Equity Markets
Canada's main stock index ticked higher in early trade on Monday, boosted by gains among its heavyweight banks and other financial stocks, while the energy sector weighed with a sharp fall in crude prices.
The Toronto Stock Exchange's S&P/TSX composite index rose 16.28 points, or 0.1 per cent, to 15,651.22, shortly after the open. Of the index's 10 main sectors, only energy was trading in the red.
Canadian stock were lifted also as Montreal grocer Metro Inc. has formalized a deal to buy Jean Coutu Group (PJC) Inc., itself a Quebec pharmacy and retail giant, for $4.5-billion in cash and stock.
Metro gained 0.2 per cent in early trading while Jean Coutu rose 1.6 per cent.
Under the deal unveiled Monday, Jean Coutu shareholders would receive $24.50 a share, 75 per cent of it in cash and the rest in Metro stock.
The marriage of the two would see a $16-billion company, giving Metro Jean Coutu's more than 400 drugstores and distribution centre. They expect annual savings of $75-million within three years of the marriage of "two highly respected and long-standing Quebec brands."
The three major U.S. stock indexes hit record highs at the open on Monday, the first trading day of the fourth quarter, on hopes of progress on U.S. President Donald Trump's tax reform plan.
The Dow Jones industrial average was up 15.59 points, or 0.07 per cent, at 22,420.68, the S&P 500 was up 1.53 points, or 0.06 per cent, at 2,520.89 and the Nasdaq composite was up 10.21 points, or 0.16 per cent, at 6,506.17.
Expectations of a more hawkish successor to U.S. Federal Reserve Chair Janet Yellen also lifted shares.
Shares of Casino operators MGM Resorts International , Melco Resorts & Entertainment, Wynn Resorts and Las Vegas Sands slipped in early trading after a gunman killed at least 50 people in Las Vegas on Sunday.
Gunmakers Sturm Ruger & Co. and American Outdoor Brands moved higher after the mass shooting at a country music festival.
"The market is optimistic today, hoping that some kind of tax reform package will be discussed at Washington," said Robert Pavlik, chief market strategist at Boston Private in Fairfield, Connecticut.
"Investors are also beginning to position themselves for the earnings season and the fourth quarter."
U.S. stocks are at record levels, with each of the major indexes ending the third quarter with solid gains on Friday.
Mr. Trump has called for tax cuts for most Americans in his proposal, but drew criticism that the plan favours business and the rich and could add trillions of dollars to the deficit.
Despite inflation remaining below the 2 per cent target set by the Federal Reserve, Fed Chair Janet Yellen's recent speech has suggested the odds of an interest rate hike in December remain high.
Mr. Trump has promised a decision this month on who is likely to be the new chief of the U.S. central bank and has met with former Federal Reserve Governor Kevin Warsh and three others.
Mr. Trump would soon have to announce who would chair the Fed and many do think that he may favour someone who would take a more aggressive approach towards monetary policy, said Naeem Aslam, chief market analyst at ThinkMarkets U.K.
However, energy stocks came under pressure as oil fell below $56 per barrel as U.S. energy companies added oil rigs for the first week in seven and Iraq announced its exports rose slightly in September when OPEC overall boosted output according to a Reuters survey.
The U.S. dollar soared as U.S. Treasury yields hit their highest in almost 12 weeks amid expectations that the U.S. Federal Reserve will raise interest rates for a third time this year as data has pointed to stead growth in the world's largest economy.
Overseas, the euro took a knock in Asia on Monday as investors kept an anxious eye on an independence vote in Spain's Catalonia, while surprisingly strong economic news out of China and Japan offered support to equities and commodities.
Spanish police used batons and rubber bullets to thwart an independence vote in Catalonia on Sunday in a show of force that left hundreds injured, according to Catalan officials, and presented Madrid with a huge challenge to calm tensions in the region.
The situation was fluid, with the head of the regional government opening the door to a potential declaration of independence from Spain.
Britain's FTSE was up 0.65 per cent, Germany's DAX gained 0.26 per cent and France's CAC was up 0.15 per cent.
Asian shares were faring better than bonds after upbeat economic data from China, Japan and South Korea augured well for a sustained pickup in global growth.
Japan's Nikkei inched up 0.14 percent after a survey of manufacturers produced the strongest sentiment reading in a decade.
