Equities
Canada’s main stock index opened up Wednesday with higher crude prices bolstering energy shares. On Wall Street, the S&P 500 and Nasdaq were both positive after fresh signs of weakening in the U.S. economy bolstered optimism that the Federal Reserve could hold steady on rates next month.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 71.93 points, or 0.35 per cent, at 20,362.34.
In the U.S., the Dow Jones Industrial Average slipped 4.87 points, or 0.01 per cent, at the open to 34,847.80.
The S&P 500 opened higher by 2.71 points, or 0.06 per cent, at 4,500.34, while the Nasdaq Composite gained 18.01 points, or 0.13 per cent, to 13,961.77 at the opening bell.
“With Jackson Hole behind us, and not really living up to the usual hype, the focus now switches to the September central bank meetings and the key data releases that could sway them one way or another as policymakers ask themselves whether they’ve already done enough,” OANDA senior analyst Craig Erlman said.
U.S. investors got a softer-than-forecast reading on consumer sentiment this week along with new figures showed job openings slowed to their lowest since March 2021. Both measures further fuelled optimism that the Federal Reserve could hold steady on interest rates at its September meeting.
Wednesday morning, investors got the latest reading on private hiring in the U.S. economy. Payrolls firm ADP said private employers added 177,000 jobs in August, down from 371,000 in July and below the 200,000 markets had been expecting. As well, second-quarter U.S. GDP growth for the second quarter was revised down to an annual rate of 2.1 per cent, from the initial estimate of 2.4-per-cent growth.
“The Fed needs to see a softer labor market to be confident that price pressures aren’t just abating but substantially and sustainably and this report is a move in the right direction,” Mr. Erlam said.
In Canada, bank earnings remain at the forefront with results due this morning from National Bank. CIBC and Laurentian report on Thursday.
National Bank earned $839-million, or $2.36 per share, in the three months that ended July 31, compared with $826-million, or $2.35 per share, in the same quarter a year earlier. Adjusted to exclude certain items, the bank said it earned $2.21 per share. That missed the $2.36 per share analysts expected, according to Refinitiv.
Bank of Montreal and Bank of Nova Scotia both released third-quarter results on Tuesday. The Globe’s Stefanie Marotta reports that the two banks saw their profits stunted in the fiscal third quarter by mounting costs and climbing reserves for loans that could go bad. Those higher costs and larger-than-anticipated provisions for potentially sour loans are dragging on earnings across the sector as customers reel under the pressure of higher interest rates and inflation.
Elsewhere, Montreal-based grocer Metro says it has reached a tentative agreement with Unifor covering striking workers at 27 Metro grocery stores across the Greater Toronto Area. Workers have been off the job since late July.
Overseas, the pan-European STOXX 600 was up 0.12 per cent by midday. Germany’s DAX was down 0.06 per cent and France’s CAC 40 rose 0.15 per cent. Britain’s FTSE 100 added 0.37 per cent.
In Asia, Japan’s Nikkei added 0.33 per cent for a third day of gains. Hong Kong’s Hang Seng slipped 0.01 per cent.
Commodities
Crude prices extended recent gains after new figures showed a drop in U.S. inventories, suggesting solid demand.
The day range on Brent was US$85.38 to US$85.99 in the early premarket period. The range on West Texas Intermediate was US$81.17 to US$81.74.
A report from the American Petroleum Institute indicated that U.S. crude stocks fell by a greater-than-expected 11.5 million barrels in the week ended Aug. 25.
More official U.S. government numbers are due later this morning.
“Oil prices appear to be stabilizing around the middle of their new higher range, in the aftermath of OPEC+ cuts (voluntary Russia and Saudi in particular),” OANDA’s Craig Erlam said.
“There remains considerable uncertainty around the outlook for the global economy, from China’s sluggish rebound to interest rates and possible recessions elsewhere. But on the supply side, major producers appear committed to ensuring the market remains tight and prices higher,” he said in an early note.
Meanwhile, traders are also keeping an eye on the path of hurricane Idalia as it moves over the Gulf of Mexico to the east of big U.S. oil and gas production sites. Reuters reports that Chevron had removed some staff from the area, which accounts for about 15 per cent of U.S. oil output, although production was continuing.
In other commodities, gold held near recent three-week highs as concerns about rising interest rates eased in the wake of softer-than-forecast U.S. economic data.
Spot gold was down 0.1 per cent at US$1,934.84 per ounce by early Wednesday morning. U.S. gold futures slid 0.1 per cent to US$1,963.10.
Currencies
The Canadian dollar was a touch lower in early morning trading while its U.S. counterpart pulled back as expectations of U.S. interest rate hikes eased further.
The day range on the loonie was 73.65 US cents to 73.79 US cents in the predawn period. The Canadian dollar is down more than 1 per cent against the greenback over the past month and has a 52-week range of 71.54 US cents to 77.20 US cents.
There were no major Canadian economic releases due Wednesday.
The U.S. dollar index, which weighs the greenback against a group of currencies, gained 0.1 per cent to 103.67 early Wednesday morning after seeing its worst day in more than a month on Tuesday, according to figures from Reuters. Money markets now place 86.5-per-cent odds for the Fed to keep rates steady on Sept. 20 after weak readings on consumer sentiment and job openings this week. Expectations are even for a move in November.
“After giving back most of the day’s gains on second-tier data releases yesterday, USD is slightly firmer overnight as U.S. yields recover from the lows,” RBC chief currency strategist Adam Cole said.
The euro slid 0.2 per cent to US$1.0856.
In bonds, the yield on the U.S. 10-year note was up slightly at 4.14 per cent ahead of the North American opening bell.
More company news
Johnson & Johnson on Wednesday forecast 12.5-per-cent growth in its annual adjusted profit after completing the separation of consumer health company Kenvue. The company expects 2023 adjusted reported earnings per share of US$10.00 - US$10.10 in 2023, reflecting increased growth of 12.5-per-cent at the mid-point. -Reuters
HP Inc tempered expectations for annual profit, as it grapples with a more than a year-long slump in the personal computers segment and sluggish demand in key market China. Inflation and an uncertain global economy triggered a decline in demand for consumer electronics including PCs last year, and led to increased inventory across the supply chain. “While we expect another quarter of sequential growth in the fourth quarter, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” said HP’s CEO Enrique Lores. -Reuters
Economic news
(8:15 a.m. ET) U.S. ADP National Employment for August.
(8:30 a.m. ET) U.S. real GDP for Q2.
(8:30 a.m. ET) U.S. goods trade deficit for July.
(10 a.m. ET) U.S. wholesale and retail inventories for July.
(10 a.m. ET) U.S. pending home sales for July.
With Reuters and The Canadian Press