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Equities
Canada’s main stock index moved higher early Wednesday, buoyed by improved risk sentiment across global markets. On Wall Street, key indexes were also higher as traders await an afternoon rate decision from the Federal Reserve.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 86.66 points, or 0.41 per cent, at 21,274.5.
In the U.S., the Dow Jones Industrial Average rose 109.59 points, or 0.33 per cent, at the open to 33,653.93.
The S&P 500 opened higher by 25.69 points, or 0.60 per cent, at 4,288.14, while the Nasdaq Composite gained 170.74 points, or 1.32 per cent, to 13,119.37 at the opening bell.
On Wednesday, investors will have a close eye on the Fed, which delivers its rate announcement at 2 p.m. ET. Markets are widely expecting the central bank to raise interest rates by a quarter percentage point, the first increase in more than three years. Traders will also be paying close attention to the Fed’s future guidance for hints about the timing of further increases. Some economists are expecting as many as six hikes this year.
“The Fed will raise rates by 25 basis points and signal that this is the beginning of a series of hikes,” OANDA senior analyst Ed Moya said in a note.
“With an uncertain outlook over the medium-term, the Fed will hold off committing any additional beyond 5 hikes for the year. There is no benefit to overcommit on tightening expectations given all the geopolitical risk and inflation uncertainty that is on the table and potential recession risk from abroad.”
In this country, investors will got the latest reading on inflationary pressures.
Statistics Canada says Canada’s annual rate of inflation rose to 5.7 per cent in February from 5.1 per cent in January. The February number marks the sharpest increase since August 1991, the agency said. It was the second consecutive month where the annual rate topped 5 per cent.
“Inflation will likely rise closer to 6 per cent in March on the back of surging pump prices. Commodity prices for products including wheat and metals have risen sharply too, and are expected to dominate the near-term inflation outlook.”
On the corporate side, The Globe’s Alexandra Posadzki reports Anthony Lacavera’s Globalive Capital Inc. has made a bid to buy Shaw Communications Inc.’s Freedom Mobile for $3.75-billion as Rogers looks to gain regulatory approval for its takeover of Calgary-based Shaw. Rogers’ $26-billion takeover of Shaw is under review by three regulators: the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Ministry of Innovation, Science and Economic Development. Both companies have said they expect the deal to close by the end of June.
Overseas, the pan-European STOXX 600 was up 2.73 per cent by midday. Britain’s FTSE 100 gained 1.27 per cent. Germany’s DAX advanced 3.34 per cent. France’s CAC 40 rose 3.72 per cent.
In Asia, Japan’s Nikkei added 1.64 per cent. Hong Kong’s Hang Seng surged 9.08 per cent, its best showing since 2008. That index is still off more than 2 per cent for the week after posting losses on Monday and Tuesday. Early Wednesday, China’s government looked to assuage market jitters with officials saying regulators should issue market-friendly policies to “invigorate the economy.” The comments came at a Cabinet meeting led by Vice Premier Liu He, President Xi Jinping’s top economic adviser, the official Xinhua News Agency said
Commodities
Crude prices wavered as markets remain volatile amid Russia’s invasion of Ukraine.
The day range on Brent is US$98.86 to US$103.70. The range on West Texas Intermediate is US$94.90 to US$99.22. Both contracts seesawed through the predawn period, continuing the recent pattern of volatility.
Fighting in Ukraine continues to be a key driver. Ukrainian President Volodymyr Zelensky said in a video address released early on Wednesday that the positions of Ukraine and Russia at peace talks were sounding more realistic, but more time was needed, according to Reuters.
“Whether markets are now reaching a point of pricing in Ukraine, is too early to say,” OANDA senior analyst Jeffrey Halley said in a note.
“The perpetual mega-bull gnomes of the stock market will say yes, but if we take the example of China tech stocks over the last six months, that light at the end of the tunnel has sadly been the train coming the other way each time.”
Later in the session, markets will get weekly U.S. inventory figures from the U.S. Energy Information Administration.
On Tuesday, the American Petroleum Institute figures showed that crude stocks rose by 3.8 million barrels last week. Gasoline inventories fell by 3.8 million barrels.
Currencies
The Canadian dollar was higher, tracking firmer global risk sentiment, while its U.S. counterpart dipped against a basket of currencies.
The day range on the loonie is 78.27 US cents to 78.63 US cents.
“Firmer crude oil going into our session has helped nudge the CAD up a little at the margin but we think the pro-risk backdrop is the primary driver of the CAD’s gains at the moment,” Shaun Osborne, chief FX strategist with Scotiabank, said.
The loonie advanced in the wake of the latest Canadian inflation figures.
On global markets, the U.S. dollar index, which measures the greenback against six peers, held below 99, from as high as 99.415 at the start of last week. The index last stood at 98.853, down 0.08 per cent from Tuesday, according to figures from Reuters.
The euro rose 0.17 per cent to US$1.09710, from a low of US$1.08060 on March 7.
Britain’s pound rose 0.08 per cent to US$1.3053, ticking up from a 16-month low of US$1.3000 in the previous session, with the Bank of England announcing its policy decision on Thursday. The bank is seen raising rates by a quarter percentage point.
More company news
Starbucks Chief Executive Officer Kevin Johnson will retire on April 4, the company said on Wednesday, and the coffee chain’s founder Howard Schultz will serve as interim CEO. Johnson had signaled to the board of directors a year ago that he might retire when the COVID-19 pandemic waned, he said in a company statement.
Economic news
(8:30 a.m. ET) Canada’s CPI for February.
(8:30 a.m. ET) Canadian wholesale trade for January.
(8:30 a.m. ET) U.S. retail sales for February.
(8:30 a.m. ET) U.S. import prices for February.
(10 a.m. ET) U.S. NAHB Housing Market Index for March.
(10 a.m. ET) U.S. business inventories for January.
(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press briefing to follow.
With Reuters, The Associated Press and The Canadian Press