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Equities

Canada’s main stock index shook off early losses to turn higher, helped by positive earnings reports. On Wall Street, stocks were lower with trade worries continuing to weigh.

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At 10:09 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 18.68 points, or 0.11 per cent, at 16,928.06. Shares of Home Capital gained more than 10 per cent on positive results. Flight simulator company CAE Inc. gained nearly 6 per cent after profit and revenue topped analysts’ forecasts.

Overall, four of 11 main subindexes were higher. Energy shares were little changed as crude prices steadied. The materials sector rose 0.5 per cent on rising gold prices.

In New York, the Dow Jones Industrial Average fell 69.45 points, or 0.25 per cent, at the open to 27,622.04.

The S&P 500 opened lower by 7.66 points, or 0.25 per cent, at 3,084.18. The Nasdaq Composite dropped 31.07 points, or 0.37 per cent, to 8,455.02 at the opening bell.

Overseas, MSCI’s all-country index fell 0.2 per cent and shares in Asia outside Japan were down roughly 1 per cent. Major European markets were down in afternoon trading.

Markets had been expecting the speech by Mr. Trump in New York on Tuesday afternoon to address issues like recent suggestions that tariffs on Chinese imports could be rolled back if a partial deal was reached and reports that the U.S. would again delay tariffs on EU auto imports.

“As it happened the President did nothing of the sort, if anything he appeared to fire the starting gun on his 2020 re-election campaign, with a rambling love letter to his own administration littered with criticisms of the Federal Reserve, the EU and China, while at the same time telling his audience how great he is, despite the constraints of U.S. monetary policy and the Democrat opposition,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

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“There was no mention of EU auto tariffs, apart from criticism of EU trade policies, though he does need to make a decision on these tariffs by Nov. 14. He also held open the prospect of a phase one US, China trade deal, but without any further details, apart from threatening an escalation if no deal was forthcoming.”

On Wednesday morning, markets also got further suggestions that the Federal Reserve is in no rush to again lower interest rates after three previous cuts this year. In prepared remarks ahead of his testimony before Congress, Fed chair Jerome Powell said members of the central bank see a “sustained expansion” for that country’s economy. “The baseline outlook remains favourable,” Mr. Powell said.

On Bay Street, markets get results from Loblaw Companies Ltd., Stelco Holdings Inc. and CAE Inc.

Loblaw posted a 2.3-per-cent increase in quarterly revenue. Revenue rose to $14.66-billion from $14.32-billion. Net earnings attributable to common shareholders rose to $331-million, or 90 cents per share, in the third quarter ended Oct. 6, from $106-million, or 28 cents per share, a year earlier. Excluding one-time items, the company earned $1.25 a share, beating the average analyst estimate of $1.24 a share, according to IBES data from Refinitiv.

Canada Goose Holdings Inc. reported quarterly sales above Wall Street estimates. Revenue rose 27.7 per cent to $294-million, well above analysts’ estimates of $267.3-million, according to IBES data from Refinitiv. Net income rose to $60.6-million, or 55 cents per share, from $49.9-million, or 45 cents per share, a year earlier. The company’s shares gave up premarket gains and were trading lower in Toronto. Despite the earnings beat, shares were down in Toronto after the company also said unrest had affected its business in Hong Kong.

U.S.-listed shares of Canadian cannabis company Tilray Inc. were down 1.7 per cent after the company posted a bigger quarterly loss as the market grapples with oversupply and lower prices. The B.C.'s company’s net loss widened to US$35.7-million, or 36 US cents per share, in the third quarter ended Sept. 30, from US$18.7-million, or 20 US cents per share, a year earlier. Revenue, however, jumped five times to US$51.1-million. The results were released after Tuesday’s closing bell.

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Overseas, major European markets were in the red in afternoon trading. The pan-European STOXX 600 was down 0.34 per cent but off earlier lows. Britain’s FTSE 100 fell 0.34 per cent in morning trading. Germany’s DAX lost 50 per cent. France’s CAC 40 dropped 0.19 per cent.

Tokyo’s Nikkei lost 0.9 per cent, Hong Kong’s Hang Seng 1.8 per cent, and the Shanghai Composite 0.3 per cent.

Commodities

Crude prices recouped early losses after Fed chair Jerome Powell said the central bank continues to see a “sustained expansion” in the U.S. economy.

Brent had a day range of US$61.22 to US$62.22. The range on West Texas Intermediate is US$56.20 to US$57.16.

Prices also found support from comments from OPEC Secretary General Mohammad Barkindo,who said economic fundamentals remain strong and that he was confident a trade deal between the United States and China could be reached.

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Earlier in the session, prices had struggled to find their footing.

“The markets remain mired in a range by the lack of new drivers, with price movements largely following sentiment on the outlook for the OPEC+ agreement and U.S.-China trade,” AxiTrader strategist Stephen Innes said. “Both [are] colossal headline risks, even if the headline in itself is not colossal.”

Prices were also pulled lower by the latest forecast from the International Energy Agency, which suggested global oil demand growth could fall after 2025.

The agency said demand is expected to grow by 1 million barrels a day on average to 2025, but will fall to 100,000 barrels a day after that. The decline in demand growth was linked to increased fuel efficiency and growth of the electrical vehicle market.

On Wednesday afternoon, markets get the first of two weekly readings on U.S. inventories with the release of new figures from the American Petroleum Institute. That report will be followed Thursday by official U.S. government numbers.

“Oil prices are naturally sensitive to shifts in sentiment so it’s no surprise to see them coming under a little pressure today,” OANDA analyst Craig Erlam said. “Especially as the drop-off seems to be tied to the latest trade headlines, despite them being a rehash of the old ones”

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“The API inventory data will provide a temporary distraction from that today. Last week saw a larger than expected increase reported, another this week may add to the downward pressure on crude, although with Brent above $60 still, that’s not the end of the world.”

