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Equities

Canada’s main stock index turned lower early Wednesday with declines in Rogers Communications Inc. shares and weaker energy prices pressuring sentiment. U.S. markets started mixed with gains by Boeing Co. stock helping offset weakness in tech shares on the back of a disappointing forecast from chipmaker Texas Instruments.

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At 9:56 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 19.9 points, or 0.18 per cent, at 16,371.62.

In the U.S., the Dow Jones Industrial Average rose 47.14 points, or 0.18 per cent, at the open to 26,835.24.

The S&P 500 opened lower by 1.98 points, or 0.07 per cent, at 2,994.01. The Nasdaq Composite dropped 14.06 points, or 0.17 per cent, to 8,090.24 at the opening bell.

Shares of Caterpillar were down about 1 per cent in morning trading after the equipment maker cut its full-year forecast and reported earnings in the latest quarter below analysts’ expectations. In the most recent quarter, Caterpillar posted earnings per share of US$2.66. Markets had been expecting earnings of US$2.88 a share. Revenue totalled US$12.76-billion, also below the US$13.57 markets had been expecting. Quarterly revenue was down 5.6 per cent year over year. Caterpillar also cut its 2019 earnings forecast to US$10.90 to US$11.40 per share, compared with its previous estimate of US$12.06-US$13.06.

Also weighing on market sentiment was a disappointing outlook from chipmaker Texas Instruments, which said after Tuesday’s close that it sees current-quarter revenue below estimates. Texas Instruments, seen as a bellwether for the sector, said it expected revenue for the fourth quarter in the range of US$3.07-billion and US$3.33-billion, below analysts’ average expectation of US$3.59-billion, according to IBES data from Refinitiv.

Texas Instruments shares were down more than 8 per cent in early trading.

On Bay Street, Rogers Communications Inc. stock opened down 5 per cent after the company cut its revenue forecast for the year. Rogers reported quarterly profit of $593-million, or $1.14 a share, diluted, compared with $694-million or $1.15 a year earlier. On an adjusted basis, earnings per share dipped to $1.19 from $1.21. Rogers also lowered its revenue outlook for the year to a decrease of 1 per cent an increase of 1 per cent. It also trimmed it’s adjusted EBITDA to an increase of 3 to 5 per cent. “The downward adjustment primarily reflects faster-than-expected adoption of our new Rogers Infinite unlimited data plans and the related reduction in overage revenue, lower wireless equipment revenue resulting from the highly competitive environment, and certain efficiencies recognized this year on capital expenditures,” the company said.

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Canadian National Railway cut its adjusted profit forecast for the year and said it expects a “challenging” first half of 2020 as a weaker economy hits North American freight demand. CN Rail now expects full-year adjusted earnings per share growth in the high single-digit percentage range compared with an earlier estimate of low double-digit range. The outlook was released along with CPR’s latest earnings after Tuesday’s close. Shares opened down slightly.

Results are also due Wednesday from Canadian Pacific Railway after the close.

On Wall Street, Boeing Co., caught in the grip of a crisis over the grounding of its 737 Max jets,, reported adjusted earnings in the latest quarter of US$1.45, down from US$3.58 a share a year earlier. However, Boeing also said it still expects “that regulatory approval of the 737 MAX return to service begins in the fourth quarter of 2019.” On Tuesday, Boeing ousted the top executive of its crucial airplanes division, Kevin McAllister in the wake of the Max crisis. Boeing also didn’t report any new charges related to the grounding of the jet. Boeing shares gained about 2 per cent in New York.

After the close, U.S. markets gets earnings from Ford, Microsoft and Tesla.

Overseas, Tokyo’s Nikkei gained 0.3 per cent, while Hong Kong’s Hang Seng lost 0.8 per cent and the Shanghai Composite slipped 0.4 per cent.

In Europe markets turned mixed in afternoon trading as Brexit undertainty continues. The pan-European STOXX 600 was off 0.,17 per cent. Britain’s FTSE 100 gained 0.26 per cent. Germany’s DAX was little changed. France’s CAC 40 slid 0.36 per cent.

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A vote in Britain’s Parliament on Tuesday approved Prime Minister Boris Johnson’s latest Brexit plan, raising the possibility of an orderly exit from the European Union. However, uncertainty persisted after lawmakers also rejected Mr. Johnson’s plan to rush the legislation through Parliament in time for the Oct. 31 deadline. A request has also been made to extend that deadline but it remains unclear how the EU will respond.

“Brexit will likely be delayed, again, but this time, investors can see the light at the end of the tunnel," Ipek Ozkardeskaya, senior market analyst with London Capital Group, said.

“EU’s Donald Tusk recommended that the U.K. is given the time it needs to sort its internal issues out to finalize the divorce. The only question is how Boris Johnson will spend the next three months. There are rising talks of an early general election in the U.K.”

Commodities

Crude prices slid in early going after new figures showed a bigger-than-forecast increase in U.S. inventories.

The day range on Brent so far is US$59.34 to US$59.69. The range on West Texas Intermediate is US$53.97 to US$54.35.

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On Tuesday, the American Petroleum Institute said U.S. crude inventories rose by 4.5 million barrels to 437 million barrels last week. Analysts had been looking for an increase closer to 2.2 million barrels. More official figures are due Wednesday morning from the U.S. Energy Information Administration.

