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Canada’s main stock index rebounded Wednesday after its worst session of the year during the previous session, buoyed by higher crude prices as OPEC begins a two-day meeting. On Wall Street, recent volatility continued with key indexes swinging higher after selling off the day before.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 222.42 points, or 1.08 per cent, at 20,882.41.
In the United States, the Dow Jones Industrial Average rose 210.58 points, or 0.61%, to 34,694.3, the S&P 500 gained 47.67 points, or 1.04%, to 4,614.67 and the Nasdaq Composite added 183.92 points, or 1.18%, to 15,721.61.
On Tuesday, Federal Reserve chair Jerome Powell signalled that the central bank may have to move faster to taper its bond-buying program to head combat inflation despite the potential threat from the spread of the Omicron variant. Markets were already jittery after the head of drug maker Moderna suggested that existing vaccines may not be as effective in fighting the new variant. The World Health Organization is studying the new variant but is still likely weeks from determining the risk.
Mr. Powell’s comments pushed Treasury yields higher. By Wednesday morning, the yield on the 10-year note was up at 1.495 per cent.
“Traders are having to base investment decisions on a limited amount of data, with each notable comment bringing knee-jerk reactions in financial markets,” Joshua Mahony, senior market analyst with IG, said.
“It will ultimately take 1 to 2 weeks for the scientists to gain a better grasp of just how much of a problem this strain is going to be, he said in a note. “Thus traders should prepare for a highly volatile time, with few places to hide if traders wish to shelter themselves from that uncertainty.”
In this country, bank earnings continue with results from Royal Bank and National Bank.
RBC, Canada’s biggest lender, raised its quarterly dividend to $1.20 a share, up 11 per cent from the a year earlier. Net profit was $3.89-billion, or $2.68 a share, in the three months ended Oct. 31, up from $3.2-billion, or $2.23 per share, a year ago. Adjusted for certain items, RBC said it earned $2.71 per share. On average, analysts expected adjusted earnings per share of $2.81, according to Refinitiv. RBC shares were marginally higher in early trading in Toronto.
National Bank, meanwhile, raised its quarterly dividend by 23 per cent to 87 cents a share for the current quarter, up from the 71 cents it has paid in the past quarters. After adjusting to exclude some items, National Bank said it earned $2.21 per share. On average, analysts expected adjusted earnings per share of $2.24, according to Refinitiv. National Bank shares fell about 1 per cent shortly after the opening bell in Toronto.
On Tuesday, Bank of Nova Scotia reported a 35-per-cent rise in quarterly profit. The bank, the first big Canadian bank to report, also hiked its dividend 11 per cent after regulators lifted pandemic-era restrictions. The Globe’s James Bradshaw reports persistent shifts in customer behaviour during the COVID-19 pandemic helped drive losses on loans to a new low point, and demand for borrowing started to rebound.
Canadian investors will also get results from Ski-Doo maker BRP Inc. Wednesday morning.
Overseas, the pan-European STOXX 600 was up 1.21 per cent by midday, rebounding from a rough day for global stocks during the previous session. Britain’s FTSE 100 gained 1.33 per cent. Germany’s DAX and France’s CAC 40 rose 1.83 per cent and 1.66 per cent, respectively.
In Asia, Japan’s Nikkei gained 0.41 per cent while Hong Kong’s Hang Seng added 0.78 per cent.
Crude prices recouped some of the previous sessions sharp losses as traders await the latest meeting of OPEC and its allies.
The day range on Brent is US$69.38 to US$72.59. The range on West Texas Intermediate is US$66.20 to US$69.22. WTI lost more than 5 per cent on Tuesday while Brent sank nearly 4 per cent.
OPEC members meet later Wednesday while the OPEC+ group, which includes Russia, will meet on Thursday. Markets are waiting to see if the producer group alters its current output plan amid global uncertainty brought on by the latest coronavirus variant.
“With panicked tail-chasing blowing out volatility this week, the full OPEC+ meeting tomorrow cannot come soon enough,” OANDA senior analyst Jeffery Halley said.
“With oil’s slump [on Tuesday], it is almost certain that OPEC+ will pause its scheduled production hikes for December to allow it to assess the impact of omicron more fully on the world economy.”
He said, if OPEC+ does postpone planned hikes, he expects crude to stabilize around current levels.
Meanwhile, new figures from the American Petroleum Institute showed that crude stocks fell by 747,000 barrels last week, less than markets had been expecting. At the same time gasoline inventories rose.
More official figures will be released later Wednesday by the U.S. Energy Information Administration.
In other commodities, gold prices were higher with continued market uncertainty bolster the metal’s safe-haven appeal.
Spot gold rose 0.3 per cent to US$1,778.56 per ounce early Wednesday morning. U.S. gold futures rose 0.2 per cent to US$1,780.60.
The Canadian dollar gained in early going, helped by improved risk sentiment and a rebound in crude prices. The U.S. dollar edged up amid renewed expectations that U.S. monetary policy would continue to tighten.
The day range on the loonie is 78.20 US cents to 78.59 US cents.
“Overnight, markets have reverted to trading with general risk appetite rather than USD direction and the tone is generally risk on,” RBC chief currency strategist Adam Cole said in a note.
There were no major Canadian economic releases on Wednesday’s calendar.
The U.S. dollar index rose 0.03 per cent to 95.997, after it registered its strongest month since June, despite volatility triggered by Omicron, according to figures from Reuters.
The euro fell 0.1 per cent versus the U.S. dollar to $1.1325.
The Australian and New Zealand dollars made gains, rising from one-year lows, after losses last week and on Tuesday. The Australian dollar bought US$0.7148 and the New Zealand dollar bought US$0.6844.
More company news
BRP Inc. beat expectations as it reported a third-quarter profit of $127.7-million amid supply chain disruptions that caused a drop in product deliveries. The maker of Ski-Doos and Sea-Doos says its profit amounted to $1.53 per diluted share for the quarter ended Oct. 31, down from a profit of $198.7-million or $2.22 per diluted in the same quarter last year. Revenue totalled $1.6-billion, down from $1.7-billion. BRP says its normalized earnings per share amounted to $1.48, down from $2.13 a year ago. Analysts on average had expected an adjusted profit of $1.33 per share, according to financial markets data firm Refinitiv.
Exxon Mobil on Wednesday set annual capital spending through 2027 at $20 billion to $25 billion, allocating money to low-carbon projects and extending its previously projected spending rate for two years. Exxon announced last year it planned to spend $16 billion to $19 billion in 2021 and $20 billion to $25 billion from 2022 to 2025.
Cenovus Energy Inc. says it is selling 337 Husky gas stations for a total of $420-million. Parkland Fuels says it will buy 156 of the retail fuel stations for $156-million.-Federated Co-operatives Ltd. will buy the remaining 181 stations for $264-million.
(8:15 a.m. ET) U.S. ADP National Employment Report for November.
(8:30 a.m. ET) Canadian building permits for October.
(9:30 a.m. ET) Canada’s Markit manufacturing PMI for November.
(9:45 a.m. ET) U.S Markit manufacturing PMI for November.
(10 a.m. ET) U.S. ISM manufacturing PMI for November.
(10 a.m. ET) U.S. construction spending for October.
(10 a.m. ET) U.S. Fed Chair Jerome Powell and Treasury Secretary Janet Yellen testify on the CARES Act to the House Financial Services Committee
With Reuters and The Canadian Press