Equities
Canada’s main stock index saw modest early gains Wednesday helped by tech and utilities stocks, with investors awaiting the the release this afternoon of the minutes from the Bank of Canada’s latest meeting. Key indexes on Wall Street were also positive, with the S&P 500 touching record levels early in the session.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 14.34 points, or 0.07 per cent, at 20,972.08.
In the U.S., the Dow Jones Industrial Average rose 92.53 points, or 0.24 per cent, at the open to 38,613.89.
The S&P 500 opened higher by 18.82 points, or 0.38 per cent, at 4,973.05, while the Nasdaq Composite gained 81.36 points, or 0.52 per cent, to 15,690.35 at the opening bell.
“S&P 500 operating earnings growth of around 5 per cent year-on-year fosters bullish sentiment among investors,” Stephen Innes, managing partner with SPI Asset Management, said. “Higher rates don’t appear to burden consumers or corporations significantly, enabling the Fed to wait longer to ensure inflation control without disrupting the stock market’s momentum amid robust U.S. growth dynamics.”
In Canada, investors will get deliberations from the Bank of Canada’s latest minute this afternoon. Last month, the central bank again held its key rate at 5 per cent, where it has remained since last summer. The bank also dialled back its threat of more rate hikes in a shift in language seen as opening the door for possible cuts in the first half of the year. The bank’s deliberations will be released at 1:30 p.m. ET.
On Tuesday, Bank of Canada’ governor Tiff Macklem spoke in Montreal, saying monetary policy cannot solve Canada’s housing affordability problem or boost the country’s longer-term economic growth prospects, The Globe’s Mark Rendell reports.
In the U.S., Fed Governors Adriana Kugler and Michelle Bowman, along with Presidents Thomas Barkin and Susan Collins also speak on Wednesday. Earlier in the week, Federal Reserve Presidents Loretta Mester and Neel Kashkari welcomed the progress on inflation but signalled there was more work to do before policy could be eased, Reuters reported.
At the outset of the year, markets had been expecting the first Fed rate cut to come as early as March, but those hopes have since faded in the wake of comments by Fed chair Jerome Powell. By early Wednesday morning, CME’s FedWatch Tool suggested just a 21.5-per-cent chance of a Fed rate cut next month.
On the corporate side, earnings continue to roll in on both sides of the border. In Canada, Héroux-Devtek reports this morning while insurer Sun Life releases results after the close of trading.
On Wall Street, Uber is among the companies releasing results before the bell. Entertainment giant Walt Disney Co. releases earnings after the close of trading.
Shares of Ford Motor Co. were up roughly 6 per cent in premarket trading after the automaker said it would return more cash to shareholders, starting with an extra 18 cents-per-share dividend in the first quarter, according to Reuters. Ford also forecast US$10-billion to US$12-billion in pretax profit for 2024, after earning US$10.4-billion before taxes last year. The results were released after Tuesday’s closing bell.
Meanwhile, shares of Snap sank more than 30 per cent in early trading in New York after the Snapchat owner’s revenue in the latest quarter fell short of forecasts. Revenue in the fourth quarter ended Dec. 31 was US$1.36-billion, missing the consensus analyst estimate of US$1.38-billion, according to LSEG data.
Overseas, the pan-European STOXX was down 0.06 per cent by midday. Britain’s FTSE 100 slid 0.33 per cent. Germany’s DAX lost 0.11 per cent while France’s CAC 40 rose 0.03 per cent.
In Asia, Japan’s Nikkei ended down 0.11 per cent. Hong Kong’s Hang Seng fell 0.34 per cent, reversing early gains.
Commodities
Crude prices advanced in early trading after new figures showed a smaller-than-forecast increase in U.S. weekly inventories.
The day range on Brent was US$78.49 to US$79.16 in the early premarket period. The range on West Texas Intermediate was US$73.23 to US$73.90.
“Crude oil is on the rise once again this morning, with WTI hitting a fresh high for the week,” Joshua Mahony, chief market analyst with Scope Markets, said.
