North American stock markets rise on trade talk hopes

Globe and Mail

14 hours ago

Canada's main stock index edged higher on Monday, on track to log its second consecutive monthly gain, while investors assessed the revival of trade talks between Washington and Ottawa.
At 11:09 a.m. ET, the S&P/TSX composite index was up 36.72 points, or 0.14 per cent, at 26,729.18, set to log its fourth straight quarter in green.
President Donald Trump had called off the trade talks on Friday over Canada's digital services tax targeting U.S. technology firms, calling it a 'blatant attack.'
Canada late on Sunday scrapped the tax, hours before it was set to take effect, in a bid to restart the negotiations.
Prime Minister Mark Carney and Trump will resume trade negotiations to agree to a deal by July 21, the Canadian finance ministry said.
'The biggest challenge for the market is to understand how quickly things will whipsaw and maybe not react quite as strongly to each individual step because we still haven't negotiated a trade agreement and there still could be some more challenges there,' Verecan Capital Management CEO Colin White said.
With Trump's July tariff deadline looming, investors will monitor signs of progress on the trade front.
Healthcare stocks led gains on the TSX, rising 2 per cent. Bausch Health and Sienna Senior were up 4.4 per cent and 1.2 per cent, respectively.
Communication stocks gained 0.9%.
On the flip side, energy stocks led sectoral losses, dropping 0.6 per cent as oil prices steadied with Middle East risks easing and markets weighing on a possible OPEC+ output increase in August.
Baytex Energy lost 1.8 per cent, International Petroleum was down 1.7 per cent.
In individual stocks, MDA Space rose 3.2 per cent after the space firm announced a contract extension with the Canadian government providing continuous space-based maritime awareness and security.
U.S. stocks are adding to their records on Monday as Wall Street nears the finish of a second straight winning month.
The S&P 500 was 0.2 per cent higher in its first trading after completing a stunning rebound from its springtime sell-off of roughly 20 per cent. The Dow Jones Industrial Average was up 146 points, or 0.3 per cent, and the Nasdaq composite was 0.2% higher.
Stocks got a boost after Canada said it's rescinding a planned tax on U.S. technology firms and resuming talks on trade with the United States. On Friday, Mr. Trump had said he was suspending talks with Canada because of his anger with the tax, which he called 'a direct and blatant attack on our country.'
One of the main reasons U.S. stocks came back so quickly from their springtime swoon has been hope that Trump will reach deals with other countries to lower his stiff proposed tariffs. Otherwise, the fear is that trade wars could stifle the economy and send inflation higher.
Many of Mr. Trump's announced tariffs are currently on pause, and they're scheduled to kick back into effect in a little more than a week.
In an interview with Fox News Channel's 'Sunday Morning Futures,' Mr. Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out 'pretty soon' before the approaching deadline, he said.
The U.S. stock market being back at a record high could actually raise the risk of renewed escalations on tariffs, according to strategists at Deutsche Bank led by Parag Thatte and Binky Chadha. They point to the pattern in 2018 and 2019 of rallies for the market prompting escalations for tariffs, which then drove market pullbacks followed by relents on tariffs that then sparked rallies again.
'Despite the rhetoric to the contrary, this dynamic looks alive and well,' the strategists wrote in a report. 'In our view, beyond the market reaction, if negative impacts of tariffs on growth, earnings or inflation start to materialize, we will get further relents.'
On Wall Street, GMS' stock jumped 11.8 per cent after the supplier of specialty building products said it agreed to sell itself to a Home Depot subsidiary in a deal that would pay US$110.00 per share in cash. That would give it a total value of roughly US$5.5-billion, including debt.
Less than two weeks ago, another company, QXO, said it was offering to buy GMS for US$95.20 per share in cash. After the announcement of the Home Depot bid, QXO's stock rose 1.9 per cent, and Home Depot's stock slipped 0.5 per cent.
Hewlett Packard Enterprise rallied 13.1 per cent and Juniper Networks climbed 8.4 per cent after saying they had reached an agreement with the U.S. Department of Justice that could clear the way for their merger go through, subject to court approval. HPE is trying to buy Juniper in a US$14-billion deal.
In the bond market, Treasury yields eased a bit ahead of major economic reports later in the week. The highlight will be Thursday's jobs report. It's often the most anticipated economic data of each month, and it will come a day earlier than usual because of the Fourth of July holiday.
The job market has remained relatively steady recently, even in the face of tariffs, but hiring has slowed. Economists expect Thursday's data to show another slowdown in overall hiring, down to 115,000 jobs in June from 139,000 in May.
Such data has kept the Federal Reserve on hold this year when it comes to interest rates. Fed Chair Jerome Powell has said repeatedly that it's waiting for more data to show how tariffs will affect the economy and inflation before resuming its cuts to interest rates. That's because lower rates can fan inflation higher, along with giving the economy a boost.
Mr. Trump, meanwhile, has been pushing for more cuts to rates and for them to happen soon. Two of his appointees to the Fed have said recently they could consider cutting rates as soon as the Fed's next meeting in less than a month.
The yield on the 10-year Treasury slipped to 4.27 per cent from 4.29 per cent late Friday.
In stock markets abroad, indexes dipped modestly in Europe following a more mixed finish in Asia.
Stocks fell 0.9 per cent in Hong Kong but rose 0.6 per cent in Shanghai after China reported its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others' exports, though manufacturing remained in contraction.
Reuters and The Associated Pres