Helping offset that downward pressure was continued market expectations that OPEC and its allies would deepen production cuts in a bid to bolster the market in the face of weaker demand. Already OPEC+ has pledged to cut production by 1.2 million barrels a day through to next March. Members meet again in early December. A Reuters report late Tuesday, citing sources, said OPEC members will consider deepening the cuts at that meeting although Saudi Arabia wants to focus on boosting adherence to the current caps before committing to more reductions.

Meanwhile, Russian Energy Minister Alexander Novak said on Wednesday that no formal proposals have been put forward to change the terms of the current production cap. “We continue monitoring the situation on the market,” he said.

“The OPEC induced oil rally has come to a grinding halt in the wake of the bearish to consensus API inventory swell,” AxiTrader strategist Stephen Innes said. “And while markets are trading a bit lower in Asia but conspicuously by their absence, Asia oil bears don’t appear so eager to embrace their usual past time which is continuously stalking oil market demand fears. Instead, they are showing a bit of respect to OPEC jawboning this morning.”

In other commodities, gold prices were mostly unchanged as investors waited for more clarity on Brexit and the U.S.-China trade row.

Spot gold was up 0.1 per cent at US$1,489.31 per ounce. U.S. gold futures rose 0.3 per cent to US$1,492.40 per ounce.

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“Gold has been rising modestly on technical buying since it fell to the $1,470 level,” Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade, told Reuters.

“What we see today is a continuation of that but uncertainty over Brexit is also providing some support.”

Currencies

The Canadian dollar held relatively steady after a Bank of Canada report showed surprising resilience in the outlook by Canadian businesses despite the global impact of the trade dispute between the United States and China.

The day range for the loonie was a fairly narrow 76.28 US cents to 76.40 US cents.

On Tuesday, the Bank of Canada’s business outlook survey showed business sentiment edged higher in the third quarter although there were more pronounced differences between the Prairies and central Canada. The central bank’s survey of senior management at roughly 100 firms suggested “a slight improvement” in overall sentiment as businesses expected moderate sales growth in the year to come.

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“(The Canadian dollar) remains firm after the BoC’s autumn Business Outlook Survey showed that overall business sentiment remained surprisingly stable despite the escalation in trade tensions through the August-September survey period,” Daria Parkhomenko, FX strategy associate with RBC, said in a note.

“The upshot is that the BoC can afford to remain patient and keep policy on hold, diverging with other global central banks such as the Fed who are now cutting rates.”

The Bank of Canada makes its next interest rate decision next week. Meanwhile. Statistics Canada said August wholesale trade fell 1.2 per cent to $64.3-billion, offsetting most of July’s 1.4-per-cent gain. Economists had been expecting to see a 0.3 per cent increase in the latest report. The dollar showed little reaction to the report.

On broader markets, safe-haven currencies like Japan’s yen and the Swiss franc gained in the wake of continued uncertainty over Brexit.

The Japanese yen rose to 108.25 per U.S. dollar, its strongest since Oct. 15, before settling at 108.380, up 0.1 per cent on the day. The Swiss franc rose 0.1 per cent to 1.1006 francs per euro.

The euro, meanwhile, slid to US$1.1120 ahead of Thursday’s European Central Bank meeting. That meeting marks president Mario Draghi’s last sitting before he exits the central bank.

The dollar index was little changed at 97.547.

In bonds, the yield on the U.S. 10-year note was slightly lower at 1.738 per cent. The yield on the 30-year note was also a touch weaker at 2.231 per cent.

More company news:

Eli Lilly and Co reported a 9.1-per-cent increase in third-quarter profit, helped by higher sales of its top-selling diabetes drug, Trulicity, and lower tax expense. Net income rose to US$1.25-billion, or US$1.37 per share, in the quarter ended Sept. 30, from US$1.15-billion, or US$1.12 per share, a year earlier. Revenue rose 3.2 per cent to US$5.48-billion.

Facebook Inc chief executive Mark Zuckerberg will be grilled by lawmakers over the company’s plan to launch a digital currency and efforts to prevent foreign election interference when he appears before a Congressional panel on Wednesday.

U.S. health insurer Anthem Inc reported a 23-per-cent rise in quarterly profit on Wednesday, boosted by its new pharmacy benefits business and higher sales of its government-backed health plans. Net income rose to US$1.18-billion, or US$4.55 per share, in the third quarter ended Sept. 30 from US$960-million, or US$3.62 per share, a year earlier. Total revenue rose to US$26.67-billion from US$23.25-billion.

Tesla Inc. is conducting trial production runs at its new $2 billion China factory for the past several weeks and will sell some of the first cars from the plant to its employees, sources told Reuters. Whether billionaire Elon Musk’s flagship company can start mass production quickly enough to hit stated targets is the question investors will want an answer to when Tesla announces third-quarter results on Wednesday. The U.S. electric vehicles maker is under pressure to ramp up output globally, and the Shanghai plant’s production schedule is crucial if it wants to reach its ambitious target of an annualised production rate of 500,000 vehicles by the end of the year.

Economic news

Canadian wholesale trade fell 1.2 per cent in August to $64.3-billion, mostly offsetting July’s 1.4-per-cent gain, Statistics Canada said. Declines were seen in five of seven sectors.

(9 a.m ET) U.S. FHFA House Price Index for August.

With Reuters and The Canadian Press

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