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Equities
Canada’s main stock index gained early Wednesday after hitting a 10-month low a day earlier with mining and energy stocks providing support. On Wall Street, key indexes struggled at the opening bell after new inflation figures suggested price pressures in the U.S. economy continue to run hot.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 98.05 points, or 0.49 per cent, at 19,988.11.
In the U.S., the Dow Jones Industrial Average fell 37.50 points, or 0.12 per cent, at the open to 32,123.24.
The S&P 500 opened lower by 10.97 points, or 0.27 per cent, at 3,990.08, while the Nasdaq Composite dropped 92.10 points, or 0.78 per cent, to 11,645.57 at the opening bell.
On Wednesday, markets got a reading on U.S. inflationary pressures in April. New figures showed the annual rate of inflation slowed to 8.3 per cent in April from 8.5 per cent a month earlier. However, the latest figure was also higher than the 8.1-per-cent that economists had been forecasting and still close to the highest level in four decades. Core inflation, which removes the volatile food and energy sector, rose 6.2 per cent in April versus an expected increase of about 6 per cent.
Markets have been closely watching inflation indicators, looking for signs that the Federal Reserve could strike a less hawkish position if inflationary pressures show signs of having crested.
“Even though modest, the deceleration in price pressures will come as a welcome development to policymakers,” TD senior economist Thomas Feltmate said.
“Still, the FOMC has its work cut out for them over the remainder of the year, as they quickly move to swing the monetary pendulum from accommodative to outright restrictive in an effort to guide inflation back to target without causing a recession.”
In this country, Rogers Communication’s $26-billion bid to acquire Shaw Communications continues to make headlines. The Globe’s Alexandra Posadzki reports that Canada’s competition watchdog says none of the proposed deals for the sale of Shaw Communications Inc.’s Freedom Mobile are sufficient to maintain competition in the wireless industry.
At the same time, the Globe reports that British Columbia First Nations, a major pension plan and an infrastructure fund have teamed up with the owner of the Vancouver Canucks to bid for Freedom as Rogers scrambles to find a buyer for the country’s fourth-largest cellphone company.
In earnings, some of Canada’s biggest insurers report results after the close of trading. Manulife and Sun Life are both scheduled to release quarterly numbers later following the end of the trading day.
In the U.S., Walt Disney Co. is among the companies also reporting results once the markets close.
“For this week’s second-quarter numbers the most attention will be on whether the company sees a similar slowdown in subscriptions [for streaming service Disney+] that we saw for Netflix as consumers cut back on unnecessary expenditure,” CMC Markets chief market analyst Michael Hewson said.
Overseas, the pan-European STOXX 600 rose 0.23 per cent by midday. Britain’s FTSE 100 gained 0.22 per cent. Germany’s DAX and France’s CAC 40 were up 0.34 per cent and 0.62 per cent, respectively.
In Asia, Japan’s Nikkei gained 0.18 per cent. Hong Kong’s Hang Seng added 0.97 per cent.
Commodities
Crude prices recouped some of the week’s losses in early going on supply concerns as the European Union continues to work on an embargo on Russian oil.
The day range on Brent is US$101.30 to US$106.04. The range on West Texas Intermediate is US$98.20 to US$103.35. Both benchmarks have lost about 10 per cent in the two previous sessions.
The EU continues to seek support from member nations for its plan for a phased removal of Russian crude from the market. The plan needs unanimous support and has faced opposition from several counties, notably Hungary. Early Wednesday, Hungary said Russian shipments via pipelines should be exempted from planned European Union oil sanctions.
“The pressure remains positive on energy prices, but the upside potential is fading due to slower global growth prospects, and the Chinese lockdown,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
She also said news that Russian gas flows via one of the key entry points in Ukraine will stop from today as troops disrupt operations has also underpinned prices.
Later Wednesday morning, traders will get weekly U.S. crude inventory figures from the U.S. Energy Information Administration. Analyst are expecting a small drop even as industry figures released late Tuesday showed an increase.
In other commodities, spot gold was up 0.6 per cent at US$1,849.245 per ounce early Wednesday morning, after hitting its lowest since Feb. 11 earlier in the session. U.S. gold futures firmed 0.2 per cent to US$1,846.40.
Currencies
The Canadian dollar gained in early going on improved risk sentiment while its U.S. counterpart held not far off two-decade highs.
The day range on the loonie is 76.71 US cents to 77.20 US cents.
There were no major Canadian economic releases due Wednesday.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was down in early European trading, slipping 0.28 per cent to 103.65, according to figures from Reuters.
The euro rose 0.24 per cent to US$1.05560, having mostly traded sideways since hitting a more than five-year low at US$1.04695 at the end of last month.
In bonds, the yield on the U.S. 10-year note rose in the wake of the latest U.S. inflation numbers and was at 3.044 per cent ahead of the North American open.
More company news
Marlboro-maker Philip Morris International Inc (PMI) said on Wednesday it was making a recommended cash offer to buy Swedish tobacco and nicotine products maker Swedish Match for 106 Swedish crowns per share. The offer value for the Stockholm-listed company amounted to approximately 161.2 billion Swedish crowns (US$16-billion), the company said in a statement.
MDA Ltd. reported net income of $8.4-million in its first quarter compared with a net loss of $1.6-million in the same quarter last year as its revenue edged up 4 per cent. The space technology firm says its profit amounted to seven cents per diluted share for the quarter ended March 31 compared with a loss of two cents per diluted share a year earlier. Revenue totalled $128.4-million, up from $123.4-million in the first three months of 2021.
Economic news
(8:30 a.m. ET) U.S. CPI for April.
(2 p.m. ET) U.S. Treasury budget for April.
With Reuters and The Canadian Press
Terry Weber