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Jun 29, 2020

North American equity markets rally as positive data overshadows rise in virus cases

BNN Bloomberg's closing bell update: June 29, 2020

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4:15 p.m. ET: North American equity markets rally as positive data overshadows rise in virus cases

North American equity markets rallied into the close Monday, as some positive economic data out of the United States overshadowed concerns about the mounting COVID-19 case count in some states as they reopen. The S&P/TSX Composite Index rose 1.32 per cent, the S&P 500 was up 2.47 per cent, the Dow Jones Industrial Average gained 2.32 per cent and the Nasdaq Composite notched a 1.20 per cent rise.

The rally came after U.S. pending home sales surged to record levels in May, offering a glimmer of hope the U.S. consumer could be coming back after the virus-induced economic lockdown.

After Monday’s rally, all four major North American equity markets are now in positive territory for June, with the TSX, S&P 500 and Dow joining the Nasdaq in the green as investors approach the last trading day of both the month and the quarter during a holiday-shortened week.

In Toronto, all 11 of the TSX subgroups finished the session in positive territory, led by consumer discretionary, energy and utilities.

159 of the composite’s 222 constituents finished the day in positive territory, led by Ballard Power Systems Inc. Shares in the fuel-cell company surged more than 13 per cent after Roth Capital Partners upgraded its view of the company to a buy from a neutral, and raised its 12-month price target to US$20 per share.

South of the border, Boeing Co. powered the Dow to its relative outperformance, with shares of the planemaker surging more than 14 per cent after the Federal Aviation Administration gave the company the green light to commence test flights of its revamped 737-MAX jet. That marks a major milestone for the beleaguered planemaker after the MAX was grounded worldwide in March 2019 following two deadly crashes.

Oil prices extended their gains on those signs of economic optimism, with U.S. benchmark West Texas Intermediate up 2.94 per cent to US$39.62 per barrel. Alberta’s Western Canadian Select cracked the psychological US$30 per barrel mark, gaining 5.58 per cent to trade at US$30.28 per barrel.

The Canadian dollar was up modestly against its U.S. counterpart, rising a tenth of a cent to 73.17 cents U.S.

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1:00 p.m. ET: North American markets extend gains, trade near session highs

North American equity markets extended earlier gains into the mid-afternoon to trade near session highs. The S&P/TSX Composite Index rose 1.3 per cent, the S&P 500 gained 1.25 per cent, the Dow Jones Industrial Average was up 1.75 per cent and the Nasdaq Composite Index rose one per cent, though trading volumes were light as investors enter the holiday-shortened week.

The gains came on the heels of some better-than expected economic data in the United States, where pending home sales posted record gains in May, a sign the U.S. economy may be coming back to life after lockdown restrictions to combat the spread of the COVID-19 virus were eased.

In Toronto, all 11 TSX subgroups were in positive territory, led by consumer discretionary, energy and utilities stocks. 156 of the composite’s 229 constituents were trading higher.

Oil extended its gains in the wake of that positive economic data, with U.S. benchmark West Texas Intermediate up 2.81 per cent to US$39.57 per barrel. Alberta’s Western Canadian Select rose 5.79 per cent to US$30.34 per barrel.

The Canadian dollar was essentially flat against its American counterpart to trade at 73.12 cents U.S.

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9:40 a.m. ET: North American markets modestly higher to kick off holiday-shortened week

North American equity markets kicked off the week modestly higher, with the S&P/TSX Composite Index up 0.4 per cent, the S&P 500 rising 0.5 per cent, the Dow Jones Industrial Average gaining 0.9 per cent, and the Nasdaq Composite Index essentially flat after Friday’s selloff.

The Dow’s outperformance was in part due to a five-per-cent jump in shares of Boeing Co. after the company gained regulatory approval to begin test flights of its beleaguered 737 MAX jet.

The push higher in equities comes as investors weigh the resurgence of COVID-19 cases in the United States against the impact of gradual economic reopenings around the world and the potential for more stimulus to combat the fallout from the virus.

Investors sold traditional safe-haven assets like U.S. Treasuries, the U.S. dollar and the Japanese yen.

Oil prices marched higher, in part due to the weakness in the U.S. dollar and the hopes for increased demand amid economic reopenings. U.S. benchmark West Texas Intermediate crude was up 0.65 per cent to US$38.75 per barrel, while Alberta’s Western Canadian Select gained 3.17 per cent to trade at US$29.59 per barrel.

A weaker greenback typically boosts the price of assets priced in U.S. dollars, as it makes commodities like oil and gold cheaper for foreign investors to buy U.S.-denominated goods.

The Canadian dollar was essentially flat against its U.S. counterpart to trade at 73.11 U.S. cents.

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