Equities
Canada’s main stock index opened higher Wednesday, helped by gains in energy shares. Wall Street’s key indexes also saw a modest rebound at the opening bell after the previous session’s deep rout on worries over stubbornly high inflation and the potential for aggressive rate moves by the Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 61.9 points, or 0.32 per cent, at 19,707.3.
In the U.S., the Dow Jones Industrial Average rose 36.05 points, or 0.12 per cent, at the open to 31,141.02.
The S&P 500 opened higher by 8.04 points, or 0.20 per cent, at 3,940.73, while the Nasdaq Composite gained 46.83 points, or 0.40 per cent, to 11,680.41 at the opening bell.
“Despite the positives of lower gasoline prices yesterday’s numbers showed that U.S. inflation was starting to become more embedded thus inviting the prospect of a much more aggressive Federal Reserve when it comes to its next rate rise,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“The bigger than expected jump in core prices has prompted speculation the Fed might go for a more aggressive option of a 100-basis-point rate hike when they meet next week.”
The Fed’s next rate decision is due on Sept. 21. Ahead of the inflation report, economists had been widely forecasting a 75-basis-point rate increase from the U.S. central bank.
Wednesday's small-cap stocks to watch
In this country, Statscan reported that Canadian manufacturing sales fell 0.9 per cent to $71.6-billion, marking the third monthly decline. Sales were down in 12 of 21 industries. The latest decline was inline with market forecasts.
On the corporate side, Ski-Doo maker BRP hiked its guidance after reporting a 28-per-cent increase in revenue in the latest quarter. For the second quarter, Quebec-based BRP reported revenue of $2.44-billion, up from $1.90-billion in the same quarter last year. The company reported earnings per share of $2.94 in the latest quarter, up from $2.46 last year. The results were released ahead of Wednesday’s opening bell. Shares were up more than 7 per cent in Toronto in early trading.
Wednesday's analyst upgrades and downgrades
Overseas, the pan-European STOXX 600 was down 1 per cent by midday. Britain’s FTSE 100 slid 1.33 per cent. Germany’s DAX was off 1.07 per cent while France’s CAC 40 was down 0.52 per cent.
In Asia, Japan’s Nikkei closed down 2.78 per cent after a weak handoff from Wall Street. Hong Kong’s Hang Seng lost 2.48 per cent.
Commodities
Crude prices were steady after seeing some weakness in the overnight period with economic concerns and the potential impact on demand weighing on sentiment.
The day range on Brent was US$91.93 to US$93.69 in the early premarket period. The range on West Texas Intermediate was US$86.18 to US$87.94.
Early Wednesday, the International Energy Agency said it expects crude demand to falter in the final quarter of this year as global economies slow but then rebound strongly next year.
The IEA cut its forecast for demand growth this year by 110,000 barrels per day (bpd) to 2 million bpd while keeping its 2023 growth forecast of 2.1 million bpd.
Still, analysts suggest that tight supply should help underpin prices.
“The oil market still remains tight and seems poised for further shortages as growth outlooks globally seem to be improving. European risks could be peaking this winter and China’s cyclical risks are very short-term,” OANDA senior analyst Ed Moya said in a note.
Meanwhile, new figures from the American Petroleum Institute show that weekly U.S. crude inventories rose by about 6 million barrels last week.
More official government figures are due later Wednesday morning.
In other commodities, gold prices were slightly higher, helped by a pullback by the U.S. dollar but the gains were limited by expectations that the Fed will act aggressively to control inflation.
Spot gold rose 0.2 per cent to US$1,704.60 per ounce by early Wednesday morning. Prices saw their biggest one-day percentage decline since July 14 in the previous session, according to Reuters.
U.S. gold futures were down 0.2 per cent at US$1,714.40.
Currencies
The Canadian dollar was marginally higher, trading near 76 US cents in early going.
The day range on the loonie was 75.78 US cents to 76.33 US cents in the predawn period.
On world markets, the U.S. dollar index was down slightly at 109.41 after spiking 1.5 per cent on Tuesday in the wake of the latest U.S. inflation figures.
“USD is mostly close to the highs seen in response to the August CPI data,” RBC chief currency strategist Adam Cole said.
Meanwhile, Japan’s yen was higher after reports suggested the Bank of Japan conducted a rate check, which could signal plans for currency intervention, according to Reuters. A rate check involves central bank officials contact dealers and asking for the price to buy or sell the yen. The yen has been trading around a 24-year low against the greenback recently.
The U.S. dollar slid 1 per cent to 143 yen, after the Nikkei website cited unidentified sources for its report on the rate check.
The euro was at US$0.99935 up 0.25 per cent on the day following a share 1.5-per-cent drop on Tuesday.
Britain’s pound, which fell 1.6 per cent in the previous session, was up 0.44 per cent at US$1.1545, according to figures from Reuters. New figures showed Britain’s annual rate of inflation fell to 9.9 per cent in August from 10.1 per cent a month earlier. The most recent number was below economists’ forecasts and came on the back of lower fuel prices.
In bonds, the yield on the U.S. 10-year note was up at 3.437 per cent in the predawn period.
More company news
One of the European Union’s highest courts has largely upheld a huge fine issued to Google by the bloc’s antitrust enforcers in 2018 over its Android mobile operating system. The European Court of Justice’s General Court on Wednesday mostly confirmed a European Commission decision to slap Google with a fine of more than 4 billion euros for stifling competition through the dominance of Android. The court said it was appropriate to give Google a fine of 4.125 billion euros (US$4.155-billion), slightly lower than the original 4.34 billion euro penalty. - The Associated Press
Economic news
(8:30 a.m. ET) Canadian manufacturing sales and new orders for July.
(8:30 a.m. ET) U.S. PPI Final Demand for August.
With Reuters and The Canadian Press