Equity Markets
U.S. and Canadian stock markets were pointed to a higher open pushing away political concerns over the sudden firing of U.S. Secretary of State Rex Tillerson and renewed concerns over a global trade war sparked by U.S. President Donald Trump.
Investors will also be watching shares of Broadcom after it dropped its bid to buy Qualcomm after Mr. Trump ordered the company to abandon the deal, siting national security concerns.
On Tuesday in the wake of the news of Mr. Tillerson's firing, the Dow closed down 170 points in choppy trading. In Toronto, the TSX finished higher as gold producers advanced and comments from Bank of Canada Governor Stephen Poloz that indicated the central bank will remain cautious in policy decisions.
Prime Minister Justin Trudeau spent Tuesday reassuring Canada's steel industry that the government will ensure Canada won't be a dumping ground for cheap steel and aluminum as a result of the tariffs on those products imposed by the U.S.
While Wall Street looked positive prior to the open Wednesday, world shares slipped for the second straight day and the dollar held near one-week lows after Mr. Trump's threats to slap US$60-billion in tariffs on Chinese imports reminded investors of the threat to world economic growth.
Equity markets were attempting to recover after Tuesday's hefty losses, heartened by robust Chinese factory data, but struggled to overcome fears of a global trade war as well as the prospect of political uncertainty in the United States.
"As long as the threat of protectionism and a trade war remains, markets will remain vigilant," Rabobank analysts told clients.
The tariffs, reportedly targeting Chinese tech, electronics and telecoms, were revealed by sources hours after Mr. Trump abruptly fired Mr. Tillerson. Mr. Tillerson's exit follows that of economic adviser Gary Cohn, a strong free trade proponent.
"The market probably correctly viewed this move as weakening internal White House opposition to some of Trump's less market-friendly policies, in particular the President's trade policy," Daiwa strategist Mantas Vanagas said.
That news had sent the dollar skidding, pushed world stocks lower and bond prices higher. The moves accelerated after news broke of the planned tariffs, with Wall Street closing down and hefty losses across Asia, led by technology shares.
In Europe, Britain's FTSE was up 0.21 per cent, Germany's DAX was up 0.16 per cent, and France's CAC gained 0.25 per cent.
In Asia though, stocks closed lower. Japan's Nikkei was down 0.87 per cent, China's Shanghai was off 0.57 per cent and Hong Kong's Hang Seng fell 0.53 per cent.
Commodities
Oil edged up on Wednesday as China reported a 7.2 per cent year-on-year increase in industrial output in the first two months of the year, roundly beating expectations and, in a dose of support for oil bulls, the data showed crude production fell 1.9 per cent.
Chinese oil production fell 1.9 per cent in January and February to a daily rate of around 3.77 million barrels per day, while the amount of crude processed by refineries rose 7.3 percent to 93.4 million barrel per day (bpd), implying that its import demand will remain strong.
Brent crude has fallen by around 1 per cent so far this week, as traders and investors have grown increasingly doubtful that coordinated supply cuts by OPEC and some of its partners might not be enough to offset the relentless rise in U.S. crude production.
U.S. oil production is expected to top 11 million bpd later this year.
Rising output, as well as seasonally low demand, mean that U.S. crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday.
Gold prices were flat on Wednesday, hovering near a one-week high on a weaker dollar following Mr. Tillerson's sudden dismissal, which invigorated concerns of protectionist policies hampering global risk appetite.
On Tuesday, Mr. Trump fired Tillerson after a series of public rifts over policy on North Korea, Russia and Iran, replacing his chief diplomat with loyalist CIA Director Mike Pompeo.
Risk aversion is back on the table following the unexpected news of Tillerson's dismissal and the appointment of Pompeo, said OCBC analyst Barnabas Gan.
"Pompeo is a supporter of Trump's trade policy and could help advance his agenda of imposing it on U.S. trading partners ... all this uncertainty and risk aversion leaves gold as a safe haven option," Gan added.
The U.S. dollar wallowed against the yen and other major currencies after the dismissal of Tillerson. This killed off an earlier bounce in the currency.
A weaker dollar makes bullion, which is used as an alternative investment during times of political and financial uncertainty, cheaper for holders of other currencies.
"With the U.S. protectionist rhetoric likely to ring equity market alarm bells, gold should continue to be an ideal hedge in this highly unpredictable environment," said Stephen Innes, APAC trading head at OANDA.
In other precious metals, silver rose 0.42 per cent to US$16.61 per ounce. Platinum gained 0.7 per cent to US$968.40 per ounce and Palladium edged 0.2 per cent higher to US$992.95 per ounce.
Currencies and bonds
The Canadian dollar edged higher but was closer to the 77 US cent level following positive comments from Poloz and rising commodity prices.
The U.S. dollar was flat after three days of losses and it held near one-week lows amid the dismissal of Mr. Tillerson and news of additional tariffs against certain Chinese imports.
The prospect of a global trade conflict has weighed on the dollar and any escalation would significantly weaken it further. The greenback has been supported by growing expectations of as much as four rate hikes this year.
"The U.S. administration has slipped further into chaos and the current Trump-induced dollar weakness can have an effect for some time, but not forever as fundamental forces come to the fore," said Ulrich Leuchtmann, an analyst at Commerzbank.
