Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index rose at the open Wednesday with energy and materials stocks gaining as investors weigh the latest policy decision from the Bank of Canada. South of the border, major indexes also gained with the Nasdaq touching a record high just after the start of trading.
At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 43.62 points, or 0.24 per cent, at 18,000.99.
On Wall Street, the Nasdaq Composite rose 145.4 points, or 1.10 per cent, to a record high of 13342.548 at the opening bell.
The Dow Jones Industrial Average rose 87.00 points, or 0.28 per cent, at the open to 31017.54. The S&P 500 rose 17.30 points, or 0.46 per cent, at the open to 3816.22.
“Joe Biden will be inaugurated as the 46th president of the United States today, and investors are hopeful that the next four years will bring greater stability,” Axi market analyst Milan Cutkovic said.
“Investors are focused on Biden´s proposed multi-billion-dollar stimulus package, which he will try to get pass through a closely divided senate as soon as possible, as well as his broader economic recovery plan,” he said.
Stimulus hopes were buoyed Tuesday when Secretary Treasury nominee Janet Yellen, speaking to the Senate, called on the government to “act big” on stimulus to offset the economic impact of the COVID-19 pandemic.
Early Wednesday, Mr. Biden’s transition team confirmed that he would sign 15 executive actions, including revoking the presidential permit granted to the Keystone XL pipeline.
In this country, investors got the latest policy announcement from the Bank of Canada. As expected, the central bank kept its key policy rate unchanged at 0.25 per cent. The central bank also said it sees a brighter outlook in the medium term as a results of COVID-19 vaccines and increased fiscal stimulus.
On the corporate side, Netflix shares were up more than 14 per cent in early trading in the wake of the company’s latest results, which were released after Tuesday’s close.
Netflix Inc said that its global subscriber rolls crossed 200 million at the end of 2020 and forecast it will no longer need to borrow billions of dollars to finance its slate of TV shows and movies. On Tuesday, the company said it expected free cash flow to break even in 2021, telling shareholders: “We believe we no longer have a need to raise external financing for our day-to-day operations.”
Overseas, the pan-European STOXX 600 rose 0.51 per cent by afternoon. Britain’s FTSE 100 slipped 0.05 per cent. Germany’s DAX and France’s CAC 40 rose 0.25 per cent and 0.43 per cent.
In Asia, Japan’s Nikkei fell 0.38 per cent. Hong Kong’s Hang Seng advanced 1.08 per cent.
Commodities
Crude prices rose, with Brent topping US$56 a barrel, on U.S. stimulus hopes and expectations of lower U.S. inventories.
The day range on Brent is US$55.95 to US$56.55. The range on West Texas Intermediate is US$53.06 to US$53.52.
On Tuesday, U.S. Treasury Secretary nominee Janet Yellen on Tuesday urged lawmakers to “act big” on COVID-19relief spending. That sparked a decline in the U.S. dollar, which helped bolster crude prices.
“There could be a rapid rise in energy prices,” Axi chief market strategist Stephen Innes said in an early note.
“Commodity markets are cheering that Biden and Democrats also favour a large infrastructure package included in a COVID-19 relief package. Oil prices continue to reprice higher tangentially to reflationary impact feedback loop via a weaker U.S. dollar.”
Crude prices were also drawing some support from expectations for a decline in weekly U.S. crude stocks. The American Petroleum Institute releases its weekly report later Wednesday followed by numbers from the U.S. Energy Information Administration on Thursday. (The two reports were delayed by a day due to Monday’s U.S. market holiday.)
Analysts estimate crude stocks fell by 300,000 barrels last week.
In other commodities, gold prices rose as the U.S. dollar weakened.
Spot gold gained 0.8 per cent to US$1,853.80 per ounce. U.S. gold futures added 0.7 per cent to US$1,852.80.
Currencies
The Canadian dollar was higher ahead of the Bank of Canada’s latest rate decision while the U.S. dollar slid against global counterparts.
The day range on the loonie is 78.48 US cents to 78.80 US cents.
“The pro risk mood, rising commodity prices and broader USD softness [are] keeping the CAD well-supported at the moment,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
The Bank of Canada’s policy announcement is due just after the opening bell. Markets aren’t expecting the central bank to change its key rate.
On global markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, slid for a third consecutive session.
The index was down 0.1 per cent at 90.390.
The euro pulled back 0.1 per cent against the U.S. dollar at US$1.2117 as the session continued.
Britain’s pound advanced 0.2 per cent to US$1.3668, up for a third straight day.
More company news
Morgan Stanley posted a 57-per-cent rise in fourth-quarter profit on Wednesday, as the Wall Street bank’s trading business benefited from coronavirus-induced volatility in financial markets. Net income applicable to common shareholders rose to $3.27-billion, or $1.81 per share, in the quarter ended Dec. 31, compared with $2.09-billion, or $1.30 per share, a year earlier. Analysts had expected a profit of $1.27 per share, according to Refinitiv IBES data.
Shareholders of West Fraser Timber Co. Ltd. and Norbord Inc. have approved a $4-billion all-stock deal that will marry two of Canada’s big wood product producers. The combined company says it will operate as West Fraser with headquarters in Vancouver and a regional office in Toronto, with West Fraser shareholders owning 56 per cent of the company, and Norbord shareholders owning about 44 per cent.
Procter & Gamble Co raised its full-year sales forecast for a second time on Wednesday as the consumer products giant benefited from a sustained high level of demand for its home care and cleaning products due to the COVID-19 pandemic. P&G said it expects full-year sales to rise 5% to 6%, compared with a prior forecast of a 3% to 4% increase.
Alibaba Group founder Jack Ma made his first public appearance since October on Wednesday when he spoke to a group of teachers by video, easing concern about his unusual absence from the limelight and sending shares in the e-commerce giant surging. Speculation over Ma’s whereabouts has swirled in the wake of news this month that he was replaced in the final episode of a reality TV show he had been a judge on, and amid a regulatory clampdown by Beijing on his sprawling business empire, Reuters reports.
Economic news
Statistics Canada says the Consumer Price Index rose 0.7 per cent on a year-over-year basis in December, down from a 1-per-cent increase in November.
(10 a.m. ET) Bank of Canada rate announcement.
Also: U.S. Inauguration Day
With Reuters and The Canadian Press
Terry Weber