Equities
Canada’s main stock index slid at Wednesday’s opening bell with financial shares under pressure. On Wall Street, key indexes also saw early weakness as traders await the release of the minutes from the latest Federal Reserve meeting later in the day.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 34.58 points, or 0.17 per cent, at 19,865.21.
In the U.S., the Dow Jones Industrial Average fell 31.43 points, or 0.09 per cent, at the open to 34,914.96.
The S&P 500 opened lower by 4.07 points, or 0.09 per cent, at 4,433.79, while the Nasdaq Composite dropped 37.88 points, or 0.28 per cent, to 13,593.17 at the opening bell.
Markets will be once again looking for clues about the Fed’s next move on interest rates with the afternoon release of the minutes from the central bank’s most recent meeting. The minutes are due at 2 p.m. ET.
“In the U.S., it is all about one thing and one thing only, and that is what the Fed Chairman is going to say today about the interest rate,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.
“In our opinion, the less the Chairman says, the better for the U.S. equity markets. The market players are already highly concerned about the economic slowdown in China, and the [U.S.] dollar index is on the rise as a safe-haven play.”
In Canada, The Globe’s Jeffrey Jones reports Occidental Petroleum Corp. is buying Canadian clean-tech developer Carbon Engineering Ltd. for US$1.1-billion, a deal the oil company said will accelerate development of facilities that remove large volumes of carbon dioxide from the atmosphere.
On the economic side, Canadian investors got a reading on June housing starts ahead of the open.
Canada Mortgage and Housing Corp. said the standalone monthly seasonally adjusted annual rate of housing starts for all areas in Canada fell 10 per cent in July to 254,966 units from 283,498 units in June, which was the strongest month so far this year. The agency said, despite the monthly decline, the total was still 7.4 per cent above the five-year average.
On Wall Street, retail stocks continue to be in focus with results this morning from Target.
The retailer cut its full-year sales forecast and profit outlook in releasing its latest results. Target now expects annual comparable sales to decline in the mid-single digit range compared to its prior forecast of low-single digit decline to a low-single digit increase. It expects 2023 adjusted profit per share between US$7 to US$8, compared with the prior range of US$7.75 to US$8.75, Reuters reported. However, Target also reported second-quarter adjusted profit of US$1.80 per share, topping market expectations. Shares rose in premarket trading.
On Tuesday, Home Depot posted better-than-expected results as consumers continued to small-scale projects around the home. Walmart is scheduled to report on Thursday.
Overseas, the pan-European STOXX 600 was off 0.06 per cent by midday. Britain’s FTSE 100 slid 0.46 per cent. Germany’s DAX and France’s CAC 40 added 0.17 per cent and 0.08 per cent, respectively.
In Asia, Japan’s Nikkei closed down 1.46 per cent after a weak handoff from Wall Street. Hong Kong’s Hang Seng slid 1.36 per cent.
Commodities
Crude prices wavered in early trading as concerns about China’s economy were offset somewhat by declines in U.S. inventories, suggesting tighter supply.
The day range on Brent was US$84.44 to US$85.20 in the early premarket period. The range on West Texas Intermediate was US$80.52 to US$81.26.
Both benchmarks fell more than 1 per cent on Tuesday after disappointing data on China’s retail sales and industrial spending raised concerns about the health of that country’s economy. Figures released Wednesday, meanwhile, showed China’s new home prices fell for the first time this year in July.
“The pivotal question at this juncture revolves around the sustainability of the factors propelling the shift in oil’s trajectory: the burgeoning global economic prospects and the orchestrated production cuts by OPEC+,” Stephen Innes, managing partner with SPI Asset Management, said.
“While not an assured outcome, our current evaluation leans toward a greater likelihood of substantial constraints on the global supply of crude oil rather than a significant surge in demand.”
Prices drew some support from new figures from the American Petroleum Institute showing that U.S. crude inventories fell by 6.2 million barrels last week. Analysts polled by Reuters had forecast a decline closer to 2.3 million barrels.
