Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Wall Street’s key indexes opened at record levels on Wednesday, buoyed by positive economic reports and encouraging trade headlines. Canada’s main stock index saw modest declines as weakness in energy shares weighed.
At 9:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 10.42 points, or 0.06 per cent, at 17,025.46.
Seven of the index’s 11 subsectors were higher. Energy stocks were down 0.4 per cent as crude prices struggled, giving up early gains. Materials shares were down 0.6 per cent, hit by lower gold prices.
In the U.S., the Dow Jones Industrial Average rose 34.79 points, or 0.12 per cent, at the open to 28,156.47. The S&P 500 opened higher by 4.97 points, or 0.16 per cent, at 3,145.49, while the Nasdaq Composite gained 21.66 points, or 0.25 per cent, to 8,669.60 at the opening bell.
MSCI’s all-world index was trading about 0.4 per cent below the record level seen in January 2018 with trade headlines supporting sentiment while a weak reading on Chinese industrial profits put a cap on the session’s gains. (New figures released Wednesday showed China’s industrial firms saw profits shrink at their fastest level in eight months in October.)
On trade, Mr. Trump said during an Oval Office event on Tuesday that trade talks were going “very well" but also that “at the same time we want to see it go well in Hong Kong," referring to long running protests. Last week, U.S. Congress passed legislation backing protesters in Hong Kong, a move that reportedly angered Beijing.
“Global sentiment isn’t exactly soaring, with developments on the U.S.-China relationship providing little tangible evidence that we are on the cusp of a phase one deal," Joshua Mahony, senior market analyst with IG, said.
"There is optimism that such a deal can be agreed, yet the length of time taken, and lack of progress tempers some of the bullishness evident throughout global markets. The impact on this ongoing breakdown in trade was evident from overnight data out of China, showing a 9.9-per-cent decline in factory profits.”
On Bay Street, Catalyst Capital Group Inc. said Wednesday it has launched a competing bid for Hudson’s Bay Co. Catalyst is offering $11 a share in cash for the iconic retailer, topping the $10.30 made by a group of investors led by HBC chair Richard Baker. HBC shares opened up 13 per cent in Toronto.
In earnings, Quebec-based convenience store giant Alimentation Couche-Tard Inc. posted higher profit in the most recent quarter but fell short of revenue forecasts. Net income attributable to the company rose to US$578.6-million, or 51 US cents per share, in the second quarter ended Oct. 13 from US$473.1-million, or 42 US cents per share, a year earlier. Revenue fell to US$13.68-billion from US$14.7-billion a year earlier. Analysts had been looking for revenue of US$14.04-billion, according to IBES data from Refinitiv. The results were released after Tuesday’s close. Earlier this week, Couche-Tard sweetened its bid for Caltex Australia, Australia’s biggest retail fuel and convenience chain, as it looks to push into the region. Couche-Tard shares were slightly lower in early trading.
Ski-Doo maker BRP Inc. raised its guidance for the year and reported higher third-quarter profit in the latest quarter. BRP posted profit in the quarter of $135.3-million or $1.49 a share, up from $90.2-million or 92 cents a year earlier. Revenue rose to $1.64-billion, up from $1.39-billion in the same quarter last year. In its outlook, BRP says it now expects full-year revenue to grow 12 to 14 per cent compared with the earlier guidance of 10-to-13-per-cent growth. Full-year normalized earnings per diluted share are expected to come in between $3.70 and $3.80, up from earlier guidance for between $3.65 and $3.80. BRP shares gained more than 2 per cent.
South of the border, heavy-equipment giant Deere & Co. reported an adjusted profit of US$2.14 a share, down from US$2.30 a share last year. That compares with average analyst estimates of US$2.13 per share, according to Refinitiv Eikon data. The company said it expects net income of US$2.7-billion to US$3.1-billion in the fiscal 2020. Analysts had been expecting earnings for the fiscal year of US$3.5-billion. Deere shares were down about 4 per cent in New York.
Overseas, the pan-European STOXX 600 gained 0.44 per cent, managing its best level in four years on the latest trade news. Britain’s FTSE 100 rose 0.51 per cent in morning trading. Germany’s DAX gained 0.54 per cent. France’s CAC 40 rose 0.28 per cent.
In Asia, Tokyo’s Nikkei gained 0.3 per cent, and Hong Kong’s Hang Seng 0.2 per cent, while the Shanghai Composite lost 0.1 per cent.
Crude prices struggled to hold early gains as investors weighed positive trade headlines against rising U.S. inventories.
The day range on Brent so far is US$63.98 to US$64.48. The range on West Texas Intermediate is US$58.16 to US$58.50.
Prices, which had been on the rise through the early part of the week, paused earlier Wednesday but regained momentum alongside broader markets. During the first two days of the week, WTI gained 1.1 per cent while Brent rose 1.4 per cent on renewed hopes of a trade deal.
However, the advance was slowed when the American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 3.6 million barrels last week. Analysts had been expecting a decline of more than 400,000 barrels. More official numbers are due later Wednesday morning from the U.S. Energy Information Administration.
“Oil markets have been gradually retracing the API inventory build sell-off as bullish sentiment is getting nudged along by trade optimism,” AxiTrader strategist Stephen Innes said. “Still, caution remains as traders are awaiting some clarity on the deal signing venue and date along with the exact measure of tariff rollbacks.”
Crude prices were also helped Wednesday by comments Wednesday by Russian Energy Minister Alexander Novak, who said OPEC and its allies may discuss adjusting production quotas at its meeting next month. The group’s current production caps run through to March. Markets are now waiting to see if that caps are extended and possibly deepened to underpin the markets.
