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Bay Street futures were in the red early Monday as oil prices extended losses on expectations that global producers could hike output. Overseas, markets in Europe gave back early gains as Italy’s political woes spooked investors. Markets in the United States are closed for Memorial day. Markets in Britain were also shut.

In Canada, Bombardier shares could get some attention after the transportation giant unveiled plans for two new large-cabin luxury jets. The Globe’s Nicolas Van Praet reports that the company revealed the existence of the planes at an industry event in Geneva on Sunday evening. The two jets - the Global 5500 and the Global 6500 - are expected to be in service by the end of next year.

Canadian Pacific shares will also be at the forefront when trading begins as contract talks continue between the rail line and two unions representing train crews and signal workers. Last week, union members rejected a three-year offer by the company. The unions say they are prepared to go on strike at 10 p.m. ET on May 29 if they can’t come to an agreement.

Energy shares could also come under pressure as crude prices extended last week’s losses after Saudi Arabia and Russia on Friday said they were talks to raise oil production by 1 million barrels a day. OPEC and non-OPEC producers have curbed production over the last year to help address global oversupply.

In Europe, markets in Britain were closed for a public holiday. Elsewhere, investors were on edge after Italy’s biggest political party has called for the country’s president to be impeached after opting to veto a a pick for economy minister. The Five Star Movement accused President Sergio Mattarella of prompting an “institutional crisis” by rejecting candidate Paolo Savona.

In morning trading, European stocks gave back early gains to trade mostly flat. Germany’s DAX was off 0.11 per cent while France’s CAC 40 was down 0.26 per cent at last check.

In Asia, markets finished mixed with Japan’s Nikkei ended up 0.13 per cent while the broader Topix was off 0.07 per cent with the oil subindex dropped more than 4 per cent.

Hong Kong’s Hang Seng advanced 0.67 per cent. The Shanghai Composite Index was down 0.19 per cent.

Commodities

Crude prices extended last week’s losses early on with West Texas Intermediate touching a six-week low as Saudi Arabia and Russia eye increasing production. Brent crude had a day range of US$74.49 to US$76.17. WTI has a range for the day of US$65.80 to US$67.55. The low end of the WTI range is the weakest level in six weeks.

Through last year, OPEC and non-OPEC producers have agreed to cut production by 1.8 million barrels a day to address the market overhang. On Friday, Saudi Arabia and Russia said they were discussing increasing production by a million barrels a day. The talks come alongside a recent spike in prices which saw Brent breach US$80 earlier this month.

The latest U.S. rig count figures also weighed on prices early Monday. U.S. energy services Firm Baker Hughes said Friday that U.S. energy companies added 15 rigs last week. That brings the total in operation to 859, the highest since 2015. U.S. crude output has risen by more than 25 per cent over the past two years.

“Baker Hughes reported a 15-rig advance in U.S. oil drilling activity—another bearish indicator for global oil prices which are suffering through the sharpest one-day pullback in nearly three years following reports that OPEC and Russia have agreed to begin tapering supply cuts,” Desjardins Securities said in an early note.

“Adding insult to injury, virtually all of the ramp-up occurred in the Permian, where another 11 rigs were added this week, pushing the basin within sight of the 500-unit level for the first time since early 2015.”

In other commodities, gold prices were lower amid renewed optimism for a summit between North Korea and the United States. U.S. President Donald Trump said on Sunday that a U.S. team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un.

“Risk sentiment has opened in a much friendly place this morning as a relief rally has ensued with the Trump-Kim summit back on, while the EU is in the midst of a relief rally after Paolo Savona was not endorsed for finance minister in Italy,” Stephen Innes, APAC trading head at OANDA, told Reuters.

Spot gold and gold futures for June delivery were both lower ahead of the North American open. Silver prices were steady.

Currencies

The Canadian dollar was slightly lower heading into the week with a range for the day so far of 76.95 US cents to 77.17 US cents. With markets closed in the United States and Britain, two key centres for foreign exchange trading, volumes were expected to be thin on Monday.

The key event for the loonie this week will be Wednesday’s Bank of Canada policy announcement. Markets are widely expected to hold interest rates unchanged.

“The economy likely struggled for a third consecutive quarter with GDP growth forecasted at 1.5 per cent in Q1,” Benjamin Reitzes, Canadian rates and macro strategist for Bank of Montreal, said in a report. “While we (and the BoC) are looking for growth to rebound in Q2, there remain a number of uncertainties clouding the outlook.”

Among those, he said, are headwinds including new mortgage rules and rising mortgage rates faced by the housing market, increased household debt levels and trade uncertainty.

“However, our expectation that housing will at least stabilize in Q2 and that the data will turn more positive underpin our call for the next rate hike to come in July,” he said. “Data dependent… that’s all there is to it.”

In other currencies, the euro gave up early gains as the spectre of new elections in Italy emerged. Initially, the euro moved higher after anti-establishment 5-star and League parties dropped plans to form a government.

“There can be many potential twists in the Italian political situation and we would be wary of reading too much into this latest development,” said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

“Structurally speaking, the U.S. economy is in far better shape than Europe, so any bounce in euro/dollar is short-lived.”

Stocks set to see action

Bombardier and Air Baltic announced Monday that they have struck an agreement for the purchase of 30 CS300 aircraft with options for another 30. Based on the list price, Bombardier said the firm order is valued at US$2.9-billion. That would rise to about US$5.9-billion if all options and purchase rights were exercised.

Corus Entertainment said the commissioner of Competition Bureau has not approved the sale of Corus’ French-language specialty channels Historia and Séries+ to Bell Media Inc. Corus and Bell Media say they are reviewing the decision and considering the appropriate course of action. The two companies announced the deal last October.

L’Oréal will produce fragrances and cosmetics for Italian fashion label Valentino, enhancing its perfumes business by winning a licence previously held by Spain’s Puig. The French beauty firm’s luxury products division already makes fragrances and cosmetics for Armani and Saint Laurent as well as its own labels such as Lancome.

Exxon Mobil Corp removed non-essential workers from the Lena production platform in the Gulf of Mexico ahead of Subtropical Storm Alberto, the company said on Sunday. Royal Dutch Shell PLC and Chevron Corp shut production on platforms in the eastern Gulf of Mexico due to Alberto and evacuated workers from those sites, the companies said. The U.S. National Hurricane Center said Alberto was transitioning to a tropical cyclone as its circulation became more focused around a central core located 135 miles (220 km) west of Tampa, Florida, with 50 mile per hour winds (85 kph).

Qualcomm Inc is expecting to meet this week in Beijing with China’s antitrust regulators in a final push to secure clearance for its proposed $44-billion acquisition of NXP Semiconductors NV, according to a Reuters report. The acquisition has been caught in the crosshairs of rising U.S.-China trade tensions, with sources saying an approval would depend on the progress of broader bilateral talks. The deal has got a nod from eight of the nine required global regulators, with Chinese clearance the only one pending.

More reading:

Monday’s small-cap stocks to watch

Monday’s Insider Report: Companies insiders are buying and selling

Economic news

No major economic releases scheduled

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

SymbolName% changeLast
BCE-T
BCE Inc
-1.01%46.03
CADUSD-FX
Canadian Dollar/U.S. Dollar
+0.01%0.73864

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