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Equities

Wall Street futures advanced early Tuesday rebounding from the previous session’s losses as investors continue to try to gauge the Federal Reserve’s path on future rate hikes. Major European markets were mixed. TSX futures were up.

The Toronto Stock Exchange’s S&P/TSX composite index rose 188.26 points, or 0.94 per cent, to 20,110.07, after declining almost 1 per cent in the previous session.

The Dow Jones Industrial Average rose 219.2 points, or 0.65 per cent, at the open to 33755.94. The S&P 500 rose 49.2 points, or 1.24 per cent, to 4006.41, while the Nasdaq Composite rose 278.6 points, or 2.49 per cent, to 11474.82 at the opening bell.

Ahead of the opening bell, U.S. investors got another reading on price pressures with the release of the producer price index, which measures wholesale inflation. In October, the index rose 0.2 per cent on a monthly basis, below the 0.4-per-cent increase markets had been expecting. On an annual basis, prices rose 8 per cent, lower than the expected 8.3-per-cent rise.

Last week, consumer inflation figures also came in below market forecasts, fuelling a rally in stocks on expectations of a less hawkish Fed.

In Canada, investors got a better-than-expected reading on September factory sales.

Statistics Canada says manufacturing sales were unchanged for the month at $70.4-billion in September. Durable goods were the main source of sales growth in September, increasing 1 per cent to $34.1-billion, the agency said. Economists had expected sales to decline by 0.5 per cent.

The figures come ahead of Wednesday’s October inflation report which is expected to show a rise in price pressures for the month.

Tuesday's analyst upgrades and downgrades

Markets also got a snapshot of the Canadian housing market with the latest sales figures due from the Canadian Real Estate Association.

CREA said home sales edged up 1.3 per cent in October compared with September. It was the first monthly increase since February. On a full-year basis, sales were down 36 per cent compared with the same month in 2021. The MLS home price index was down 1.2 per cent month-over-month. It was down 0.8 per cent year-over-year, CREA said.

On the earnings front, Stelco and bus maker NFI Group report after the close.

On Wall Street Home Depot and Walmart kick off the week’s run of retail earnings.

Home Depot topped same-store sales forecasts in the latest quarter. Comparable sales at the largest U.S. home improvement chain rose 4.3 per cent in the third quarter, compared with estimates of a 3.1-per-cent increase, according to Refinitiv IBES data. However, the retailer also left its annual forecasts unchanged.

Walmart, meanwhile, said it expects a smaller decline in annual profit that previous forecast. The company said it expects fiscal 2023 adjusted earnings per share to fall 6 per cent to 7 per cent, compared to its previous forecast of a 9 per cent to 11-per-cent decline. Walmart said it expects fiscal 2023 net sales to increase 5.5 per cent, compared to its previous forecast of a 4.5-per-cent increase.

Overseas, the pan-European STOXX 600 edged up 0.24 per cent by midday. Britain’s FTSE 100 dipped 0.33 per cent. Germany’s DAX rose 0.21 per cent while France’s CAC 40 advanced 0.37 per cent.

In Asia, Japan’s Nikkei finished 0.10-per-cent higher. Hong Kong’s Hang Seng jumped 4.1 per cent on gains in tech shares.

Commodities

Crude prices were down after OPEC+ again cut its demand forecast and the International Energy Agency flagged market uncertainty amid looming bans on Russian exports.

The day range on Brent was US$91.53 to US$93.33 in the premarket period. The range on West Texas Intermediate was US$84.06 to US$85.82. Both benchmarks were down about 1 per cent early Tuesday morning. Both lost more than 3 per cent on Monday.

“Traders continue to weigh up the global economic outlook, OPEC+ production risks, and China’s Covid approach,” OANDA senior analyst Craig Erlam said.

“Prices remain choppy and that’s likely to remain the case given the ongoing uncertainty around these key areas.”

He said sentiment became more optimistic last week after a weaker-than-forecast reading on U.S. inflation, although that appears to be fading.

“Enormous downside risks remain around the global economy next year even if the Fed does pause its tightening a little sooner and perhaps that reality is kicking in again,” he said.

On Monday, the OPEC+ group cut its demand forecast for the year for a fifth time since spring, citing high inflation and other economic threats.

Meanwhile, the IEA said early Tuesday that looming European Union banks on Russian crude exports along with a G7 price cap will create further market uncertainty.

“The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets,” the Paris-based energy watchdog said in its monthly oil report, released early Tuesday morning.

In other commodities, gold prices hit a three-month high in early going.

Spot gold rose 0.3 per cent to US$1,777.29 per ounce early Tuesday, hitting its highest since Aug. 15. U.S. gold futures edged 0.2-per-cent higher to $1,780.20.

Currencies

The Canadian dollar advanced on improved broader market sentiment while its U.S. counterpart dipped against a basket of world currencies.

The day range on the loonie was 75.03 US cents to 75.47 US cents in the predawn period.

On world markets, the U.S. dollar index, which weighs the greenback against a selection of global currencies, slipped 0.1 per cent to 106.85, holding most of its hefty gains from Monday, when it rebounded from the previous session’s three-month low of 106.27, according to figures from Reuters.

The index slid nearly 4 per cent last week on expectations that the Fed will soon begin scaling back the size of rate increases in the wake of a report suggesting easing inflation. Markets have priced in an 89-per-cent chance that the Fed will hike rates by half a percentage point at its December meeting.

Elsewhere, Britain’s pound edged 0.13-per-cent higher to US$1.1775, after slipping at the start of the week from a 2-1/2-month top at $1.1855 from Friday, Reuters reports.

The euro was little changed at US$1.03315.

In bonds, the yield on the U.S. 10-year note was lower at 3.812 per cent early Tuesday morning.

Economic news

(8:30 a.m. ET) Canada’s manufacturing sales and new orders for September.

(8:30 a.m. ET) Canada’s wholesale trade for September.

(8:30 a.m. ET) Canada’s new motor vehicle sales for September.

(8:30 a.m. ET) U.S. PPI Final Demand for October.

(9 a.m. ET) Canada’s existing home sales and average prices for October.

(9 a.m. ET) Canada’s MLS Home Price Index for October.

With Reuters and The Canadian Press

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