Equities
Canada’s main stock index opened lower Wednesday with weaker gold prices pressuring mining stocks. On Wall Street, key indexes were also in the red at the start of trading with markets awaiting the minutes from the latest Federal Reserve meeting later in the day.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 105.78 points, or 0.51 per cent, at 20,766.36.
In the U.S., the Dow Jones Industrial Average fell 85.81 points, or 0.23 per cent, at the open to 37,629.23. The S&P 500 opened lower by 17.76 points, or 0.37 per cent, at 4,725.07, while the Nasdaq Composite dropped 124.47 points, or 0.84 per cent, to 14,641.47 at the opening bell.
On Wednesday, markets will be watching the latest Fed minutes for signals about how soon the Federal Reserve is likely to start easing borrowing costs. Futures suggest about a 70-per-cent chance of the U.S. first rate cut coming in March, but a level of uncertainty has also weighed on sentiment in recent days as traders await key U.S. employment numbers at week’s end.
“Questions remain over the likeliness of the 150-basis points worth of rate cuts expected by the markets currently, and thus there is a risk that the Federal Reserve members will seek to reign in those expectations somewhat,” Joshua Mahony, chief market analyst with Scope Markets, said.
“Today’s FOMC minutes will provide one such opportunity for the disparity between market rate expectations and the Fed outlook to narrow, with traders keeping a close eye on the language behind a meeting that was widely considered to be highly dovish.”
In Canada, Vancouver home sales figures are due today.
On the corporate side, Suncor said on Wednesday it saw record upstream production in the fourth quarter, supported by strong output at its Firebag and Fort Hills assets, Reuters reported. The Calgary, Alberta-based company said it had its second-highest quarterly upstream production of 808,000 barrels per day (bpd) in the fourth quarter ended Dec. 31. CEO Rich Kruger noted that December was Suncor’s best month ever with upstream production averaging over 900,000 bpd.
Overseas, the pan-European STOXX 600 was down 0.84 per cent by midday. Britain’s FTSE 100 slid 0.61 per cent. Germany’s DAX and France’s CAC 40 lost 1 per cent and 1.47 per cent, respectively.
In Asia, Hong Kong’s Hang Seng lost 0.85 per cent. Markets in Japan were closed.
Commodities
Crude prices remained uneven in early trading as economic uncertainty offsets the impact of trade disruptions in the Red Sea.
The day range on Brent was US$74.79 to US$76.20 in the early premarket period. The range on West Texas Intermediate was US$69.28 to US$70.70. Early this week, crude prices advanced after attacks on vessels in the Red Sea by Houthi rebels. However, that impact faded as traders awaited the latest Fed minutes and the release of U.S. jobs numbers for December on Friday.
“While geopolitical headlines can temporarily support oil prices, the broader market context, including dismal economic data in China and Europe to start the year and diminishing optimism about U.S. rate cuts, exerted downward pressure during the busy New York session,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“Coupled with a strengthening U.S. dollar, it contributed to the negative trajectory of oil prices into the Asia session as traders remained on headline watch.”
Later today, markets will get the first of two weekly U.S. inventory reports with the release of new numbers by the American Petroleum Institute. More official U.S. government figures follow on Thursday. Analysts polled by Reuters are expecting crude inventories to decline while gasoline and distillate stocks likely rose.
In other commodities, spot gold was down 0.3 per cent to US$2,053.10 per ounce ahead of the North American open. U.S. gold futures were down 0.5 per cent to US$2,062.20 per ounce.
Currencies
The Canadian dollar was weaker, trading around the 75-US-cent mark, amid weaker global risk sentiment, while its U.S. counterpart advanced against a group of world currencies.
The day range on the loonie was 74.98 US cents to 75.09 US cents in the early premarket period. On Tuesday, the Canadian dollar saw its biggest decline against the green back in about three months, hit by weaker crude prices and broad global economic concerns.
“The CAD is moderately weaker on the session but losses are limited and among the least of the major currencies on the session against a generally stronger USD,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said in a note.
“Soft risk appetite and weaker commodities are headwinds for the CAD in the short run but narrower spreads are helping limit CAD losses for now.”
The U.S. dollar index, meanwhile, was up 0.11 per cent at 102.31 in the predawn period, shaking off modest early declines. The index has gained more than 1 per cent over the past five days.
The euro slid 0.05 per cent to 1.0935 while Britain’s pound edged up 0.06 per cent to US$1.2627 after seeing its biggest decline in three months during the previous session.
In bonds, the yield on the U.S. 10-year note was higher at 3.976 per cent ahead of the North American opening bell.
More company news
Walt Disney and ValueAct Capital Management have entered a deal to consult the activist investor on strategic matters through meetings with the entertainment giant’s board and management. San Francisco-based ValueAct, well known for working collaboratively with target companies, had built a large stake in Walt Disney late last year, sources told Reuters in November. Its exact stake in the company could not be immediately determined. -Reuters
Flight attendants at Air Transat have voted to reject a new tentative contract with the Canadian leisure carrier, according to a letter from the union to cabin crew seen by Reuters on Tuesday. More than 98% of the votes cast were against the agreement, as per the letter, posing a potential hurdle for the company as it looks to capitalize on a boom in air travel demand. The airline last month reached a tentative agreement with the Canadian Union of Public Employees (CUPE), which represents about 2,000 Transat workers. -Reuters
Pfizer said on Wednesday that Canada’s health regulator approved its gene therapy for the treatment of a rare inherited bleeding disorder called hemophilia B. Canada’s approval comes ahead of a pending decision by the U.S. Food and Drug Administration, which is expected in the second quarter of 2024. U.S. regulators over a year ago approved CSL’s Hemgenix, the first one-time gene therapy for hemophilia B. -Reuters
Economic news
U.S. job openings for November (10 a.m. ET)
U.S. ISM manufacturing data (10 a.m. ET)
Fed minutes for December meeting (2 p.m. ET)
With Reuters and The Canadian Press
Terry Weber