“We don’t rule out discussing various issues,” Mr. Novak was quoted as saying by the Interfax news agency when asked if the OPEC+ meeting would discuss lower production quotas for Russia.
Elsewhere, gold prices slipped in early going.
Spot gold fell 0.2 per cent to US$1,458.85 per ounce. Prices hit a two-week low of US$1,450.30 in the previous session. U.S. gold futures fell 0.1 per cent to US$1,458.70.
“Gold investors have remained defensive today knowing full well that fast money traders will be looking to knock gold lower on any sign of significant progress in the trade deal, especially around dates, venues, and tariff rollbacks,” Mr. Innes said.
The Canadian dollar gained in early going on improved risk sentiment and firmer crude prices although there was little economic news on tap to offer more direction for the currency.
The day range on the loonie is 75.29 US cents to 75.39 US cents.
There were no Canadian economic reports on Wednesday’s calendar. Most of the action will be south of the border, with the release of weekly U.S. jobless claims, durable goods orders, a second reading on third-quarter GDP and the afternoon release of the Fed’s Beige Book.
“[The Canadian dollar] caught a modest bid off of news that the CN Rail strike had been called off yesterday and has extended a little higher overall through the Asian and European sessions,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said. “The damage to the Canadian economy is expected to be minimal and the quick end to the dispute has further dampened near-term BoC rate-cut speculation, with December probabilities falling to less than 7 per cent, the lowest since the end of Oct, following the BoC’s last rate decision.”
The loonie also got some support from news that Deputy Prime Minister Chrystia Freeland is expected to be in Washington on Wednesday to negotiate an addendum to the U.S.-Mexico-Canada Agreement that will help the Trump administration get Congress to ratify the trade deal.
The Globe reports that Ms. Freeland’s talks with U.S. Trade Representative Robert Lighthizer and Jesus Seade, who handles the USMCA file in Mexico, would be aimed at crafting a side-letter that incorporates demands from congressional Democrats, who hold a majority in the House of Representatives.
Against a basket of currencies, the U.S. dollar index rose 0.1 percent to 98.352.
The euro slipped 0.1 per cent to US$1.1011, close to a two-week low of US$1.0989. The Australian dollar slid 0.1 per cent to 67.79 US cents as investors bet on more easing from the Reserve Bank of Australia. Westpac Bank Chief Economist Bill Evans said he expected two central bank interest rate cuts and quantitative easing to be introduced next year.
In bonds, the yield on the U.S. 10-year note was higher at 1,743 per cent. The yield on the 30-year note was also higher at 2.178 per cent.
More company news
Cannabis company CannTrust Holdings Inc. says it has been told by the TSX that its eligibility for continued listing on the exchange is under review as a result of delayed filings. CannTrust said in a statement that it expects to meet the March 25, 2020, deadline set by the TSX for the filings.
HP Inc posted quarterly earnings above analysts’ estimates as higher sales of personal computers and workstations helped counter weakness in its printer business. Revenue from its personal systems unit, which makes notebooks and laptops, rose 3.6 per cent to US$10.43-billion in the fourth quarter, beating estimates of US$10.29-billion. Excluding items, HP earned 60 US cents per share, above the average analyst estimate of 58 US cents. The results were released after Tuesday’s close. HP shares were higher in premarket trading.
Dell Technologies Inc missed Wall Street estimates for quarterly revenue as its server business wrestled with higher costs and lower demand in a market hit by U.S.-China trade tensions. reported total revenue of US$22.84-billion for the latest quarter, narrowly missing estimates of US$23.04-billion, according to IBES data from Refinitiv. The company’s net income was US$552-million, compared with a loss of US$895-million a year earlier. Excluding items, the company earned US$1.75 per share, while analysts were expecting a profit of US$1.62 per share.
Federal safety regulators indicated that they will keep full control over approvals of each new Boeing 737 Max built since the planes were grounded in March, rather than delegating some of the work to Boeing employees. The Federal Aviation Administration said it told Boeing on Tuesday that the agency will retain all authority to issue safety certificates for newly manufactured Max planes.
BMW management and labour have reached an agreement on measures to reduce costs that avoids “drastic measures”, the German car maker said. BMW had been in talks with labour representatives and its top suppliers as it seeks to achieve cost savings of more than 12 billion euros by 2022. The agreement involves reducing a payout scheme for workers based on company profits, as well changes to Christmas and other bonuses for some workers. The measures are effective from 2020.
Low-cost carrier Norwegian Air Shuttle says it is ending long-haul routes to the United States and Thailand from two Scandinavian capitals, citing technical issues with the Rolls Royce engines on Boeing 787s and low demand. Norwegian Air says it had carried out “a thorough review” and concluded it would not resume flying to New York, Los Angeles, Bangkok and Krabi, Thailand, from Copenhagen and Stockholm after the winter break.
U.S. GDP growth in the third quarter was revised up to 2.1 per cent from an initial estimate of 1.9-per-cent growth.
U.S. durable goods orders rose 0.6 per cent in October after falling 1.4 per cent in September.
Initial claims for U.S. state unemployment benefits declined 15,000 to a seasonally adjusted 213,000 for the week ended Nov. 23, the U.S. Labor Department said. Figures for the prior week were revised to show 1,000 more claims received than previously reported.
The U.S. National Association of Realtors said its pending home sales index, based on contracts signed last month, decreased 1.7 per cent to a reading of 106.7.
(2 p.m. ET) U.S. Beige Book
With Reuters and The Canadian Press