China's manufacturing activity grew at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices.
The official Purchasing Managers' Index (PMI) released on Saturday rose to 52.4 in September, from 51.7 in August.
Markets in China were closed for mid-Autumn festival and national day, while markets in Hong Kong were also closed.
Commodities
Oil dipped below $56 a barrel on Monday as a rise in U.S. drilling and higher OPEC output put the brakes on a rally that saw prices score their biggest third-quarter gain in 13 years.
U.S. energy companies added oil rigs for the first week in seven and Iraq announced its exports rose slightly in September when OPEC overall boosted output according to a Reuters survey.
Brent crude, the global benchmark, was down 95 cents at $55.84 a barrel at 1052 GMT. It notched up a third-quarter gain of around 20 percent, the biggest third-quarter increase since 2004 and traded as high as $59.49 last week.
"I think it's going to be a struggle to move above $60 Brent," said Olivier Jakob, oil analyst at Petromatrix.
U.S. crude was down 88 cents at $50.79. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.
The rally was driven by mounting signs a three-year supply glut is easing, helped by a production cut deal by global producers led by the Organization of the Petroleum Exporting Countries.
Gold fell to its lowest since mid August on Monday as rising U.S. Treasury yields pushed the dollar higher, while concerns over violence during Catalonia's independence vote at the weekend weighed on the euro.
Expectations that the Federal Reserve will push ahead with a third U.S. interest rate hike this year, upbeat U.S. data and talk of a possibly more hawkish successor to Fed Chair Janet Yellen all lifted Treasury yields.
Rising yields tend to weigh on non-interest bearing gold, while strength in the dollar makes assets priced in the U.S. currency more expensive for buyers holding other currencies.
Spot gold was down 0.5 per cent at $1,273.21 an ounce at 0940 GMT, having earlier touched a near seven-week low at $1,270.60 an ounce. U.S. gold futures for December delivery were down $8.70 an ounce at $1,276.10.
Currencies and bonds
The Canadian dollar slipped below the 80 cent (U.S.) mark as oil prices sagged.
As more investors weighed that the U.S. Federal Reserve would raise interest rates for a third time this year, the U.S. dollar soared.
Ten-year yields topped 2.37 per cent, their highest since mid-July, pushing the dollar half a per cent higher against a basket of currencies.
"The dollar is stronger on higher Treasuries, and the market is seeming to play the idea that the Fed might become more hawkish when we look at the possible candidates for the board of directors," said Antje Praefcke, FX strategist at Commerzbank.
The Canada 10-year bond rose 0.03 to 2.09 per cent.
Stocks set to see action
Canada's Metro Inc. has struck a $4.5-billion cash-and-stock deal for The Jean Coutu Group Inc. Under the deal unveiled today, Jean Coutu shareholders would receive $24.50 a share, 75 per cent of it in cash and the rest in Metro stock. The marriage of the two would see a $16-billion company, giving Metro Jean Coutu's more than 400 drugstores and distribution centre.
Unifor is digging in for a long strike against General Motors Co. at the auto maker's Cami assembly plant in Ingersoll, Ont., saying the company refuses to agree to contract language that would provide job security for workers. A meeting with senior GM officials on Thursday and conversations with GM negotiators on the weekend did not lead to any progress on the issue of job security, Unifor president Jerry Dias said Sunday.
Insolvent Sears Canada Inc. is ready to give its executive chairman another month to firm up his bid for the company, even as the retailer pushes ahead with a flurry of sales of its assets to others, raising more doubts about its long-term survival. Sears, which won court protection from its creditors in June, will ask the Ontario Superior Court on Wednesday to approve a number of sales, including some that would result in 11 more stores closing and 1,200 more employees losing their jobs after the outlets are liquidated. In June, it announced that 2,900 other workers were being let go without severance and 59 of its 255 outlets were closing.
More reading: Monday's small-cap stocks to watch
More reading: Hydro One shows the downside of investing in a regulated utility
Economic News
(9:30 a.m. ET) Canadian Markit Canada Manufacturing PMI for September is revealed.
(10 a.m. ET) U.S. ISM Manufacturing Index for September is unveiled. The consensus projection is 58.0, down from 58.8 in August.
(10 a.m. ET) U.S. construction spending for August is announced. Consensus is a rise of 0.4 per cent from July.
With files from Reuters and Bloomberg