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Canadian Shares Edging Higher After Cautious Start

After a flat start and a subsequent fall into the red, the Canadian stock market emerged into positive territory Monday morning, amid cautious moves by investors.

The Trump administration's decision to drop its plans on taxing Mexican goods helped ease trade tensions and lift investor sentiment. Data showing a sharp increase in Canadian building permits helped as well.

The benchmark S&P/TSX Composite Index was up 28.52 points, or 0.18%, at 16,259.48. The index dropped to a low of 16,201.61 earlier in the session.

On Friday, the index ended up 3.16 points, or 0.02%, at 16,230.96.

Shares from healthcare, consumer discretionary and information technology sections moved higher. Financial stocks were also edging up, while energy and industrials shares were a bit sluggish. Materials traded weak, tracking falling gold prices.

Cronos Group Inc. (CRON.TO) shares rose nearly 5.5%. Aphria Inc. (APHA.TO) gained 3.2%, Canopy Growth Corporation (WEED.TO), Hexo Corp. (HEXO.TO) and Baush Health Companies (BHC.TO) moved up by 2.2 to 2.7%, Aurora Cannabis (ACB.TO) gained nearly 2% and CannTrust Holdings (TRST.TO) advanced 1.3%. Extendicare was higher by about 1%.

In the consumer discretionary space, shares of Hudson's Bay Company (HBC.TO) soared nearly 43%. The announced today that its Board of Directors has formed a Special Committee of independent directors to review the June 10, 2019 proposal from a group of HBC shareholders for the privatization of the Company at a price of C$9.45 per share, payable in cash.

HBC also announced that it has entered into definitive agreements to sell the company's remaining stake in its German real estate joint venture, and divest its related retail joint venture to its partner, SIGNA, for a total consideration of $1.5 billion.

BRP Inc. (DOO.TO), Linamar Corp. (LNR.TO) and Magna International (MG.TO) were up 2 to 4.5%.

Information technology stock Enghouse Systems (ENGH.TO) is rising 5.8%, extending recent gains. Sierra Wireless (SW.TO), Kinaxis (KXS.TO), Shopify Inc. (SHOP.TO), Constellation Software (CSU.TO), Quarterhill Inc. (QTRH.TO) and Descartes Systems Group (DSG.TO) were also up with strong gains.

In the banking space, CDN Western Bank (CWB.TO), Canadian Imperial Bank of Commerce (CM.TO), Bank of Montreal (BMO.TO), Toronto-Dominion Bank and Bank of Nova Scotia (BNS.TO) gained 0.7 to 1.5%. Royal Bank of Canada (RY.TO) was modestly higher.

Among energy stocks, Encana Corp. (ECA.TO) gained 2.85%, Parex Resources (PXT.TO) moved up 2% and MEG Energy (MEG.TO) gained 1.2%.

Meanwhile, Crescent Point Energy (CPG.TO), Enerplus Corp. (ERF.TO) and Precision Drilling (PD.TO) were weak, losing 1 to 1.5%.

Among materials shares, Yamana Gold (YRI.TO), Oceanagold Corp. (OGC.TO), Wheaton Precious Metals (WPM.TO), Pan American Silver (PASS.TO), Iamgold Corp. (IMG.TO), Eldorado Gold Corp. (ELD.TO) and B2Gold Corp. (BTO.TO) lost 2 to 4%.

In economic news, data released this morning showed the seasonally adjusted annual rates of housing starts in Canada fell to 202,337 units in May 2019 from a downwardly revised 233,410 in April, missing market expectations of 205,000.

Meanwhile, Canadian municipalities issued a record CAD 9.3 billion worth of building permits in April 2019, up 14.7% from the previous month. Markets had expected an increase of just 1.3%. The increase in the value of permits was almost entirely due to a planned change in development costs in Metro Vancouver, the report showed.

U.S. stocks moved higher this morning, extending last week's gains, with investors reacting positively to news the U.S. and Mexico have reached an agreement to avert President Donald Trump's threatened tariffs on all Mexican imports.

Trump revealed in a post on Twitter late Friday that the 5% tariff he threatened to impose on Mexican imports beginning today has been "indefinitely suspended."

The suspension of the tariff threat comes as the two countries signed a deal Trump claims will help stop the flow of migrants through Mexico and into the U.S.

European stocks were heading to a positive close. Markets across Asia ended on a fairly bright note on Monday.

In commodities, crude oil futures for July were up $0.34, or 0.63%, at $54.33 a barrel.

Gold futures for August were declining $13.30, or 0.99%, at $1,332.80 an ounce.

Silver futures for July were down $0.296, or 1.97%, at $14.735 an ounce, while Copper futures for July were rising $0.0365, or 1.4%, at $2.6640 per pound.

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