Equities
Canada’s main stock index gained at Wednesday’s opening bell helped by strength in commodities. On Wall Street, key indexes were treading water ahead of remarks from Federal Reserve chair Jerome Powell.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 88.71 points, or 0.44 per cent, at 20,366.12.
In the U.S., the S&P 500 opened lower by 0.45 points, or 0.01 per cent, at 3,957.18, while the Nasdaq Composite gained 11.42 points, or 0.10 per cent, to 10,995.20 at the opening bell.
The Dow Jones Industrial Average fell 57.10 points, or 0.17 per cent, at the open to 33,795.43.
On Wednesday, Mr. Powell is set to speak before the Brookings Institution at 1:30 p.m. ET. Markets will be watching closely for signals about the size of future rate hikes by the central bank.
Right now, traders are expecting a 50-basis-point hike on Dec. 14 after a series of three-quarter point increases. The comments are the last from Mr. Powell before the central bank heads into its quiet period before the December policy meeting.
“What will Jerome Powell say?” Swissquote senior analyst Ipek Ozkardeskaya said.
“Well, he will say that the pace of the U.S. rate hikes will slow. But he will also say that the Fed is not done fighting inflation and that the terminal Fed rate will likely be higher.”
In Canada, banks remain in the spotlight with investors getting results from Royal Bank and National Bank.
Royal Bank of Canada posted a fourth-quarter profit of $3.88-billion or $2.74 a diluted share, compared with $3.89-billion or $2.68 a year earlier, when it had more shares outstanding. On an adjusted basis, RBC said it earned $2.78 per share, ahead of the $2.69 per share that banking analysts anticipated, according to Refinitiv. RBC also said it will now pay a quarterly dividend of $1.32 per share, an increase of four cents.
On Tuesday, RBC announced one of the country’s biggest domestic banking deals on record with the planned purchase of HSBC’s Canadian operations for $13.5-billion.
The Globe’s James Bradshaw reports that HSBC Canada’s unique position in the market means the deal raises questions about competition and concentration. RBC needs approvals from the Competition Bureau, the Office of the Superintendent of Financial Institutions and the federal Finance Minister to close the transaction. If allowed, it would drive up RBC’s share of the domestic banking market by about 2 per cent at the outset, the bank said.
Meanwhile, National Bank of Canada’s net income, excluding one-off items, fell to $738-million, or $2.08 per share, in the three months ended Oct. 31, from $776-million, or $2.19 per share, a year earlier.
Elsewhere, Canadian investors will also got quarterly results from Ski-Doo maker BRP Inc.
In reporting its latest results, BRP said both profit and revenue rose in the third quarter. The company also hiked its guidance for the year. BRP says it earned $141.6-million or $1.76 per diluted share for the quarter ended Oct. 31, up from $127.7-million or $1.53 per diluted share in the same quarter last year. Revenue for the quarter totalled $2.71-billion, up from $1.59-billion a year earlier.
Overseas, the pan-European STOXX 600 was up 0.67 per cent by midday. Britain’s FTSE 100 advanced 1 per cent. Germany’s DAX and France’s CAC 40 were up 0.24 per cent and 0.78 per cent, respectively.
In Asia, Japan’s Nikkei slid 0.21 per cent. Hong Kong’s Hang Seng jumped 2.16 per cent.
Commodities
Crude prices gained in early going after new figures showed a decline in weekly oil inventories and speculation over China’s COVID-19 policy helped prop up sentiment.
The day range on Brent is US$83.61 to US$84.85 in the premarket period. The range on West Texas Intermediate is US$78.40 to US$79.93.
“Oil prices initially rose on hopes that both China’s COVID situation might be improving as protests are pressuring officials to ease some rules,” OANDA senior analyst Ed Moya said.
“China’s COVID infections declined for the first time in a week, and they are ramping up vaccination efforts for the elderly.”
Sentiment also got a lift from new figures from the American Petroleum Institute showing crude inventories fell 7.9 million barrels last week. More official U.S. government figures are due later this morning.
Mr. Moya said prices also saw downward pressure from reports that OPEC+ members might agree to keep production levels unchanged at their next meeting.
“Expectations were growing for them to seriously consider an output cut as China’s COVID situation steadily worsened,” he said.
Elsewhere, gold prices advanced as the U.S. dollar eased and looked set for a monthly increase of nearly 8 per cent. That would be its biggest monthly gain since mid 2020.
Spot gold rose 0.6 per cent to US$1,760.56 per ounce by early Wednesday morning. U.S. gold futures gained 0.6 per cent to $1,759.40.
Currencies
The Canadian dollar advanced, supported by improved risk sentiment and higher crude prices, while its U.S. counterpart pulled back from a one-week high against a group of global currencies.
The day range on the loonie was 73.55 US cents to 73.93 US cents in the early premarket period.
There were no major Canadian economic releases on Wednesday calendar.
On world markets, the U.S. dollar index, which measures the greenback against six major currencies, fell 0.22 per cent to 106.64, down from an overnight high of 106.90 ahead of remarks from the Fed’s Jerome Powell. The index is down more than 4 per cent for the month, marking its biggest one-month drop since June 2010, according to figures from Reuters.
The euro was last up 0.2 per cent at US$1.0348, rising from a one-week low earlier on Wednesday at US$1.0319. Against Britain’s pound, it rose 0.1 per cent to 86.46 pence.
In bonds, the yield on the U.S. 10-year note was a touch lower at 3.744 per cent in the predawn period.
More company news
Enbridge Inc. forecast higher 2023 core earnings, banking on sustained high demand for oil and gas amid tight supplies. The company also raised its quarterly dividend by 3.2% to 88.75 cents per share, and said it plans to renew its share repurchase program for 2023, allowing it to buy back up to $1.5-billion worth of shares. -Reuters
Canadian Natural Resources Ltd on Wednesday forecast higher production for 2023 as it seeks to capitalize on higher oil and gas prices. Demand for oil and gas has surged following sanctions on Russia after it invaded Ukraine earlier this year, as Europe scrambles to replace gas from Russia and improve long-term energy security. Calgary, Alberta-based Canadian Natural said it expects total production in 2023 to be about 4% higher than previous targets for this year. -Reuters
Economic news
815 am ET) U.S. ADP National Employment Report for November.
(830 am ET) U.S. real GDP for the third quarter.
(830 am ET) U.S. goods trade deficit for October.
(830 am ET) U.S. wholesale and retail inventories.
(945 am ET) Chicago PMI
(10 am ET) U.S. pending home sales for October.
(10 am ET) U.S. job openings and labor turnover survey.
(130 pm ET) Fed Chair Powell speaks in Washington on the economic outlook
With Reuters and The Canadian Press
Terry Weber