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North American stock markets start week on a positive note; dollar down

North American stock markets started the week on a positive note, surging ahead as investor fears calmed slightly following a tumultuous week of rhetoric between the United States and North Korea. The S&P/TSX composite index advanced 86.
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The Canadian dollar was trading at 78.71 cents US on Monday, down from Friday’s average price of 78.83 cents US.

North American stock markets started the week on a positive note, surging ahead as investor fears calmed slightly following a tumultuous week of rhetoric between the United States and North Korea.

The S&P/TSX composite index advanced 86.53 points to 15,119.91.

On Wall Street, the Dow Jones industrial average gained 135.39 points to 21,993.71, while the S&P 500 index rose 24.52 points to 2,465.84. The Nasdaq composite climbed 81.06 points to 6,337.62.

“It’s really a reflection of the fact that I think some of the fears have calmed down,” said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.

Last week, tensions escalated between America and North Korea. U.S. President Donald Trump threatened that military solutions were “locked and loaded” as the ’hermit kingdom’ said it would fire missiles into the ocean near Guam, a U.S. territory.

The war of words resulted in the biggest single-day drop on U.S. markets in nearly three months last Thursday.

But investors found some comfort by Monday in the belief that the situation isn’t devolving at an accelerated pace, said Fehr.

“I don’t think by any stretch we have extinguished the risk that geopolitical issues, particularly the North Korea issue, poses for the market,” he said.

“But, I do think that we’re seeing a little bit of a relief rally today... that we aren’t going to see this situation really boil over in the very, very near term.”

The fact that the TSX, which is heavily weighted in the energy sector, surged ahead despite a fall in oil prices shows that investors are moving into riskier assets, he said.

The September crude contract shed US$1.23 to US$47.59 per barrel and the energy sector was the worst performer of the Toronto market’s main index, with
stocks losing an average of 1.33 per cent of their worth.

The appetite for risk also came at the expense of gold, which is considered a safe haven in uncertain times, Fehr said. The December gold contract fell US$3.60 to US$1,290.40 an ounce.

The Canadian dollar was trading at an average price of 78.71 cents US, down 0.12 of a cent.

Elsewhere in commodities, the September natural gas contract fell 2.4 cents to about US$2.96 per one million British Thermal Units and the September copper contract declined three quarters of a cent to US$2.90 a pound.