The dollar index broadly flat at 89.56, its lowest level since March 8 and within striking distance of a one-month low of 89.40.
U.S. Treasury yields were trading just off one-week lows touched earlier in the session. The 10-year Treasury was lower at 2.840 per cent and the 30-year Treasury was lower at 3.086 per cent.
The Canada 10-year bond yield was up slightly at 2.207 per cent.
Stocks set to see action
Quebecor Inc. reported its fourth-quarter profit fell compared with a year ago, as its revenue crept higher. The telecommunications and media company says it earned a profit attributable to shareholders of $65.6-million or 27 cents per share for the quarter ended Dec. 31, down from $123.3-million or 50 cents per share a year earlier Revenue totalled $1.06-billion, up from $1.05-billion. Adjusted income from continuing operating activities for the quarter totalled $78.7-million or 33 cents per share in the quarter, down from $84.7-million or 35 cents per share a year earlier. Analysts on average had expected an adjusted profit of 37 cents per share and revenue of $1.08-billion, according to data compiled by Thomson Reuters.
Empire Co. Ltd. reported better-than-expected results for its third quarter as its revenue and profits improved compared with a year ago. The parent company of the Sobeys grocery chain says it earned $58.1-million or 21 cents per diluted share for the quarter ended Feb. 3. Sales totalled $6.03-billion, up from $5.89-billion, while same-store sales excluding fuel increased 1.1 per cent. On an adjusted basis, Empire says it earned 33 cents per diluted share for the quarter up from an adjusted profit of 13 cents per diluted share a year ago. Analysts on average had expected Empire to report an adjusted profit of 25 cents per diluted share, according to Thomson Reuters.
Singapore-based Broadcom Ltd. withdrew its $117-billion bid to acquire Qualcomm Inc. on Wednesday, two days after U.S. President Donald Trump blocked the attempt citing national security concerns. The company said it has also withdrawn its slate of independent director nominees for Qualcomm's annual shareholder meeting.Broadcom, however, expects to continue with its plan to redomicile to the United States. Broadcom's shares were up 0.61 per cent in premarket trading and Qualcomm's shares were 0.34 per cent higher.
Alphabet Inc.'s Google said on Wednesday it will ban advertisements for cryptocurrencies and related content starting in June. Under the new policy, the company will ban ads for unregulated or speculative financial products like binary options, cryptocurrency and financial spread betting among others. In a separate blog post, Google said it took down 3.2 billion ads that violated its advertising policies in 2017, nearly double the number of ads it removed in 2016.
The biggest legal grower of cannabis in the state of Washington is going public in Canada this week, the latest in a wave of American marijuana businesses that are raising money north of the border. Cannex Capital Group Inc. will list its common shares Wednesday on the Canadian Securities Exchange (CSE), which has only recently become Canada's – and maybe the world's – go-to stock market for firms that are exposed to the cannabis sector in the United States.
Earnings include: Ag Growth International Inc.; Empire Company Ltd.; Maxim Power Corp.; Progressive Corp.; Quebecor Inc.; Seven Generations Energy Ltd.; Stella-Jones Inc.; The Stars Group Inc.
More reading: Wednesday's small-cap stocks to watch
More reading: Wednesday's analyst upgrades and downgrades
Economic News
Canadian home prices dipped in February after two consecutive months of gains, weighed by declines in Toronto and a number of other cities, data showed on Wednesday. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices were down 0.1 percent last month compared to January. Price growth also continued to decelerate on an annual basis. Home prices were up 7.5 percent compared to last year, the smallest annual increase since March 2016. On a monthly basis, prices were down in seven out of the 11 cities surveyed, including a 0.1 percent decline in Toronto. Home sales in Canada's largest city have been dampened by tighter mortgages rules and moves taken by the Ontario government last year to try to cool the market.
U.S. retail sales fell for a third straight month in February as households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter. The Commerce Department said on Wednesday that retail sales slipped 0.1 percent last month. January data was revised to show sales dipping 0.1 percent instead of falling 0.3 percent as previously reported. It was the first time since April 2012 that retail sales have declined for three straight month. Economists polled by Reuters had forecast retail sales rising 0.3 percent in February. Retail sales in February increased 4.0 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0.1 percent last month after being unchanged in January. These core retail sales correspond most closely with the consumer spending component of gross domestic product.
U.S. wholesale prices rose 0.2 per cent in February. A pickup in services prices offset a drop in the cost of food and energy. The Labor Department said Wednesday that the February increase in its producer price index was half January's 0.4 per cent gain. Over the past year, producer prices, which show inflation before it reaches consumers, rose 2.8 per cent. Energy prices fell 0.5 per cent in February, and food prices fell 0.4 per cent as fresh and dry vegetable prices plunged 27.1 per cent, most since May 2007. Excluding volatile food and energy prices, so-called core wholesale inflation rose 0.2 per cent for the third straight month. Prices have been rising faster for producers than for consumers. Tthe Labor Department reported Tuesday that consumer prices rose just 2.2 per cent over the past year.
(8:30 a.m. ET) Canada's new motor vehicle sales for January.
(10 a.m. ET) U.S. business inventories for January. Consensus is an increase of 0.6 per cent from December.
(10:30 a.m. ET) EIA petroleum status report is released.
With files from Reuters and Bloomberg