Equity Markets
World stocks struggled at a 5-1/2-week low on Monday. Traders were digesting the latest departure from Donald Trump's White House team, watching tensions around North Korea and waiting to see what the world's top central bankers would signal at the annual Jackson Hole gathering later in the week.
Canada's main stock index turned slightly higher in early trade on Monday as gains for gold and base metal miners on the back of higher gold and copper prices offset losses for heavyweight energy stocks. The Toronto Stock Exchange's S&P/TSX composite index was up 1.64 points, or 0.01 per cent, at 14,953.97 shortly after opening in negative territory.
U.S. stocks opened little changed on Monday, with investors keeping an eye on the White House as well as the simmering tensions between the United States and North Korea. The Dow Jones Industrial Average fell 12.76 points, or 0.06 per cent, to 21,661.75. The S&P 500 dipped 0.77 points, or 0.03 per cent, to 2,424.78. The Nasdaq Composite edged up 0.64 points, or 0.01 per cent, to 6,217.16.
European stocks were largely unchanged, though M&A activity helped shipping giant Maersk jump and the rally in metals sent Rio Tinto, BHP Billiton and Anglo American higher.
Britain's FTSE saw little action, while France's CAC was down about 0.2 per cent.
The euro rebounded from the day's lows on Monday but held well below a 2-1/2 year high hit earlier this month as markets bet the single currency's double-digit gains this year may be too much for a central bank that is still wary of removing stimulus.
Investors are looking to European Central Bank chief Mario Draghi's comments later this week at a meeting of the world's central bankers in Jackson Hole, Wy.
Federal Reserve Chair Janet Yellen's keynote speech will also be a key focus.
Comments last week from Fed officials suggested the stock market's steady rise, but low long-term bond yields and a sagging dollar are strengthening the Fed's intent to raise interest rates again this year despite caution about weak inflation.
"People focus on inflation but in the Fed's minutes policymakers spend a lot of time discussing whether bond yields are too low or asset prices are too high. If Yellen questions market stability, markets will expect a tighter policy," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.
Asian shares were fragile on Monday as investors remained unconvinced about U.S. President Donald Trump's ability to fulfil his economic agenda, even as the departure of his controversial policy strategist raised hopes of some progress.
Japan's Nikkei shed 0.3 per cent, hitting a 3-1/2-month low, shrugging off a Reuters poll which showed confidence at Japanese manufacturers rose to its highest in a decade in August.
MSCI's broadest index of Asia-Pacific shares outside Japan was barely in the black thanks to modest gains in China, but many markets, including Australia and South Korea, were in the red.
Tech-heavy Korean shares – one of the best performers globally for much of this year – have lost momentum since last month, partly on worries about escalating tensions in the Korean Peninsula.
Commodities
Oil prices fell around 1 per cent on Monday as a rally at the end of last week prompted investors to close positions at a higher price, against a backdrop of signs the global market is starting to rebalance.
Benchmark Brent crude futures were down 56 cents at $52.16 a barrel at 1342 GMT, after surging more than 3 per cent in the previous session.
U.S. West Texas Intermediate crude futures traded at $48.19 a barrel, down 32 cents. The contract had also risen 3 per cent in the previous session.
"We are currently seeing some profit-taking after Friday's strong rally ahead of this week's inventory data," said Hans van Cleef, senior energy economist at ABN Amro.
"Fresh uncertainty about inventories and OPEC compliance (with agreed production cuts) could be enough reason to sell some of the long positions."
U.S. hedge funds and money managers have already started reducing their bets on rising prices, with Commodity Futures Trading Commission data showing on Friday that investors had cut bullish bets on U.S. crude for a second straight week.
Investors in Europe disagree on the outlook, however, as data from the InterContinental Exchange showed speculators raised bullish Brent crude bets last week.
The world remains awash with oil despite a deal struck by some of the world's biggest producers to rein in output. Rising U.S. production has been a major factor keeping supply and demand from balancing.
