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Stocks Edge Higher; Yen Steady Before BOJ: Markets Wrap – Yahoo Canada Finance

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Stocks Edge Higher; Yen Steady Before BOJ: Markets Wrap

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(Bloomberg) — Asian stocks saw modest gains on low volume as investors mulled further signs of positive developments in the global fight against the coronavirus. The yen was steady as traders awaited a key Bank of Japan policy meeting.

Shares in Hong Kong, South Korea and Japan rose after U.S. stocks ended firmer on Friday. U.S. futures fluctuated and Chinese stocks were little changed. The Australian dollar outperformed, while other risk currencies tucked higher. Treasury yields were little changed. Coronavirus deaths slowed the most in more than a month in Spain, Italy and France while fatalities reported in the U.K. and New York were the lowest since the end of March. Oil retreated.

The Federal Reserve joins the BOJ and the European Central Bank announcing policy decisions this week as the battle against the pandemic continues with some countries proceeding on steps to relax lockdown measures. Several major economies will release GDP numbers, while corporate earnings will keep flooding in, including from Amazon.com Inc., Barclays Plc and Samsung Electronics Co.

“This coming week will be huge from a macro data perspective and the extent to which the global economy has been floored by Covid-19,” said Simon Ballard, chief economist at First Abu Dhabi Bank. “Until we are clearly past the peak of the outbreak, on a global scale, and can feasibly deem the pathogen to be contained and there to be no meaningful risk of a second wave of infection, we believe a defensive investment strategy will remain the most appropriate.”

Meantime, New York Governor Andrew Cuomo sketched out a phased-in reopening that begins with construction and manufacturing. That could start as soon as May 15, he said, probably upstate before the New York City area. Italy and Spain, Europe’s two hardest-hit countries, along with neighboring France, all signaled tentative moves to open up their economies.

These are the main moves in markets:

Stocks

Futures on the S&P 500 rose 0.1% as of 10:40 a.m. in Tokyo. The gauge added 1.4% on Friday.Topix index advanced 0.9%.Australia’s S&P/ASX 200 Index gained 0.4%.South Korea’s Kospi index rose 1.1%.Hong Kong’s Hang Seng Index added 0.9 %.Shanghai Composite was little changed.

Currencies

The yen was little changed at 107.57 per dollar.The offshore yuan traded at 7.0808 per dollar, up 0.1%.The euro bought $1.0825, little changed.The Aussie gained 0.9% to 64.31 U.S. cents.

Bonds

The yield on 10-year Treasuries held at 0.61%.

Commodities

West Texas Intermediate crude slipped 8.5% to $15.50 a barrel.Gold was at $1,722 an ounce, down 0.4%.

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At the open: S&P 500 breaches 3000 mark for first time since early March – The Globe and Mail

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U.S. stocks surged at the open and S&P 500 breached a major technical barrier on Tuesday as business restarts and optimism about a potential coronavirus vaccine helped investors overlook Sino-U.S. tensions.

The S&P 500 rose 2.2% to 3,020 points at the open, rising above 3,000, a key psychological level for the first time since March 5.

The Dow Jones Industrial Average rose 316.68 points, or 1.29%, at the open to 24,781.84. The Nasdaq Composite gained 176.63 points, or 1.89%, to 9,501.21 at the opening bell.

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The TSX, which rallied on Monday when U.S. markets were closed, was up 0.67% in early trading.

Also see: Market movers: Stocks seeing action on Tuesday – and why

Reuters

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Scotiabank profit plunges 40% as bad loans more than double amid COVID-19 – CBC.ca

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Scotiabank posted a profit Tuesday morning of $1.32 billion in the three months up to the end of April, a fall of more than 40 per cent from last year’s level as the bank set aside twice as much money for bad loans.

The bank’s provisions for credit losses totalled nearly $1.85 billion for the quarter. That’s up 111 per cent from the $873 million worth of bad loans the bank revealed in the same three months last year, well before the COVID-19 pandemic crushed the economy.

Higher loan loss provisions don’t necessarily mean that all of those loans will end up defaulting. Rather, it just means that they aren’t being actively being paid back as planned.

The bank revealed on Tuesday that 300,000 of its Canadian customers have applied for some sort of financial relief on the $60 billion they collectively owe to the bank. That would include mortgagees who asked for interest rate deferrals.

Scotiabank has a huge presence in Latin America, and the bank says it has processed two million applications for loan relief from its international customers.

Economic bellwether

Not all of those loans will necessarily end up defaulting, but some may. So the uptick in loan loss provisions is troubling.

Scotia is the first of Canada’s big banks to reveal its financial performance through the current pandemic, numbers which will be closely scrutinized as they are considered to be a bellwether for the broader economy. That’s because pain at other businesses tends to show up on the books of the banks that lend to them.

Canada’s other big banks — Royal, Toronto-Dominion, Canadian Imperial Bank of Commerce and Bank of Montreal — will report earnings in the next few days.

On an adjusted basis, Scotiabank’s profit for the quarter came in at $1.04 per diluted share. That’s well down from $1.70 per diluted share a year ago, but ahead of the 98 cents that analysts who cover the bank were expecting.

Not all bad news

But not all parts of the bank’s business saw tough times. Indeed, some did even better than usual.

Scotia’s global wealth management business posted a profit of $314 million, an increase of four per cent over last year’s level. That uptick came about with investors around the world becoming much more active than usual as global stock markets plummeted.

“This quarter saw record results for both new client account openings and trading volumes in Scotia iTRADE,” the bank said.

Similarly, the global banking and markets business posted a profit of $523 million, up 25 per cent from a year earlier.

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Scotiabank's loan-loss provisions double on coronavirus risks – The Globe and Mail

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A Bank of Nova Scotia building stands in Toronto on Aug. 22, 2017.

Nathan Denette/The Canadian Press

Bank of Nova Scotia on Tuesday reported quarterly profit that beat analysts’ estimates due to a strong performance in the capital markets business, but the bank’s loan loss provisions jumped two-fold.

Provisions for loan losses at Scotia more than doubled to $1.85 billion from a year earlier as it set aside more money to meet future losses.

Canadian banks are expected to face loan defaults as the coronavirus pandemic drives the world into a recession, leaving small and medium-sized businesses scrambling to meet their debt payments.

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The bank said commercial and corporate performing loan provisions increased by $275 million, hurt by the poor macroeconomic outlook and a plunge in oil prices that impacted the energy sector globally.

Adjusted net income at its global wealth management segment rose 3 per cent to $314 million, while profit at the global banking and markets business jumped 25 per cent to $523 million.

Canada’s third-biggest lender said net income fell to $1.24 billion, or $1 per share, in the quarter ended April 30, from $2.13 billion, or $1.73 per share, a year earlier.

On an adjusted basis, the lender earned $1.04 per share, compared with analysts’ estimate for profit of $0.98 per share, according to IBES data from Refinitiv.

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