Gold prices, meanwhile, saw some gains as uncertainty over trade pared risk appetite and weighed on the U.S. dollar.

Spot gold rose 0.3 per cent at US$1,460.89 per ounce, while U.S. gold futures advanced 0.6 per cent at US$1,462.70 per ounce.

“I’m not convinced we’ve seen the end of the declines in the yellow metal, with US$1,400 being the next test if US$1,440 falls,” Mr. Erlam said. “With risk appetite generally improving, the near term outlook for gold may be tough, especially if the US and China can get an agreement over the line. That’s a big if, though.”

Currencies

The Canadian dollar was lower as crude prices slid and the U.S. dollar firmed on broader currency markets.

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The day range on the loonie is 75.37 US cents to 75.57 US cents.

The economic calendar was fairly light with the next key event coming Thursday morning when Bank of Canada Governor Stephen Poloz speaks at a conference in San Francisco.

“The [Canadian dollar] is a mild under-performer on the session as the [U.S. dollar] continues to recover from the late October low,” Scotiabank chief FX strategist Shaun Osborne said. “Softer crude and wider short-term spreads, while marginal, have been a drag on the CAD’s performance following the soft jobs data last week.”

RBC chief currency strategist Adam Cole noted that New Zealand’s dollar was the standout in the session. The New Zealand dollar jumped more than 1 per cent against the U.S. dollar after the country’s central bank surprised markets by keeping interest rates unchanged after two previous rate cuts this year. The NZ dollar was heading for its biggest one-day gain in more than a year.

“G10 FX is otherwise trading in tight ranges,” Mr. Cole said. “President Trump’s speech at the Economic Club of New York did not give markets much direction. Trump said a phase 1 deal could ‘happen soon’, but also said that the U.S. would ‘substantially increase tariffs’ if there is no deal.”

In other currencies, the U.S. dollar index edged up 0.1 per cent to 98.41, holding just below the one-month high of 98.423 seen in the previous session.

Britain’s pound was mostly unchanged at US$1.2840 as the latest polls forecast a lead for the ruling Conservative Party ahead of next month’s general election.

In bonds, the yields on the U.S. 10-year and 30-year notes were lower at 1.876 per cent and 2.353 per cent, respectively.

More company news

U.S. electric vehicle maker Tesla Inc. will build its first European factory and design centre near Berlin to produce cars “Made in Germany” as it seeks to burnish its reputation for reliability and sporting prowess. Tesla Chief Executive Elon Musk made the announcement at a prestigious German car awards ceremony late on Tuesday and said its new plant would make batteries, powertrains and vehicles - starting with its Model Y sports utility vehicle. “Everyone knows German engineering is outstanding for sure. You know that is part of the reason why we are locating Gigafactory Europe in Germany,” Musk said at the Golden Steering Wheel awards in Berlin.

Home Capital Group Inc. reported its third-quarter profit rose compared with a year ago as its mortgage originations also climbed higher. The alternative mortgage lender says it earned $39-million or 67 cents per diluted share for the quarter ended Sept. 30, up from a profit of $32.6-million or 41 cents per diluted share in the same quarter last year. On an adjusted basis, Home Capital says it earned 72 cents per diluted share for its most recent quarter, up from an adjusted profit of 41 cents per diluted share a year ago. Analysts on average had expected a profit of 56 cents per share, according to financial markets data firm Refinitiv.

Chinese gaming and social media giant Tencent Holdings Ltd. said its quarterly net profit fell 13 per cent, missing analysts’ estimates, hit by falling media advertising and PC games revenue. The world’s largest gaming firm by revenue booked a 20.38 billion yuan (US$2.91-billion) profit for the three months through September. That compared with the 23.45 billion yuan average of 15 analyst estimates compiled by Refinitiv, and a year earlier 23.33 billion yuan. Revenue rose 21 per cent to 97.2 billion yuan, versus the 98.2 billion yuan average estimate of 17 analysts.

Hong Kong’s Cathay Pacific Airways Ltd. reported a 7-per-cent drop in passengers who flew with the airlines in October as fewer tourists from Mainland China travelled to Hong Kong. Cathay also signalled a challenging remainder of 2019 for airlines, and expects second-half financial results will be significantly below those of its first half. Cathay Pacific and its budget airline Cathay Dragon carried a total of 2.7 million passengers last month. Anti-government protesters in Hong Kong have clashed with police from months, creating the worst political crisis in the territory for decades.

Chinese e-commerce giant Alibaba Group is poised to launch a Hong Kong share sale expected to raise up to US$13.4-billion as soon as Thursday, Reuters reports, citing two sources with knowledge of the discussions. The deal - which would be the world’s biggest cross-border secondary listing - will be seen as a boost for Hong Kong, which has sunk into its first recession in a decade as more than five months of street protests and worries about the U.S.-China trade war took their toll.

Abbott Laboratories said Chief Executive Officer Miles White would step down next year and be replaced by Chief Operating Officer Robert Ford. Mr. White was named Abbott’s CEO in 1998 and was responsible for acquiring rivals St. Jude Medical and Alere.

Economic news

The U.S. Labor Department said its consumer price index rose 0.4 per cent in October as households paid more for energy products, healthcare, food and a range of other goods. That was the largest gain in the CPI since March and followed an unchanged reading in September, according to Reuters. In the 12 months through October, the CPI increased 1.8 per cent after climbing 1.7 per cent in September.

(11 a.m. ET) U.S. Fed chair Jerome Powell testifies on the economic outlook to the Joint Economic Committee of Congress.

With Reuters and The Canadian Press

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