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Equities
Canada’s main stock index opened lower Wednesday with energy shares weighed down by weaker crude prices. On Wall Street, key indexes were higher helped by a rebound in tech and growth stocks.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 73.86 points, or 0.38 per cent, at 19,439.04.
In the U.S., the Dow Jones Industrial Average rose 36.28 points, or 0.11 per cent, at the open to 31,827.15.
The S&P 500 opened higher by 14.51 points, or 0.36 per cent, at 4,000.67, while the Nasdaq Composite gained 89.42 points, or 0.75 per cent, to 11,972.56 at the opening bell.
“There’s clearly a lack of conviction in the markets following a lot of hawkish central bank commentary in recent days,” OANDA senior analyst Craig Erlam said in a note. “The narrative that investors want to believe is that inflation has peaked and is falling in the U.S. and that a soft landing is plausible. That doesn’t necessarily align with what we’re hearing.”
On Wednesday, Canadian investors got a weaker-than-forecast reading on second-quarter GDP growth.
Statistics Canada says the Canadian grew at an annual rate of 3.3 per cent in the quarter. Economists had been expecting a number closer to 4.5 per cent. In June, growth edged up 0.1 per cent on a monthly basis. Statscan also said early estimates suggest a monthly decline in growth of 0.1 per cent in July, the first month of the third quarter.
“While policymakers will still likely deliver another non-standard hike to interest rates at next week’s meeting to combat high inflationary pressures, the slowdown in the economy over the summer supports our view that the Bank will pause after that to reassess how growth and inflation are reacting to this higher interest rate environment,” CIBC economist Andrew Grantham said.
The Bank of Canada’s next policy decision is due Sept. 7.
On the corporate front, Laurentian Bank reported results before the bell.
On an adjusted basis, Laurentian earned $1.24 per diluted share in its most recent quarter, down from an adjusted profit of $1.25 per diluted share a year ago. Analysts on average had expected an adjusted profit of $1.25 per share, according to estimates compiled by financial markets data firm Refinitiv. Shares were down more than 8 per cent in early trading in Toronto.
Elsewhere, Quebec-based convenience store giant Alimentation Couche-Tard Inc. said net earnings rose to $872.4-million in the first quarter, up 14 per cent from a year earlier. Couche-Tard said its profit amounted to 85 cents per diluted share, compared to 71 cents per diluted share in the first quarter of fiscal 2022. The company reported total revenue for the quarter of $18.7-billion, a year-over-year increase of more than 37 per cent. The results were released after the close of trading on Tuesday. Couche-Tard shares were up more than 2 per cent just after the opening bell.
Overseas, the pan-European STOXX 600 slid 0.57 per cent by midday. Germany’s DAX and France’s CAC 40 fell 0.26 per cent and 0.58 per cent, respectively. Britain’s FTSE 100 was down 1.2 per cent.
In Asia, Japan’s Nikkei closed down 0.37 per cent. Hong Kong’s Hang Seng edged up 0.03 per cent, erasing early losses.
Commodities
Crude prices were down again in early trading, hit by global economic concerns and the prospect of a continued rise in interest rates.
The day range on Brent is US$97.14 to US$100.46. The range on West Texas Intermediate is US$89.43 to US$92.73. Both benchmarks saw losses on Tuesday.
“Everything seems to be turning bearish for oil,” OANDA senior analyst Ed Moya said.
“First, global markets still have a Fed headache that has everyone bracing for further pain for households and businesses.”
He also noted inflation in the EU is raising the possibility of a recession in Europe while earnings from companies like Best Buy indicate consumers are pulling back on spending.
“Lastly, Taiwan’s military reportedly fired warning shots at a Chinese drone, reminding traders how the tensions between the two world’s largest economies might not see a de-escalation anytime soon, which would weigh on demand for Chinese goods,” Mr. Moya said.
Crude prices, however, drew some support from the latest U.S. inventory figures. The American Petroleum Institute showed that U.S. gasoline inventories bell by 3.4 million barrels last week, nearly triple the decline expected by analysts. However, crude stocks rose by 593,000 barrels. Analysts had been expecting a drop of more than 1 million barrels.
Official U.S. government figures are due later this morning.
In other commodities, gold prices looked set for a fifth monthly decline.
Spot gold fell 0.1 per cent to US$1,721.59 per ounce by early Wednesday morning, having hit its lowest level since July 27 at $1,718.70 earlier in the session. Gold has lost 2.5 per cent so far in August.
U.S. gold futures dipped 0.2 per cent to US$1,733.10.
Currencies
The Canadian dollar was modestly lower while its U.S. counterpart was flat against world currencies but not far off two-decade highs.
The day range on the loonie is 76.24 US cents to 76.55 US cents.
“The CAD is trading a little softer as stocks remain weak,” Shaun Osborne, chief FX strategist with Scotiabank, said. “The CAD’s measured (short-term, 10-day) correlation with stocks has jumped to 66 per cent, suggesting that risk appetite will continue to drive movement here for now — even at the expense of domestic data inputs.”
The U.S. dollar index, which measures the greenback against a basket of six currencies, was last flat at 108.76, hovering just below a two-decade peak reached on Monday of 109.48, according to figures from Reuters. The index is up more than 2 per cent for the month.
The euro was down 0.17 per cent against the U.S. dollar, dipping below parity at US$0.99965.
In bonds, the yield on the U.S. 10-year note was up slightly at 3.136 per cent.
More company news
Bed Bath & Beyond Inc said on Wednesday it has secured more than US$500-million in new financing as the cash-strapped home goods retailer battles a slump in demand and profit. The company said it would shut about 150 underperforming stores and cut about 20 per cent of its workforce across its corporate and supply chain.
The Globe’s Vanmala Subramaniam reports that cannabis producer Tilray Inc. quietly terminated the contracts of at least 22 migrant farm workers over the summer, which has forced many of them to abruptly return to their home countries – highlighting the precarity of temporary work permits for tens of thousands such labourers in Canada. The Leamington, Ont.-based company confirmed the layoffs last week, saying they were part of a “recent effort to right size business operations” while “increasing manufacturing capabilities and automation.”
Snap Inc said on Tuesday its two senior advertising executives have exited the company, hours after a report disclosed the Snapchat parent was planning to cut about 20% of its workforce. The executives Jeremi Gorman, chief business officer, and Peter Naylor, vice president of ad sales for the Americas, will join Netflix Inc, the streaming major said.
Economic news
(830 am ET) Canada real GDP for the second quarter.
(815 am ET) U.S. ADP National Employment Report
With Reuters and The Canadian Press