Equities
Stock indexes in both Canada and the United States jumped, with the S&P/TSX Composite Index hitting its best level in a week, after new U.S. inflation figures raised hopes that the Federal Reserve will dial down its campaign of aggressive rate hikes.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 307.66 points, or 1.54 per cent, at 20,327.36.
In the U.S., the Dow Jones Industrial Average rose 555.64 points, or 1.65 per cent, at the open to 34,546.65. The S&P 500 opened higher by 78.82 points, or 1.98 per cent, at 4,069.38, while the Nasdaq Composite gained 399.10 points, or 3.58 per cent, to 11,542.84 at the opening bell.
In November, the annual rate of inflation in the United States came in at 7.1 per cent, down from 7.7 per cent a month earlier. Economists had been forecasting a moderation in price pressures, although most were looking for a figure closer to 7.3 per cent in November. On a monthly basis, the consumer price index rose 0.1 per cent. Markets had been looking for an increase of about 0.3 per cent.
The reading comes as members of the Federal Reserve begin two days of meetings, which will culminate with the central bank’s rate decision on Wednesday afternoon. Markets are expecting to see a half percentage point rate hike after a string of 75-basis-point increases.
“Today’s CPI reading has confirmed that ultra-hawkish bets are over now and dovishly hawkish bets are the ones which traders are more focused on,” AvaTrade chief market analyst Naeem Aslam said.
“In summary, the Santa has delivered a nice enough package to the Fed who can now celebrate the Christmas with more peace knowing that inflation is moving in the direction that they want with plenty of tail wind behind.”
Tuesday's analyst upgrades and downgrades
In this country, final arguments are scheduled to be held in the Competition Tribunal’s hearing over Rogers Communications’ proposed $26-billion takeover of Shaw Communications.
The Globe’s Alexandra Posadzki reports written arguments by the two sides locked in a battle at the Competition Tribunal were made public on Friday, roughly a week after the evidentiary portion of the hearings concluded. The Competition Bureau, headed up by Commissioner of Competition Matthew Boswell, is asking the tribunal to block the deal in its entirety on the grounds that it would increase wireless prices in Alberta and British Columbia. Rogers and Shaw, along with intervenor Videotron Ltd., argue that the deal is good for competition and are asking the tribunal to dismiss Mr. Boswell’s application.
Overseas, the pan-European STOXX 600 was up 0.61 by midday. Britain’s FTSE 100 rose 0.28 per cent. Germany’s DAX and France’s CAC 40 advanced 0.70 per cent and 0.61 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.40 per cent. Hong Kong’s Hang Seng gained 0.68 per cent after Chief Executive John Lee announced continued easing of measures aimed at curbing the spread of COVID-19.
Commodities
Crude prices were up in early going as the continued closure of TC Energy’s Keystone pipeline stoked concerns about supply
The day range on Brent was US$78.10 to US$79.60 in the early premarket period. The range on West Texas Intermediate was US$73.29 to US$74.54.
Keystone was closed last week after the release of crude into a creek in Kansas. TC Energy Corp said it had cleaned up almost 2,600 barrels of oil from the spill, but the timetable to restart the pipeline remained unclear.
Keystone ships 620,000 barrels per day of Canadian crude from Alberta to the United States.
“That’s a lot of supportive factors for the price even in what appears to be an environment tilted towards oversupply,” OANDA senior analyst Craig Erlam said.
“Suddenly there appears more upside risk than downside which could keep prices slipping below US$70 for the foreseeable future.”
Later in the day, traders will get the first of two weekly U.S. inventory reports with the release of new figures from the American Petroleum Institute. More official numbers follow on Wednesday morning from the U.S. Energy Information Administration.
Analysts polled by Reuters are forecasting a decline in crude inventories of about 3.9 million barrels for the week ended Dec. 9.
In other commodities, gold prices traded in a narrow range ahead of this week’s Fed decision.
Spot gold was up 0.1 per cent at US$1,783.16 per ounce by early Tuesday morning. U.S. gold futures edged 0.1-per-cent higher to $1,793.90.
Currencies
The Canadian dollar gained while its U.S. counterpart fell against a group of world currencies in the wake of the latest U.S. inflation figures.
The day range on the loonie was 73.28 US cents to 73.96 US cents. The Canadian dollar was closer to the upper end of that spread just ahead of the North American open.
There were no major Canadian economic releases due Tuesday. The Globe’s Mark Rendell reports that Bank of Canada Governor Tiff Macklem said Monday in a year-end speech that the central bank has entered a new phase of monetary policy. After raising interest rates seven consecutive times, the bank has moved from asking how big the next rate hike should be to asking whether to raise interest rates at all. That could mean a pause to rate increases as early as January.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, fell more than 1 per cent to 103.75 just after new figures showed the annual rate of inflation eased to 7.1 per cent in November, lower than market forecasts.
Earlier, Britain’s pound was flat against the U.S. dollar at US$1.2272 ahead of the Bank of England’s policy decision on Thursday. It hit a near six-month high of US$1.2345 last week.
The euro was also steady at US$1.0539. The European Central Bank delivers its next rate decision on Thursday.
More company news
Gold Fields Ltd said on Tuesday its Chief Executive Officer Chris Griffith will step down from his role effective Dec. 31, a month after the South African gold miner’s bid to acquire Canada’s Yamana Gold Inc fell through. Some analysts had predicted that Mr. Griffith would not be able to survive the unsuccessful bid, from which Gold Fields walked away with a US$300-million break fee from the Canadian precious metals producer. Two top Gold Fields shareholders, Red Wheel Capital and VanEck, had publicly opposed the transaction. -Reuters
Oracle Corp posted better-than-expected quarterly revenue, driven by strong demand for its cloud software business as companies move to hybrid working models. The software company’s total revenue rose 18.5 per cent to US$12.28-billion in the second quarter compared with a Refinitiv consensus estimate of US$12.05-billion, per 19 analysts. The results were released after Monday’s close. Shares were up more than 3 per cent in early trading. -Reuters
Eli Lilly and Co said on Tuesday it expects adjusted profit in the range of US$8.10 to US$8.30 per share in 2023. The adjusted profit forecast was lower than analysts’ average estimate of US$9.15 per share, according to Refinitiv IBES data.
United Airlines said Tuesday it is ordering 100 Boeing 787 Dreamliners and 100 737 MAX airplanes, a major order as the air carrier pushes for post-pandemic growth and replaces older less-efficient aircraft. The Chicago-based airline’s order for 200 airplanes has list prices of about $43 billion and is a big boost to the U.S. planemaker that has faced political and production issues for the two planes this year. -Reuters
Economic news
(8:30 a.m. ET) U.S. CPI for November.
Also: U.S. Fed meeting begins.
With Reuters and The Canadian Press