has risen 2.6% after getting raised to Accumulate from Hold at Gordon Haskett.

AutoNation
(AN) has jumped 5.5% after getting upgraded to Buy from Neutral at Guggenheim.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

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Unifor launches Big Three negotiations with warning against COVID concessions – BNN

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TORONTO – Negotiations with the Detroit Three automakers were launched Wednesday with Unifor national president Jerry Dias warning the union won’t make any concessions, even if there is a “second wave” of coronavirus infection.

Union representatives met with the Canadian arms of Fiat Chrysler Automobiles FCA, Ford Motor Co. and General Motors Co. to start negotiating wages and benefits for the next four years.

The impact of the COVID-19 pandemic on the employment landscape was in focus, after auto sales plummeted this spring during the peak months of the pandemic, and production lines stalled as automakers shut down plants.

“Has the pandemic taken some wind out of the sails? Of course it has. And I’d be naive not to acknowledge that, but it’s a different situation today than in 2008, 2009.

Dias told reporters.

“The crash of 2008 and the impending bankruptcies of General Motors and Chrysler was very much based on an entire collapse of the banking industry started with Lehman Brothers. So when people were losing their houses, they certainly weren’t buying cars,” he said.

These days, dealerships are a lot more full than people were expecting as consumers are nervous about taking public about taking public transit, Ubers and hopping on trains.

“And so I’m hoping that we get out of this crisis a lot quicker than anybody had anticipated.”

Dias said that car companies are planning for demand six years from now, and that temporary pressure from the pandemic cannot be used as an “excuse” to keep new projects out of Canada.

“COVID-19 is a real problem. There’s no question. I feel for families that have lost so many loved ones. But this is an industry that thinks not just for the short-term, but the long-term,” said Dias.

“It’s not as if I have to chase wages in the United States, because that’s not a part of the real equation here today. Obviously, Mexican autoworkers make mere smidgens of what we do … That’s something that obviously we can’t compete with, from that point of view. But where we may not be as cheap as Mexico, we’re definitely more productive, and we’re certainly building incredible quality vehicles.”

Matt Hough, the general director of human resources and labour relations for GM Canada, said the company’s focus is to reach a four-year agreement that is “fair” and “flexible.”

Despite confidence in the auto companies’ balance sheets, Dias said the industry as a whole remains “in peril,” citing lack of investments in electric vehicles as one example. Dias noted that the existing collective bargaining agreements, which expire on Sept. 21, cover 3,600 fewer workers than when they were negotiated last time after downsizing at several plants, notably in Oshawa, Ont.

Dias warned that Canadian consumers would “punish” companies who did not keep local operations running.

“Canadians are really loyal to the companies that build here,” said Dias.

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