More official U.S. government figures are due from the U.S. Energy Information Administration later Wednesday morning.
Gold prices were relatively steady after breaking through the key US$1,900-an-ounce level for the first time in more than a month.
Spot gold edged up 0.1 per cent to US$1,903.20 per ounce by early Wednesday morning, while U.S. gold futures were flat at US$1,935.40.
Currencies
The Canadian dollar was up modestly while its U.S. counterpart continued to trade not far from recent one-month highs.
The day range on the loonie was 74.01 US cents to 74.21 US cents in the predawn period. As of early Wednesday morning, the Canadian dollar was down about 0.46 per cent against the greenback over the past five days and off more than 2 per cent over the past month.
OANDA analyst Kenny Fisher noted that this week’s Canadian inflation report, which showed the annual rate of inflation ticked up to 3.3 per cent in July, has again focused attention on the Bank of Canada’s Sept. 6 rate decision.
“The BoC has said that its rate decisions will be based on the data, and the rise in July CPI could provide support for a rate hike at that meeting,” he said.
“Reuters reported that the money markets have raised the probability of a 25 basis point hike in September to 31 per cent currently, up from 22 per cent prior to the inflation report release.”
On world markets, the U.S. dollar index was down 0.2 per cent at 103.02, though it was not far from an over one-month peak hit on Monday, according to figures from Reuters.
The euro gained 0.2 per cent to US$1.0924.
Britain’s pound was heading to its biggest single-day gain since early August after new numbers showed core inflation remained strong in July. Core inflation in Britain, which strips out volatile energy and food prices, remained at 6.9 per cent in July, unchanged from the previous month, although headline inflation fell sharply.
The pound was last up around 0.3 per cent at US$1.2747, set for its biggest one-day jump since Aug. 7, Reuters reported.
In bonds, the yield on the U.S. 10-year note was lower at 4.184 per cent ahead of the North American open.
More company news
NFI Group Inc. reported a loss of US$48.1-million in its latest quarter compared with a loss of US$56.0-million in the same quarter last year as it looks to ramp up production in the second half of the year. NFI chief executive Paul Soubry says the company expects some temporary inefficiencies as it looks to increase production, but it sees a path for significant margin growth in 2024 and 2025. The bus maker, which keeps its books in U.S. dollars, says the loss amounted to 62 cents per share for the quarter ended July 2 compared with a loss of 73 cents per share a year earlier. In its guidance for its full year, NFI says it now expects revenue of US$2.6 billion to US$2.8 billion compared with earlier expectations for between US$2.5-billion and US$2.8-billion. Adjusted earnings before interest, taxes, depreciation and amortization are now expected between US$40-million and US$60-million compared with its previous guidance for between US$30-million and US$60-million. -The Canadian Press
Intel and Israeli contract chipmaker Tower Semiconductor’s proposed US$5.4-billion deal has been mutually terminated as they were unable to get timely regulatory approvals, the companies said on Wednesday. Intel, which had decided to buy Tower last year, will pay a termination fee of US$353-million to the latter, the company said in a statement. Tower and Intel did not provide details on the regulatory approvals. Reuters reported late on Tuesday that Intel would drop the deal once their contract expired without regulatory approval from China. -Reuters
General Motors is investing in a Silicon Valley startup to help it speed development of a more affordable battery chemistry for its future electric vehicles, the company said on Wednesday. GM will lead a US$60-million investment in Mitra Chem, a two-year-old Mountain View, California, company that uses artificial intelligence to accelerate development of lithium-ion battery materials. -Reuters
Economic news
(8:15 a.m. ET) Canadian housing starts for July.
(8:30 a.m. ET) Canadian wholesale trade for June.
(8:30 a.m. ET) U.S. housing starts for July.
(8:30 a.m. ET) U.S. building permits for July.
(9:15 a.m. ET) U.S. industrial production and capacity utilization for July.
(2 p.m. ET) U.S. Fed minutes from July 25-26 meeting are released
With Reuters and The Canadian Press
Terry Weber