Equity Markets
Canada's main stock index opened slightly higher on Tuesday as gains in the resource and financial sectors offset a decline in shares of TMX Group after Scotia Capital and Alberta Investment Management said they would cut their stake in the company.
Shortly after the opening bell, the Toronto Stock Exchange's S&P/TSX composite index was up 16.38 points, or 0.1 per cent, at 15,721.38.
Eight of the index's 10 sectors were up, led higher by the consumer discretionary, materials and financial sectors.
The S&P and the Dow opened at record highs for the second straight day on Tuesday with gains across sectors as investors looked ahead to the upcoming earnings season.
The Dow Jones Industrial Average rose 25.11 points, or 0.11 per cent, to 22,582.71, the S&P 500 gained 1.78 points, or 0.07 per cent, to 2,530.9 and the Nasdaq Composite added 8.13 points, or 0.12 per cent, to 6,524.85.
On Monday, all the three main U.S. indexes hit new all-time highs, as investors digested robust economic data and turned their attention to the upcoming third-quarter corporate earnings.
Third-quarter earnings for S&P 500 companies are expected to increase 6.2 per cent from a year earlier, according to Thomson Reuters research, after rising a better-than-expected 12.3 per cent in the second quarter.
U.S. stocks started the fourth quarter on a strong note on Monday after factory data pointed to underlying strength in the economy.
The encouraging data helped world shares touch their latest record highs on Tuesday, while lifting the dollar to its loftiest in 1-1/2 months.
"This year has been one of the strongest year ever, not from a per cent gain standpoint, but from a lack of the correction or lack of a pullback," said Adam Sarhan, chief executive of 50 Park Investments in New York.
"So to me, the market is cautiously optimistic."
Gold fell to its lowest in seven weeks on Tuesday after the data reinforced expectations of another interest rate rise in the United States this year.
Investors are also watching out for progress on President Donald Trump's tax reform plan, which calls for lowering corporate tax to 20 per cent.
Billionaire investor Warren Buffett told CNBC on Tuesday that the odds of getting a tax plan passed are higher than what most people expect, but expressed uncertainty over the reforms.
"U.S. markets have started the new week and quarter in the same way they finished the previous one, posting new record highs." Michael Hewson, chief markets analyst for CMC Markets, said in an early note. " These gains have been led by the small cap Russell 2000 which has made almost parabolic gains in the past couple of weeks, gaining over 5 per cent, on expectations of progress on tax cuts and, or reforms."
Gains this week on Wall Street have been underpinned by solid economic reports, most recently a surprisingly strong reading on U.S. factory activity in September which showed little impact from recent hurricanes, he noted. The U.S. economic calendar is clear Tuesday, but markets will hear from Jerome Powell, who sits on the board of governors of the Federal Open Market Committee and is one of four candidates being eyed for the chair position once Janet Yellen's term ends early next year.
"Powell is due to speak on regulatory reform before a Reuters conversation on U.S. Financial Regulation but as always, officials can stray off topic onto monetary policy, especially when prompted during Q&A sessions," OANDA senior market analyst Craig Erlam noted.
On Bay Street, traders will be paying close attention to a noon-hour speech by Bank of Canada deputy governor Sylvain Leduc. The topic is firm creation and productivity in the Canadian economy. Last week, Bank of Canada Governor Stephen Poloz dampened expectations of a rate hike this month when he said the central bank isn't on a firm course for its next moves, citing an unusual number of "unknowns" affecting the inflation outlook. Rate-hike expectations were further dampened Friday when Statistics Canada reported that gross domestic product was unchanged in July, ending eight straight months of growth.
Overseas, world shares continued a run of record highs. MSCI's 47-country 'All-World' index touched record levels overnight while markets in Europe and Asia also moved higher.
In Britain, the FTSE 100 was up 0.21 per cent. France's CAC 40 advanced 0.34 per cent. Markets in Germany were closed for a public holiday.
In Asia, key indexes were higher with Japan's Nikkei climbing 1.05 per cent. Hong Kong's Hang Seng index rose 2.25 per cent when it resumed trading Tuesday after being closed Monday for a public holiday.
Commodities
Oil prices steadied on a round of profit taking bolstered by hopes that the global oversupply is easing. Early on, Brent crude dipped blow $56 a barrel while West Texas Intermediate was trading in a day range of between $50.34 to $50.68.
"Oil prices have continued the run of poor form over the past few days," Jasper Lawler, head of research for LCG, said. "The failure to sustain a breakout to new 2017 highs has seen sellers come back into the market in force."
He also noted that a Reuter's poll showing compliance fell and output rose by 50,000 barrels a day in September among OPEC countries has dented belief in an improving supply outlook.
For the third quarter, Brent posted a gain of about 20 per cent. That's the best showing for that quarter since 2004. Last week, Brent neared $60. Reuters said Tuesday that money managers have pushed their bullish bets on the Brent crude market to a record high in the last week, encouraged by signs of rebalancing between supply and demand. However, traders also suggest that that level of stretched position can also lend volatility to prices.
"It's always problematic when you have this amount of speculative length in the market," Petromatrix strategist Olivier Jakob told the news agency.
"The price action ... for me is all about positions and potentially profit-taking on some of those speculative positions."
In other commodities, gold fell to a seven-week low as the U.S. dollar advanced as the markets increasingly expect another U.S. interest rate in the near future. After a strong reading Monday by the Institute for Supply Management on factory activity, futures had priced in a 77-per-cent chance of an interest rate hike by the end of the year.
