Equities
Canada’s main stock index opened higher Wednesday, helped by gains in tech and consumer discretionary stocks. On Wall Street, key indexes were also up in early trading as markets begin to weigh the timing of potential rate cuts in the wake of dovish comments from a Federal Reserve official.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 40.93 points, or 0.2 per cent, at 20,077.7.
In the U.S., the Dow Jones Industrial Average rose 19.82 points, or 0.06 per cent, at the open to 35,436.80.
The S&P 500 opened higher by 16.95 points, or 0.37 per cent, at 4,571.84, while the Nasdaq Composite gained 85.36 points, or 0.60 per cent, to 14,367.11 at the opening bell.
Sentiment got a boost from comments on Tuesday after Federal Reserve Governor Christopher Waller said current policy is well positioned to get inflation back to 2 per cent and suggested that, if price pressures continue to decline for several more months, rates could start declining.
“Like his old boss, [former St. Louis Fed President] Jim Bullard, Waller is a born-again hawk — an erstwhile dove who changed his feathers during the post-pandemic inflation fight,” Stephen Innes, managing partner with SPI Asset Management, said.
“If he’s satisfied that terminal is achieved, it’s a solid nod to the idea that the bar is quite high for another rate increase.”
In the wake of the remarks, Fed fund futures priced in more than 100 basis points in cuts next year and a 40-per-cent chance they could start in March, according to Reuters. Markets will get a reading on the Fed’s preferred measure of inflation on Thursday morning with the release of the PCE Index. Economists are expecting that report to show a continued easing in price pressures. This afternoon, the Fed’s Beige Book, which offers a snapshot of current economic conditions across the 12 Federal Reserve Districts, will be released.
In Canada, Quebec convenience store operator Alimentation Couche-Tard Inc. said net earnings for the second quarter rose to US$819.2-million or 85 cents per share, up from US$810.4-million or 79 cents a year earlier. Total revenue rose 1 per cent to US$4.1-billion.
Early Wednesday, Enbridge Inc. raised its core-earnings forecast for 2024. Enbridge said it expects adjusted core earnings to be between $16.6-billion and $17.2-billion next year, higher than its 2023 expectations of $15.9-billion to $16.5-billion. It also said it will raise its 2024 dividend by 3.1 per cent. Enbridge shares were up nearly 1 per cent in early trading in Toronto.
Overseas, the pan-European STOXX 600 was up 0.54 per cent by midday. Britain’s FTSE 100 slid 0.02 per cent. Germany’s DAX and France’s CAC 40 gained 1.01 per cent and 0.53 per cent, respectively.
In Asia, Japan’s Nikkei closed down 0.26 per cent. Hong Kong’s Hang Seng lost 2.08 per cent.
Currencies
Crude prices were higher in early trading with talks reportedly continuing ahead of Thursday’s OPEC+ meeting.
The day range on Brent was US$81.52 to US$82.78 in the early premarket period. The range on West Texas Intermediate was US$76.36 to US$77.43.
OPEC+ has a ministerial meeting scheduled for Thursday. The meeting had originally been set for last weekend but was postponed to address concerns among African members over production targets, according to reports.
Reuters, citing two unnamed sources within the producer group, reported early Wednesday that talks were continuing but the meeting was still scheduled to go ahead tomorrow.
“U.S. crude rebounded past US$76 per barrel, but gains remain timid as the latest news suggest that Angola and Nigeria continue to resist to Saudi’s demand for a joint effort to reduce supply and that there is a chance that the OPEC meeting, which is rescheduled to tomorrow, could be delayed again,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“Any further delay could trigger another selloff in oil prices in the second half of this week.”
Saudi Arabia and Russia have both earlier agreed to additional voluntary production cuts, which are set to run to the end of the year.
In other commodities, spot gold fell 0.2 per cent to US$2,036.50 per ounce by early Wednesday morning, after hitting its highest since May 5. U.S. gold futures for December delivery lost 0.1 per cent to US$2,037.30 per ounce.
Currencies
The Canadian dollar was slightly weaker as the greenback bounced off three-month lows against a group of currencies.
The day range on the loonie was 73.61 US cents to 73.86 US cents in the predawn period.
“CAD moves largely reflect general USD strength more than anything,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Sustained CAD gains this week do, however, highlight the risk of some additional tailwinds emerging from position adjustment as investors who have been (quite heavily) short the CAD may be forced to cover.”
On world markets, the U.S. dollar index, which weighs the greenback against a selection of currencies, was up 0.13 per cent at 102.88 early Wednesday morning. The index earlier touched its weakest level since August in the wake of dovish recent Fed comments.
In other currencies, New Zealand’s dollar rose 0.49 per cent to US$0.6166 after that country’s central bank held rates steady but cautioned further tightening may be necessary. Earlier in the session, the New Zealand dollar gained as much as 1 per cent to a four-month high against the U.S. dollar, according to figures from Reuters.
The euro was little changed at US$1.0991. Earlier in the session, the euro breached US$1.10 for the first time since late summer.
In bonds, the yield on the U.S. 10-year note was lower at 4.297 per cent in the predawn period.
More company news
General Motors said on Wednesday its new labor deals following a lengthy U.S. strike will cost it US$9.3-billion over the life of the agreement, even as it outlined US$10-billion in share buybacks, a 33-per-cent dividend increase and reduced spending at its robotaxi unit Cruise. The Detroit automaker, whose shares rose 5 per cent in premarket trading, also lowered 2023 profit expectations after the strike by the United Auto Workers (UAW). -Reuters
Foot Locker on Wednesday forecast annual profit above Wall Street estimates and a smaller-than-expected drop in annual revenue, as steep discounts helped kick off strong holiday sales at the retailer. The company’s stock, which has lost about 40% of its value this year, was up about 9% in premarket trade after it also forecast a smaller than-expected decline in holiday-quarter comparable sales. -Reuters
Economic news
(8:30 a.m. ET) Canada’s current account balance for Q3
(8:30 a.m. ET) U.S. real GDP for Q3.
(8:30 a.m. ET) U.S. wholesale and retail inventories for October
(2 p.m. ET) U.S. Beige Book is released.
With Reuters and The Canadian Press
Terry Weber