What every Canadian investor needs to know today: TSX gains ahead of BoC; Wall Street up on inflation reading

Equities

Canada’s main stock index opened up Wednesday as investors await the latest rate decision from the Bank of Canada. On Wall Street, key indexes also started higher with new inflation figures coming in tamer than expected.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 108.02 points, or 0.53%, at 20,529.87.

In the U.S., the Dow Jones Industrial Average rose 79.42 points, or 0.24 per cent, at the open to 33,764.21. The S&P 500 opened higher by 12.78 points, or 0.31 per cent, at 4,121.72, while the Nasdaq Composite gained 78.99 points, or 0.66 per cent, to 12,110.87 at the opening bell.

Just after Wednesday’s opening bell, Canadian investors will get the latest rate decision from the Bank of Canada. Markets are expecting the central bank to again keep rates unchanged. The bank paused rates in March after eight consecutive increases aimed at combating high inflation.

“Thus far we’ve seen the latest jobs data hold up well, while headline CPI has continued to come down, even as the economy has managed to hold its own,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“Today’s decision is likely to be an ‘as you were’ decision with little distinction from the language seen last month.”

The decision will be released at 10 a.m. along with the central bank’s monetary policy report, looing at economic conditions in Canada.

On Wall Street, March inflation figures were released ahead of the open of markets.

The U.S. Labor Department said the annual rate of inflation in March came in at 5 per cent. Economists had been forecasting a number closer to 5.2 per cent. On a monthly basis, consumer prices rose 0.1 per cent, also below the 0.2-per-cent increase economists had been expecting. Core inflation edged up to 5.6 per cent in March from 5.5 per cent in February, matching market expectations.

“The data has now confirmed that the Fed doesn’t need to work as hard as they have, and the time has come to ease off on increasing the interest rate,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.

“Moving ahead, we are going to hear a lot of commotion about the Fed’s next move, and odds are that the Fed will confess that inflation has slowed and that they may halt their hike cycle.”

In the wake of the report, markets were pricing in about a 60-per-cent chance of the Federal Reserve hiking by a quarter percentage point at its may meeting. Ahead of the release of Wednesday’s figures, markets had pegged the likelihood above 70 per cent. Meanwhile, minutes from the last Fed meeting will be released this afternoon at 2 p.m. ET.

Overseas, the pan-European STOXX 600 was up 0.22 per cent by midday. Britain’s FTSE 100 was up 0.62 per cent. Germany’s DAX and France’s CAC 40 rose 0.19 per cent and 0.34 per cent, respectively.

In Asia, Japan’s Nikkei finished up 0.57 per cent. Hong Kong’s Hang Seng fell 0.86 per cent.

Commodities

Crude prices were up modestly in early trading, adding to the previous session’s advance, with traders awaiting clues about where the Fed is headed on interest rates in the months ahead.

The day range on Brent was US$85.39 to US$85.96 in the early premarket period. The range on West Texas Intermediate was US$81.28 to US$81.55.

“The oil market is going to remain tight and while China’s reopening has underwhelmed, they will do a lot better going forward and that should keep prices supported,” OANDA senior analyst Ed Moya said in a note.

Both benchmarks added about 2 per cent on Tuesday. Optimism over interest rates and the expectation that the Fed may be near the end of its tightening campaign helped boost sentiment.

Later this morning, markets will get the latest U.S. weekly inventory numbers from the U.S. Energy Information Administration.

Late Tuesday, the American Petroleum Institute reported that crude inventories rose by 380,000 barrels. Analysts polled by Reuters had been expecting a decrease of about 600,000 barrels.

In other commodities, spot gold was up 0.7 per cent at US$2,017.09 per ounce early Tuesday morning. U.S. gold futures rose 0.7 per cent to US$2,032.60.

“Gold demand should remain healthy as a plethora of risks remain on the table this week,” Mr. Moya said.

“This is the week Wall Street starts to focus more on Main Street and that should keep safe haven flows coming gold’s way. Gold’s path to record territory could become very clear post inflation report and if more signs of banking stress emerge.”

Currencies

The Canadian dollar was relatively steady ahead of the Bank of Canada’s rate decision later in the morning.

The day range on the loonie was 74.20 US cents to 74.36 US cents in the predawn period.

Economists widely expect the central bank to hold rates steady in the 10 a.m. ET announcement.

“No change in policy is expected,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Even though the bar to higher rates remains high in Canada, the economy is still running quite hot (hotter than policy makers expected), meaning it is too soon to sound the ‘all clear’ on the inflation fight.”

On world markets, the U.S. dollar index, which measures the greenback against a basket of currencies, fell 0.1 per cent to 102.02 as traders await the latest U.S. inflation figures this morning.

Elsewhere, Britain’s pound was flat at US$1.2426, but was not far from a 10-month high against the dollar hit last week, according to figures from Reuters. The euro rose 0.1 per cent to US$1.0928, after touching a one-month high last week.

In bonds, the yield on the U.S. 10-year note was up slightly at 3.439 per cent in the early premarket period.

More company news

Intermodal container lessor Triton International Ltd has agreed to be acquired by Brookfield Infrastructure for about US$4.7-billion in a cash-and-stock deal, the companies said on Wednesday. Brookfield has offered about US$85 per Triton common share, which represents a premium of nearly 35% to the stock’s last closing price. The deal is expected to close in the fourth quarter of the year. -Reuters

MTY Food Group Inc. reported a first-quarter profit of $18.4-million, up from $16.6-million a year earlier, as acquisitions helped its revenue to more than double. The restaurant franchisor says its profit amounted to 75 cents per diluted share for the quarter ended Feb. 28, up from 68 cents per diluted share a year earlier. Revenue at MTY totalled $286-million for the quarter, up from $140.5-million in the same quarter last year, while system sales totalled a record $1.36-billion, up from $885.7-million. -The Canadian Press

Economic news

(8:30 a.m. ET) U.S. CPI for March.

(10 a.m. ET) Bank of Canada policy announcement and monetary policy report (with press conference to follow)

(2 p.m. ET) U.S. budget balance for March.

(2 p.m. ET) U.S. Fed minutes from March 21-22 meeting are released.

Also: G20 finance ministers and central bank governors meet in Washington through Thursday.

With Reuters and The Canadian Press