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Equities

Canada’s main stock index opened higher Tuesday on strength in materials stocks. Wall Street, meanwhile, saw a mixed start with investors weighing earnings and awaiting tomorrow’s rate decision from the Federal Reserve.

At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 53.46 points, or 0.26 per cent, at 20,745.68.

In the U.S., the Dow Jones Industrial Average rose 24.59 points, or 0.07 per cent, at the open to 33,086.09.

The S&P 500 opened higher by 4.40 points, or 0.11 per cent, at 4,159.78, while the Nasdaq Composite dropped 24.56 points, or 0.20 per cent, to 12,511.46 at the opening bell.

The Fed begins its two-day policy meeting Tuesday. It culminates Wednesday afternoon with the central bank’s rate decision. Markets are expecting to see a half percentage point rate increase as central banks around the world look to normalize borrowing costs and head off high inflation.

“Fed Chair [Jerome] Powell and other FOMC members have been telegraphing their newfound hawkishness to the markets and receive full marks for being transparent, assuming that there are no last-minute surprises,” OANDA analyst Kenny Fisher said.

“There have been calls for a massive 0.75-per-cent rate, which is unlikely. Still, the mere fact that such massive increases are being suggested indicates just how badly the Fed miscalculated inflation and has fallen behind on the inflation curve.”

Later Tuesday, Canadian investors will get fresh remarks from the Bank of Canada. Senior Deputy Governor Carolyn Rogers speaks in Toronto at a capital markets event around midday.

“Any references to the economy or monetary policy are likely to reiterate recent BoC communication that interest rates will need to rise further in order to keep inflation expectations anchored around their 2 per cent target,” Elsa Lignos, global head of FX strategy, said.

On the corporate side, Tim Hortons-parent Restaurant Brands International reported earnings ahead of the start of trading. The company said total revenue rose to US$1.45-billion in the first quarter ended March 31, from US$1.26-billion a year earlier. Analysts on average were expecting revenue of US$1.39-billion, according to Refinitiv IBES data.

In the U.S., investors got results from Pfizer this morning. Starbucks, Airbnb and Lyft all report after the close. In reporting its latest quarterly results, Pfizer said it was keeping its forecast for full-year sales of its COVID-19 antiviral pill Paxlovid unchanged.

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Overseas, the pan-European STOXX 600 was up 0.22 per cent per cent by midday. Britain’s FTSE 100 slid 0.43 per cent. Germany’s DAX and France’s CAC 40 were up 0.28 per cent and 0.46 per cent, respectively.

In Asia, Hong Kong’s Hang Seng ended up 0.06 per cent. Markets in Japan were closed. In the region, Australia’s central bank raised its benchmark interest rate for the first time in more than a decade on Tuesday. The Bank of England is expected to again raise rates on Thursday.

Commodities

Crude prices were weaker amid continuing concerns about the impact of efforts to stem the spread of COVID-19 on the Chinese economy.

The day range on Brent is US$105.62 to US$108.32. The range on West Texas Intermediate is US$103.41 to US$105.80.

In China, Beijing is undertaking mass testing in an effort to avoid a lockdown similar to that seen in Shanghai. Restaurants in Beijing have been closed for indoor dining and Reuters reports that some apartment blocks have been sealed.

“Dragging on crude is China’s recent string of softer economic data and new wave of COVID restrictions and outbreaks,” OANDA senior analyst Ed Moya said.

“COVID cases across Shanghai appear to be heading in the right direction, but energy markets are hesitant to become optimistic given the uncertainty of how bad the negative impact will be for the crude demand outlook.”

Meanwhile, prices continue to draw some support from the prospect of potential EU sanctions on Russian crude. The European Commission is expected to finalize work on the next package of sanctions on Tuesday, which could include a ban on buying oil, according to a Reuters report.

Elsewhere, gold prices held near their lowest in more than two months as markets await the Fed policy decision on Wednesday.

Spot gold was down 0.5 per cent at US$1,854.21 per ounce by early Tuesday morning, its lowest level since Feb. 16. U.S. gold futures were also down 0.5 per cent at US$1,854.40.

“Gold prices continue to get pummeled as traders price in much more aggressive Fed tightening,” Mr. Moya said.

“The gold market can’t stabilize until the bond market selloff shows signs of easing.”

Currencies

The Canadian dollar was steady in early going while its U.S. counterpart traded just below its best level in two decades against a basked of world currencies.

The day range on the loonie is 77.59 US cents to 77.91 US cents.

There were no major Canadian economic releases on Tuesday’s calendar, although investors will get comments from Bank of Canada’s Carolyn Rogers around midday.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was flat at 103.54, after reaching 103.48 last week, the highest since December 2002, according to figures from Reuters.

The euro was little changed at US$1.05075 early Tuesday morning. It had dropped to US$1.0470 on Thursday, its lowest since January 2017.

In bonds, the yield on the U.S. 10-year note was just below 3 per cent in the predawn period on Tuesday at 2.983 per cent.

More company news

Nutrien Ltd posted a more than 10-fold jump in first-quarter profit on Monday and raised its earnings forecast for the year, as the world’s largest fertilizer company was helped by soaring crop nutrient prices. The company expects 2022 adjusted earnings of US$16.20 to US$18.70 per share, compared with its previous forecast of US$10.20 to US$11.80 per share. Nutrien’s net earnings rose to US$1.39-billion, or US$2.49 per share, in the quarter ended March 31 from US$133-million, or 22 US cents per share, a year earlier. The results were released after Monday’s close.

MEG Energy Inc. says higher energy prices contributed to it earning a $362-million profit in its latest quarter as revenues surged 68 per cent. The Calgary-based oilsands developer says it earned $1.15 per diluted share in the first quarter, compared with a loss of six cents per share or $17-million a year earlier. Revenue for the three months ended March 31 were $1.53-billion, up from $914-million in the first quarter of 2020.

Calfrac Well Services Ltd. reported a first-quarter loss of $21.5-million compared with a loss of $22.4-million in the same quarter last year, as its revenue rose 38 per cent. The oilfield services company says the loss amounted to 56 cents per share for the quarter ended March 31 compared with a loss of 60 cents per diluted share a year earlier. Revenue in the quarter totalled $294.5-million, up from $214-million in the same quarter last year.

Economic news

(10 a.m. ET) U.S. factory orders for March.

(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for March.

(12:30 p.m. ET) Bank of Canada Deputy Governor Carolyn Rogers speaks in Toronto on BoC’s operational independence and public accountability to Women in Capital Markets.

With Reuters and The Canadian Press

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