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Equities
Canada’s main stock index bounced higher early Wednesday after four days of losses, tracking firmer global sentiment. On Wall Street, key indexes were up in early trading as investors weigh sanctions against Russia and await the next move in the Ukrainian crisis.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 32.42 points, or 0.16 per cent, at 20,940.24.
In the U.S., the Dow Jones Industrial Average rose 84.36 points, or 0.25 per cent, at the open to 33,680.97.
The S&P 500 opened higher by 20.17 points, or 0.47 per cent, at 4,324.93, while the Nasdaq Composite gained 130.23 points, or 0.97 per cent, to 13,511.75 at the opening bell.
Russia’s push to send soldiers to Donetsk and Luhansk this week triggered coordinated sanctions from Western nations, including Canada. More could follow if Moscow looks to push further into the country.
“Market mood is not cheerful but the softer-than-feared sanctions somewhat help lift the mood,” Swissquote senior analyst Ipek Ozkardeskaya. “The risk appetite is limited, of course, except in some key assets including oil and commodities.”
U.S. President Joe Biden announced the first sanctions against Russia for what he called the beginning of an invasion of Ukraine, and he promised steeper punishments ahead if Russia continued its aggression. The European Union also agreed on new sanctions against Russia while Germany halted the new Nord Stream 2 gas pipeline from Russia and Britain took action against Russian banks.
Meanwhile, Kinross Gold Corp. says its operations in Russia are unaffected by U.S. sanctions. The Toronto-based gold miner operates the Kupol mine in the Chukotka region in the northeastern corner of Russia. Kinross said it has successfully operated in Russia for more than 25 years and has previously managed through similar situations.
On the corporate side, earnings season slowly winds down with Wall Street getting results from retailer Lowe’s Cos. Ahead of the opening bell, Lowe’s raised its full-year sales and profit forecasts. Lowe’s said it expects fiscal year 2022 total sales of US$97-billion to US$99-billion, compared to a previous forecast of US$94-billion to US$97-billion.
On Tuesday, competitor Home Depot’s stock took a hit after the company reported weaker profit margins in the holiday quarter on the back of higher costs.
In this country, investors got results from Gildan Activewear. The company said fourth-quarter sales rose 14 per cent to US$784-million. Earnings per share totalled 89 US cents while adjusted earnings per share came in at 76 US cents. Analysts had been expecting adjusted earnings per share of 60 US cents a share on revenue of US$735.6-million, according to Refinitiv. The Montreal-based company also said it will now pay a quarterly dividend of 16.9 cents per share, up from 15.4 cents.
All eyes will be on the country’s banks starting Thursday, when Royal Bank kicks off earnings from Canada’s biggest lenders. Analysts expect profit gains to moderate while dividend hikes will likely be put on hold.
Overseas, the pan-European STOXX 600 was up 0.79 per cent by midday. Britain’s FTSE 100 gained 0.59 per cent. Germany’s DAX and France’s CAC 40 rose 0.81 per cent and 1.22 per cent, respectively.
In Asia, Hong Kong’s Hang Seng rose 0.60 per cent. Markets in Japan were closed for a public holiday.
Commodities
Crude prices pulled back from seven-year highs as supply concerns eased in the wake of sanctions on Russia by Western nations.
The day range on Brent is US$92.81 to US$94.29. The range on West Texas Intermediate is US$90.64 to US$96.
“Crude prices still seem like they have a good chance to make a run towards the US$100 level, but it might take a major escalation by Russia for that breakout to happen,” OANDA senior analyst Ed Moya said.
“The deployment of Russian troops to two regions in Ukraine and prospects of various sanctions against Russia will likely lead to further tense moments in the coming days.”
Reuters reported a U.S. State Department official told reporters late Tuesday that sanctions announced this week “are not targeting and will not target oil and gas flows”.
Mr. Moya said developments in the Iran nuclear talks also weighed on prices. He noted that a spokesman for Iran’s Foreign Ministry said that progress was being made in reviving the 2015 nuclear deal, raising the spectre of more supply coming to market.
“Energy traders are looking at a long list of geopolitical risks and see the Biden administration being extra motivated to make a deal with Tehran,” Mr. Moya said.
In other commodities, gold prices held below US$1,900 an ounce after hitting their highest level in nine months during the previous session.
Spot gold was steady at $1,895.43 per ounce by early Wednesday morning, after rising to its highest since June 1 at US$1,913.89 per ounce in volatile trade on Tuesday. U.S. gold futures slid 0.4 per cent to US$1,899.70.
“Bullion seems like it is taking a little break right now, but investors will soon be saying, ‘I love gold’ as geopolitical and growth concerns will drive safe-haven demand,” Mr. Moya said in a note.
Currencies
The Canadian dollar was higher as risk sentiment steadied somewhat in world markets and its U.S. counterpart was modestly lower against a basket of currencies.
The day range on the loonie is 78.27 US cents to 78.71 US cents.
“The news from Ukraine has not gotten any better, but there may be some market relief that the worst has not happened,” Alvin Tan, Asia FX strategist with RBC, said.
On world markets, the U.S. dollar index, which measures the greenback against six peers, fell 0.1% to 96.949.
The euro was up 0.1 per cent against the dollar at US$1.1340 after hitting its lowest on Tuesday since Feb. 14 at US$1.1286, according to figures from Reuters.
The New Zealand dollar jumped 0.8% after the Reserve Bank of New Zealand raised interest rates and said more tightening could be necessary.
More company news
Pembina Pipeline Corp said on Wednesday its interim Chief Executive Officer Scott Burrows would lead the company on a permanent basis. Burrows was previously Pembina’s financial head until November, when he replaced Mick Dilger who stepped down as president and CEO to pursue other opportunities.
Canadian Imperial Bank of Commerce, the country’s fifth largest lender, said on Tuesday it plans to bring its local staff back to office starting March 21 as Omicron-related infections ebb. The Canadian employees, who had been asked to work remotely in December as infections resurged, would return to office on a hybrid basis, Sandy Sharman, group head of people, culture and brand at CIBC, said in a memo seen by Reuters.
Rio Tinto reported annual underlying earnings on Wednesday that rose almost 72%, helped by higher iron ore prices and strong demand from top consumer China. The world’s biggest iron ore producer posted underlying earnings of US$21.38-billion for the year ended Dec. 31, compared with US$12.45-billion a year earlier. Analysts had expected underlying earnings of US$21.63-billion, according to Visible Alpha.
Economic news
Euro zone CPI
Germany consumer confidence
With Reuters and The Canadian Press