Spot gold was little changed at last check after touching its lowest level since mid August overnight. U.S. gold futures for December delivery were also lower.
Silver prices were higher but still near early August lows. Copper prices in London eased.
Currencies and bonds
The Canadian dollar was little changed, holding near the 80-cent (U.S.) mark as crude prices steadied. The loonie's day range so far is 79.76 cents to 79.98 cents.
In a note this week, BMO chief economist Douglas Porter said a key driver for the loonie this year has been the spread between the spread between interest rates in Canada and the United States.
"Of course, the Canada-US rate spread has long mattered, but this year the relationship has been uniquely powerful," he said. The bank looked at the two year spread and found the loonie's movement this year closely followed.
"While this spread has had a strong influence on the exchange rate for years—pretty much since the recovery began in 2009—it hasn't always been the case," Mr. Porter said. "There were long stretches in the 1990s and also before the financial crisis where the correlation was zero, or even deeply negative.
In other currencies, the U.S. dollar posted its second straight day of gains as a strong reading on factory activity bolster confidence in the economy and raised expectations of another rate hike by year's end.
The U.S. dollar index, which weighs the greenback against a basket of currencies, was higher in early going. Reuters notes that, despite recent gains, the U.S. dollar is down about 8 per cent for the year and on track for its worst annual showing in a decade.
Meanwhile, the Australian dollar fell to a two-month low after the Reserve Bank of Australia left interest rates unchanged and offered a cautious view of the economy.
In bonds, debt prices were lower as markets awaited comments a speech from the Fed's Jerome Powell. The yield on the 10-year note was higher at 2.357 per cent. The yield on the 30-year note was also higher at 2.894 per cent.
Stocks set to see action
Tesla shares were down 2.1 per cent in premarket trading after the luxury electric vehicle maker said "production bottlenecks" had left the company behind its planned ramp-up for the new Model 3 mass-market sedan.
Whole Foods rivals Trader Joe's and Sprouts Farmers Market Inc. have been hit hardest by customer defections since Amazon.com Inc.'s price cuts at the premium grocer, Whole Foods price cuts, a data analytics firm said on Tuesday. Amazon cut prices on select items at Whole Foods on Aug. 28. On the first day, customer traffic spiked 31 per cent from a year earlier. Traffic jumped 17 per cent during the week after the price reductions and remained up 4 per cent for the week ended Sept. 16, according to Thasos Group, which analyzes location data from millions of mobile phones.
Amazon has approached various French supermarket operators – including Casino – about setting up distribution deals or making an acquisition in the country, newspaper Le Monde reported, citing its own sources. Le Monde said Amazon had contacted Casino over Casino's Monoprix division, but Casino had declined to pursue the matter.
Lennar Corp., the No.2 U.S. homebuilder, reported a higher-than-expected quarterly profit on Tuesday as it sold more homes at higher prices. Home orders, a key indicator of future revenue, rose 8.4 per cent to 7,610 homes in the third quarter ended Aug. 31. Lennar said deliveries of about 950 homes will be pushed into fiscal 2018 due to the recent hurricanes. Lennar shares were up 2.25 per cent in premarket trading.
The man who was leading BlackBerry Ltd's efforts to make money from its patent portfolio has left to join a health technology company, two sources with knowledge of the move said on Monday. Mark Kokes left the Canadian company last month to join privately held NantWorks LLC, the sources said. NantWorks was founded in 2011 by billionaire Patrick Soon-Shiong and houses a string of startups looking to transform global health information and develop next-generation pharmaceuticals. Kokes is the second senior executive to move from BlackBerry to NantWorks this year, following the May announcement that NantHealth Inc, a publicly traded part of NantWorks, had hired BlackBerry's president for devices and emerging solutions, Ron Louks, as its chief operating officer. BlackBerry also announced it plans to transfer its U.S. stock listing to the New York Stock Exchange from the Nasdaq. BlackBerry expects to begin trading on the NYSE on Oct. 16 under the ticker BB. BlackBerry will continue to trade on the Nasdaq until the transfer is complete. BlackBerry's TSX listed will not change.
Credit report company Equifax said Monday that 2.5 million more Americans may have been affected by the massive security breach of its systems, bringing the total to 145.5 million people. Equifax said the company it hired to investigate the breach, Mandiant, has concluded its investigation and plans to release the results "promptly." The company also said it would update its own notification for people who want to check if they were among those affected by Oct. 8. Equifax stock was down 0.7 per cent in premarket trading.
Shares of micro-cap drug developer Endocyte jumped for the second straight day after inking a licensing deal for its prostate cancer drug.
Tile Shop Holding shares plunged 30 per cent premarket after the natural stone retailer scrapped its 2017 forecast.
More reading: Q&A: Fiera Capital's François Bourdon is bullish on Canada, forecasts oil at $65 in next 12 months
More reading: Five tailwinds set to boost the rally in global markets
Economic News
(12:45 p.m.) Sylvain Leduc, deputy governor of the Bank of Canada, speaks in Sherbrooke on the subject of "Firm creation and productivity in the Canadian economy"
U.S. and Canadian auto sales for September are released
"Canadian auto sales have been posting strong gains, beating monthly sales records for 7 of the last 8 months," BMO's Priscilla Thiagamoorthy said in a note. "Employment growth should keep sales activity elevated with 2017 on track for another record year (sales have set record highs in the last four years)."
With files from Reuters