Canadian stock market up due to eased tension


The Toronto Stock Exchange's S&P/TSX composite index mirrored global markets, which rebounded from their biggest weekly losses of the year, after US officials played down the likelihood of a nuclear conflict with North Korea.

The S&P index was on track for its biggest single-day percentage gain since April.

The U.S. consumer price index for July, released on Friday, inched up 0.1 percent, falling short of market expectations and dampening speculation that the Federal Reserve would conduct another interest rate hike later this year.

MSCI's world equity index was up 0.75 per cent after its biggest weekly drop since early November and the USA benchmark S&P 500 climbed 1 per cent for its third one percent daily gain in 2017.

Reassuring statements from U.S. CIA Director Mike Pompeo and Army Lt. Gen. H.R. McMaster, Trump's national security adviser that a conflict is avoidable also helped calm the mood.

Barrick Gold Corp fell 1.5 per cent to $21.27, while Goldcorp Inc was down 1.1 per cent to $16.31. BMO Nesbitt Burns downgraded all three companies to "market perform", saying prospects for a near-term settlement of the U.S.

Canada laid down a tough line ahead of talks on modernizing the North American Free Trade Agreement, suggesting it could walk away if the United States pushed to remove a dispute-settlement mechanism in the trade deal.

Tracking strength in USA technology shares, Japanese chip-related companies such as Advantest Corp and Tokyo Electron gained 2.1 percent each. Hong Kong's Hang Seng index jumped 1.4 percent to 27,250.23 and Australia's S&P ASX 200 surged 0.7 percent to 5,730.40.

The yen had gained a lift last week after Trump warned North Korea that it would face "fire and fury" if it threatened the United States.

While North Korea's Liberation Day celebration on Tuesday to mark the end of Japanese rule could see tensions rise again, markets are relieved that the weekend had passed without more rhetoric.

In currencies, the USA dollar was up 1 per cent against the Swiss franc, erasing much of the greenback's losses last week against the Swiss currency, which is viewed as a safe bet during times of geopolitical turmoil. The Australian currency traded at $0.789.

"That added up to good news for the dollar, bad news for the yen", he said. The yield on the 10-year Treasury note rose to 2.22% from 2.19% late on Friday.

The Canadian dollar gained 0.09 cents to 78.58 US cents while oil prices dropped 1.31 dollars to 47.51 USA dollars a barrel and gold prices dropped six dollars to 1,288 US dollars an ounce. On Monday the USA dollar rose 0.3 per cent against the yen to 109.48 yen.

Benchmark US crude lost 4 cents to $48.78 per barrel in electronic trading on the New York Mercantile Exchange. Spot gold dropped 0.6 per cent to $1,280.71 an ounce.