However, there are indications that U.S. output may soon slow, as energy companies cut rigs drilling for new oil for a second week in three, energy services firm Baker Hughes reported on Friday. Drillers cut five rigs in the week to Aug. 18, decreasing the count to 763.
"The rig count suffered its biggest fall since January, adding to signs that the market is tightening," ANZ bank said.
Also, U.S. commercial crude inventories have fallen almost 13 per cent from their March peaks to 466.5-million barrels.
The oil minister of Kuwait, which is participating in OPEC-led production cuts, said U.S. crude stocks were falling more than expected because output cuts were taking effect.
Azerbaijan, not an OPEC member but one of the countries which has committed to the production curbing deal, also remains committed to decreasing output, the head of state oil company SOCAR told Reuters in an interview.
Elsewhere, a shutdown of Libya's Sharara field due to a pipeline blockage provided some upside. Libya's National Oil Corp declared force majeure on loadings of Sharara crude from the Zawiya oil terminal on Sunday.
Gold prices were little changed on Monday as investors sought further direction after a week of geopolitical uncertainty in the United States and Europe and ahead of a meeting of central bankers later this week.
Spot gold edged 0.1 per cent higher at $1,286.01 an ounce by 0640 GMT, while U.S. gold futures for December delivery were flat at $1,291.70 per ounce.
Among other precious metals, silver rose 0.2 per cent to $16.96 an ounce and platinum rose 0.3 per cent to $978.40 an ounce.
Palladium was 0.4 per cent higher at $926.97 per ounce, after climbing to its highest in over 16 years at $934 on Friday.
Currencies and bonds
The Canadian dollar opened Monday up 0.03 cents to 79.53.
The U.S. dollar steadied on Monday, edging away from four-month lows against the yen as investors turned their focus from political turmoil in Washington to the Federal Reserve's annual central banking conference in Wyoming.
The benchmark 10-year U.S. Treasuries yield skidded to 2.162 per cent on Friday, its lowest since late June, before closing at 2.194 per cent. It last stood at 2.199 per cent.
Stocks set to see action
Total SA could see reaction after the French oil major announced that it is buying Maersk Oil in a $7.45-billion deal. Total said the deal would boost its earnings and cash flow, and bolster its dividend prospects. Under the terms of the deal, A.P. Moller Maersk will get $4.95-billion in Total shares and Total will assume $2.5-billion of Maersk Oil's debt. The stock was trading down about 0.12 per cent at 10:47 ET.
Sempra Energy said it will buy Oncor for $9.45-billion in cash after Energy Future Holdings Corp, which indirectly owns Oncor, abandoned a deal to sell the power transmission company to Warren Buffett's Berkshire Hathaway Inc. Sempra expects to own about 60 per cent of a reorganized Energy Future after the transaction that is valued at $18.8-billion, including Dallas-based Oncor's debt, it said late on Sunday. The stock was trading up about 1.24 per cent at 10:47 ET.
China's Great Wall Motor Co Ltd is interested in bidding for Fiat Chrysler Automobiles (FCA), a company official said on Monday, confirming earlier reports that it is pursuing all or part of the owner of brands including Jeep and truck maker Ram. The stock was trading up about 6.45 per cent at 10:47 ET.
South Korea's new antitrust chief said he has been in talks with the autos-to-steel conglomerate Hyundai Motor Group about overhauling its complex ownership structure, which critics say gives too much power to its controlling family at the expense of shareholders.
Economic News
Economic news for today includes Japan's all-industry activity index and department store sales, as well as China's foreign direct investment.
Canada's wholesale sales declined slightly in June, with the food and auto industries showing the biggest impact. Wholesale sales fell by 0.5 per cent to $61.4-billion, following a series of monthly increases. Statistics Canada says the value of wholesale sales fell in five of the seven subsectors it follows and in six provinces, with the biggest decline in Alberta and the biggest gain in Ontario.
The U.S. Chicago Fed National Activity Index for July was –0.01, a decline from the reading of +0.16 in June.
Earnings include: BHP Billiton Ltd.
With files from Reuters and Bloomberg