“This comes as we see Houthi Rebels continue their attacks in the Red Sea, shrugging off the actions taken by the U.S. and U.K. in the region. For equity markets, the need to keep a lid on energy prices is absolutely key, with the U.S. starting to gradually rebuild their own strategic oil stockpiles (SPR) after years of sales. Time will tell whether that shift from supplier to consumer will make a tangible impact upon sentiment for energy markets.”
Figures released late Tuesday by the American Petroleum Institute showed crude stocks rose by 670,000 barrels last week, less than the 1.7 million analysts had been expecting. More official U.S. government numbers are due later this morning.
Sentiment was also helped by the U.S. Energy Information Administration’s latest forecast for 2024. The agency says it now expects domestic output to grow by 120,000 barrels a day to 170,000 barrels a day. That’s down from last year’s output increase of more than 1 million barrels a day.
In other commodities, spot gold was relatively steady at US$2,034.79 per ounce by early Wednesday morning. On Tuesday, gold added more than 0.5 per cent. U.S. gold futures were also steady at US$2,051.00 per ounce.
Currencies
The Canadian dollar was firmer as its U.S. counterpart pulled back after hitting its best level since November earlier in the week.
The day range on the Canadian dollar was 74.09 US cents to 74.24 US cents early Wednesday morning. For the year to date, the Canadian dollar is down about 1.7 per cent against the greenback.
“The slightly softer tone in stocks has not had any obvious impact the Canadian dollar, with a small lift in crude prices this week perhaps helping offset the drag from risk appetite,” Shaun Osborne, chief FX strategist with Scotiabank, said.
The U.S. dollar index was down 0.15 per cent at 104.06. On Monday, the index hit 104.60, its best level since Nov. 14. The index lost about 0.29 per cent yesterday.
The euro was up 0.12 per cent at US$1.0768. Britain’s pound rose 0.29 per cent to US$1.2636.
In bonds, the yield on the U.S. 10-year note was up slightly at 4.108 per cent ahead of the North American opening bell.
More company news
Brookfield Asset Management Ltd. raised its dividend as it reported a profit of US$95 million in its latest quarter from its stake in the asset management business it owns with Brookfield Corp. The company, which owns a 25 per cent stake in the asset management business that is 75 per cent owned by Brookfield Corp., says it will now pay a quarterly dividend of 38 cents US per share, up from 32 cents US. The increased payment to shareholders came as it says its profit in U.S. dollars amounted to 24 cents US per diluted share for the quarter ended Dec. 31. -The Canadian Press
Héroux-Devtek Inc. reported a third-quarter profit of $9.0 million, up from $1.8 million a year earlier as its sales rose 16 per cent. Chief executive Martin Brassard says the third-quarter results reflect the company’s progress in implementing its strategic initiatives. The maker of aircraft landing gear says its profit amounted to 27 cents per diluted share for the quarter ended Dec. 31, up from five cents per share in the same quarter a year earlier. Sales for the quarter totalled $163.5-million, up from $140.9-million. -The Canadian Press
Uber Technologies forecast quarterly core profit and gross bookings above estimates and reported market-beating results for the holiday quarter on Wednesday, fueled by higher demand in its ride sharing and food delivery segments. The company expects adjusted earnings before interest, taxes, depreciation, and amortization of US$1.26-billion to US$1.34-billion in the quarter ending March, compared with expectations of US$1.26-billion, according to LSEG data. Uber’s gross bookings forecast of US$37-billion to US$38.5-billion came in higher than expectations of US$37.33-billion. -Reuters
China’s Alibaba Group Holding on Wednesday missed analysts’ estimates for third-quarter revenue, hurt by softness in the retail market and sagging economic recovery in the world’s second-largest. The company’s U.S.-listed shares, which announced an increase of US$25-billion to its share repurchase program through the end of March 2027, were up 3.5% in premarket trading. Alibaba announced the split of its business into six units last March in a transition overseen by CEO Eddie Wu and Chairman Joe Tsai, both Alibaba co-founders. -Reuters
Economic news
(8:30 a.m. ET) Canada’s merchandise trade balance for December.
(8:30 a.m. ET) U.S. goods and services trade balance for December.
With Reuters and The Canadian Press
Terry Weber