Skip to main content

Equities

Canada’s main stock index slid at Wednesday’s opening bell with traders awaiting the latest Bank of Canada rate decision. On Wall Street, key indexes were also in the red in early going amid continued recession concerns.

At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 13.16 points, or 0.07 per cent, at 19,977.01.

In the U.S., the Dow Jones Industrial Average fell 39.9 points, or 0.12 per cent, at the open to 33556.4. The S&P 500 fell 8.0 points, or 0.20 per cent, at the open to 3933.28, while the Nasdaq Composite dropped 50.9 points, or 0.46 per cent, to 10963.95 at the opening bell.

“Traders have been hoping after the recent rally in the U.S. stock indices that they will finally get to see the end of the bear market,” Naeem Aslam, chief market analyst with AvaTrade, said.

“However, the price action in the last week told us a different story, and that is, the bear market has a long way to go.”

He noted downward pressure came most recently from comments from CEOs of some of the biggest U.S. banks, including Goldman Sachs and JPMorgan, warning that a recession is likely next year. Adding to the economic uncertainty, he said, are the rising number of layoffs seen in the corporate landscape.

Earlier this week, reports suggest PepsiCo is planning on laying off hundreds of corporate jobs, raising concerns that cuts spreading through a broader range of sectors.

Global markets, meanwhile, failed to find solace in news that China plans changes to its tough COVID-19 policies, loosening restrictions that had raised concerns about growth in the global economic powerhouse. The relaxation of rules includes allowing infected people with mild or no symptoms to quarantine at home and dropping testing for people traveling within the country, according to a Reuters report.

In this country, the Bank of Canada is front and centre with its policy announcement due at 10 a.m. ET. Markets are expecting the central bank to deliver its seventh rate hike since March, although economists are split on whether the bank will raise borrowing costs by a quarter or half percentage point.

“Our economists are in the 25-basis-point camp, though it is clearly a close call, and think this hike could be the last in the current cycle,” RBC chief currency analyst Adam Cole said. “The BoC has been clear that another larger 50-basis-point hike is also a possibility. But there are tentative signs that broader inflation pressures have peaked.”

He also noted those early signs of peaking inflation have come even before the full impact of earlier rate hikes has been felt by the economy.

“Perhaps more important than the size of today’s hike is how many more could follow,” he said. “The answer to that question depends on inflation.”

On the corporate side, Quebec-based retailer Dollarama hiked its full-year forecast early Wednesday as Canadian consumers hit by high inflation seek out cheaper options. Dollarama said it now expects comparable store-sales growth between 9.5 per cent and 10.5 per cent for fiscal 2023, up from the 6.5 per cent to 7.5 per cent range estimated previously.

Overseas, the pan-European STOXX 600 was down 0.47 per cent by midday. Britain’s FTSE 100 edged up 0.02 per cent. Germany’s DAX and France’s CAC 40 were off 0.36 per cent and 0.32 per cent, respectively.

In Asia, Japan’s Nikkei lost 0.72 per cent. Hong Kong’s Hang Seng tumbled 3.22 per cent after new figures showed China’s imports and exports in November shrank at their steepest pace in more than two years.

Commodities

Crude prices remained choppy in early going as broad economic concerns continue to weigh on sentiment.

The day range on Brent was US$77.74 to US$79.93 in the early premarket period. The range on West Texas Intermediate was US$72.75 to US$74.82. Early in the session Brent crude hit its lowest level since early January, according to figures from Reuters.

“It seems to have happened quickly but the crude demand outlook is getting crushed as we are in a slowdown basically across all the major economies,” OANDA senior analyst Ed Moya said.

“Supplies seem plentiful over the near-term and that has everyone hesitating on what was one of the easiest trades of the year.”

Prices drew some support from China’s announcement of easing COVID-19 restrictions, although some analysts noted that markets had already priced in that move.

As well, new U.S. inventory numbers helped put a floor under prices. Numbers from the American Petroleum Institute indicated that U.S. crude inventories fell 6.4 million barrels last week. More official figures are due later this morning from the U.S. Energy Information Administration.

In other commodities, gold prices were little changed as markets await next week’s rate decision from the Federal Reserve.

Spot gold was steady at US$1,771.89 per ounce by early Wednesday morning. U.S. gold futures edged 0.1 per cent higher to US$1,784.30.

“Gold prices are holding up despite a major risk-off mode on Wall Street,” Mr. Moya said in a note.

“Recession warnings are running wild and are driving a strong move back into safe-havens.”

Currencies

The Canadian dollar was weaker, trading around the 73-US-cent market, ahead of the Bank of Canada’s rate decision.

The day range on the loonie was 72.98 US cents to 73.36 US cents in the early premarket period.

The Bank of Canada is expected to deliver its seventh rate hike of the year later this morning. Markets are divided on whether a quarter or half percentage point increase is likely.

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was less than 0.1-per-cent higher at 105.55 after top U.S. bank CEOs cautioned that a recession is likely next year.

The greenback was up 0.32 per cent against the Japanese yen following a 0.16-per-cent gain on Tuesday, Reuters reported. The euro was flat against the dollar at US$1.048, after falling 0.2 per cent in the previous session.

In bonds, the yield on the benchmark U.S. 10-year note was up slightly at 3.529 just before dawn.

More company news

Fertilizer producer Mosaic Co said it has temporarily curtailed potash production at its Colonsay, Sask., mine in Canada, citing slower-than-expected demand. Mosaic said in a statement that its inventories are adequate to meet demand in the short term. The company had restarted Colonsay in August 2021 after idling it for two years. Potash prices spiked this year due to sanctions against Russia and Belarus, the world’s second– and third-biggest producers after Canada.

Microsoft said Wednesday that it struck a deal to make the hit video game Call of Duty available on Nintendo for 10 years when its $69-billion purchase of game maker Activision Blizzard goes through — an apparent attempt to fend off objections from rival Sony. The blockbuster merger is facing close scrutiny from regulators in the U.S., Europe and elsewhere. Microsoft, maker of the Xbox game console, faces resistance from Sony, which makes the competing PlayStation console and has raised concerns with antitrust watchdogs about losing access to what it calls a “must-have” game title. -The Associated Press

Economic news

(8:30 a.m. ET) U.S. productivity for Q3.

(10 a.m. ET) Bank of Canada policy announcement.

(3 p.m. ET) U.S. consumer credit for October.

With Reuters and The Canadian Press

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe