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Equities

U.S. stock futures backed off early lows as a strong earnings beat from Boeing helped offset investor concerns over climbing U.S. bond yields. In this country, futures were weaker as oil prices eased ahead of new U.S. inventory figures. Overnight, MSCI’s world equity index traded lower for the fifth straight day on weakness in Europe and Asia.

Wall Street sank Tuesday after the yield on 10-year Treasuries rose above 3 per cent to their highest levels in four years. Initially, stocks looked set for another rocky start as yields held at that level. But positive earnings, particularly from plane maker Boeing, helped turn sentiment around.

“Three-per-cent is a closely watched psychological level for U.S. treasury yields and the fact is has been breached dampened demand for U.S. equities,” Jasper Lawler, head of research for London Capital Group, said. “Higher interest rate expectations mean higher corporate borrowing costs, in turn making investments more expensive.”

He said there is also added concern that the Federal Reserve could move to raise interest rates more quickly, sideswiping economic growth.

Rising yields, meanwhile, are also playing out as earnings continue to floor in. (Tuesday’s drop on Wall Street was exacerbated by disappointing forecasts from Caterpillar and 3M.)

Early Wednesday, Boeing shares were up more than 2 per cent after the world’s biggest plane maker posted better-than-expected profit for the latest quarter and hiked its full-year outlook for earnings per share and cash flow. Boeing posted core earnings per share of US$3.64 in the first-quarter. Analysts had been looking for earnings closer to US$2.58 a share.

On Bay Street, energy giant Cenovus posted a first-quarter loss of $914-million or 74 cents a share, compared with profit of $211-million or 25 cents a year earlier. The loss in the latest quarter came as shipping problems weighed on the prices of Canadian heavy oil. Cenovus also said in March it was running oil sands production below capacity and stockpiling excess crude due to transportation issues.

On Wall Street, tech companies take the spotlight with embattled social media giant Facebook and e-commerce company eBay reporting after the close.

Facebook, which continues to battle the fallout of the Cambridge Analytica data-mining scandal, is expected to earn US$1.36 a sahre in the latest quarter. Mr. Lawler notes that the range of estimates on earnings per share goes from US$1.04 to US$1.58. Revenue is expected to come in at US$11.41-billion with the range of forecasts spanning $10.59-billion $11.83-billion.

“Earnings estimates increased by approximately 9 per cent over the past 90 days but are down slightly by less than 1 per cent over the past 60 days,” Mr. Lawler said. “Even if it produces blow out numbers, it will be hard for Facebook to escape the cloud of uncertainty in the short-term.”

Meanwhile, Twitter shares spiked 13 per cent in premarket trading after that company topped estimates with its latest results. Twitter posted a net profit of US$61-million or 8 US cents in the latest quarter, compared with a loss of US$61.6-million or 9 cents a year earlier. Excluding items, first-quarter per share profit was 16 US cents. Analysts had been expecting earnings of 12 cents a share. Twitter posted its first quarterly profit in the final quarter of last year and says it expects to be profitable in 2018.

Overseas, markets in Europe were lower as investors turned cautious on rising U.S. bond yields. The pan-European STOXX 600 index was down 0.83 per cent at last check. Britain’s FTSE 100 was down 0.61 per cent. Germany’s DAX fell 1.5 per cent. France’s CAC 40 was off 0.60 per cent.

In Asia, Japan’s Nikkei ended down 0.28 per cent while the broader Topix fell 0.11 per cent. Shares in Takeda Pharmaceutical fell more than 7 per cent to a fresh 52-week low on news that it had again increased its bid for London-based drug maker Shire to about US$64-billion.

Elsewhere in Asia, Hong Kong’s Hang Seng fell 1.01 per cent. The Shanghai Composite Index lost 0.35 per cent.

Commodities

Crude prices pulled back ahead of trading in North America with traders awaiting new inventory figures from the U.S. Energy Information Administration. Brent crude was trading in a day range of US$73.63 to US$74.19 a barrel. West Texas Intermediate had a range for the day of US$67.48 to US$67.99. On Tuesday, Brent touched its highest level since November 2014 on Tuesday.

Tuesday afternoon figures released by the American Petroleum Institute showed a surprise increase in U.S. crude inventories. The report said crude supplies rose by 1.1 million barrels last week. Inventories of gasoline and distillates fell. More official figures are due Wednesday morning from the EIA and are expected to show a decline of 1.1 million barrels.

Oil prices have been bolstered recently by the prospect of fresh U.S. sanctions against Iran, which is among OPEC’s top producers. Traders noted, however, that prices came off slightly on news that French President Emmanuel Macron has pitched a new deal on Iran’s nuclear program to assuage U.S. concerns. U.S. government borrowing costs have also tempered investors’ appetite for risk in recent days, analysts noted.

“There’s a good chance we try again to break $75 again [on Brent]. We still have all the different soundbites on Iran and the May 12 deadline is coming up,” Petromatrix strategist Olivier Jakob told Reuters. The U.S. has said it will withdraw from the Iran nuclear deal by that date if other countries involved in the pact don’t meet certain conditions.

In other commodities, gold prices fell as the U.S. dollar rose on rising bond yields. Spot gold was weaker and had erased Tuesday’s gains which followed three losing sessions. U.S. gold futures were also lower. Silver prices were weaker as well.

Currencies and bonds

The Canadian dollar was lower as rising U.S. Treasury yields push its U.S. counterpart to a four-month high against world currencies. The day range on the loonie so far is 77.65 US cents to 77.99 US cents.

RBC chief currency strategist Adam Cole says the move lower by the loonie is entirely the result of the U.S. dollar moves and mirrors what is being seen across G10 currencies.

“Generally we have a view that the [U.S.] dollar will remain relatively firm going forward,” he told The Globe’s Michael Babad.

“Typically the Canadian dollar tends to do well against other currencies when the U.S. dollar is doing well,” he said.

The U.S. dollar index, which weighs the greenback against a basket of currencies, was higher at 91.027. Overnight, the index rose to 91.076, its highest since early January. Against the yen, the U.S. dollar marked a two-month high.

In bonds, the yield on the U.S. 10-year note was higher at 3.013 per cent at last check. The yield on that note had been flirting with the psychologically important 3-per-cent mark for days before breaching that level on Tuesday, sending stocks lower. Rising inflation expectations - and concerns that the Fed may move to raise interest rates more quickly than anticipated - has led to investors selling U.S. Treasuries, pushing yields higher. The yield on the 30-year note was also higher at 3.188 per cent.

Stocks set to see action

Boeing Co posted a 57-per-cent increase in profit for the first quarter on Wednesday, while also raising its full-year forecast for earnings per share and cash flow. The world’s biggest plane maker, which sold a record 763 aircraft last year and has already announced a rise in commercial deliveries in the first three months of the year, raised its full-year operating cash flow forecast to a range of US$15.0-billion-US$15.5 billion from about US$15-billion, previously. Boeing shares were higher in premarket trading.

Comcast Corp topped Wall Street estimates for quarterly profit on Wednesday as the communications company cut expenses and added high-speed internet customers, offsetting a drop in cable TV subscriptions. The biggest U.S. cable provider said in its results that it added 379,000 customers for the internet service overall in the first quarter, while its main TV business was helped by NBCUniversal’s broadcast of the Olympics and the Super Bowl. Separately, Comcast formalized a 22 billion pound (US$31-billion) bid for U.K.- based pay-TV group Sky PLC, challenging a lower but already-agreed takeover bid from Rupert Murdoch’s Twenty-First Century Fox. Shares were lower in premarket trading.

U.S. exchange operator Nasdaq Inc on Wednesday reported a 14.6-per-cent rise in quarterly revenue, helped by higher trading volumes. Revenue from market services, the company’s largest business which oversees transactions, clearing and settlements, rose 21.3 per cent to US$735-million. Heightened volatility in February, after a prolonged calm in 2017, roiled global equities, bonds, currencies and commodities, markets, and remained elevated through the end of March, helping Nasdaq book gains in the first quarter.

Kyrgyz gold miner Kyrgyzaltyn has not yet seen or studied an offer by Chaarat Gold Holdings to take over the Kumtor gold mine, its deputy chief executive, Bektur Sagynov, said on Wednesday. Chaarat Gold on Tuesday made a proposal to buy Kyrgyzstan’s largest gold mine, Kumtor, from Canada’s Centerra Gold for an undisclosed cash sum, in a deal that would also involve Kyrgyz state firm Kyrgyzaltyn. “We cannot say we are ready for the deal,” he told Reuters by telephone, referring to the surprise bid by the London-listed miner.

More reading:

Wednesday’s small-cap stocks to watch

Wednesday’s Insider Report: Companies insiders are buying and selling

Economic news

(10:30 a.m. ET) EIA Petroleum Status report is released.

(4:15 p.m. ET) Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins appear before the Senate Standing Committee on Banking, Trade and Commerce

With Reuters and The Canadian Press

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
EBAY-Q
Ebay Inc
+1.66%52.78
CMCSA-Q
Comcast Corp A
+0.65%43.35
CCZ-N
Comcast Corp
+0.46%56.2
NDAQ-Q
Nasdaq Inc
+0.16%63.1
USEG-Q
U S Energy Corp
+1.89%1.08
CG-T
Centerra Gold Inc
+1.39%8
BA-N
Boeing Company
+0.54%192.99

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