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Equities
Major North America stock indexes opened higher Wednesday as volatile markets continue to look for signs that the spread of the novel coronavirus has turned a corner.
At 09:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 120.42 points, or 0.88 per cent, at 13,734.56.
On Wall Street, the Dow Jones Industrial Average rose 239.61 points, or 1.06%, at the open to 22,893.47.
The S&P 500 opened higher by 25.59 points, or 0.96%, at 2,685.00. The Nasdaq Composite gained 88.46 points, or 1.12%, to 7,975.72 at the opening bell.
Ahead of the open, Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, told Fox News that U.S. health officials are planning ways for the country to return to normal if current efforts prove successful in curbing the outbreak.
“If in fact we are successful, it makes sense to at least plan what a re-entry into normality would look like. That doesn’t mean we’re going to do it right now, but it means we need to be prepared to ease into that,” Dr. Fauci said.
Indexes have seen marked volatility in recent days - the Dow shed roughly 900 points during the course of trading on Tuesday - as investors look for indications that attempts to stem the spread of the virus are working.
“Traders are trying to pick a bottom in shares and scientists are trying to pick the peak in the pandemic,” Jasper Lawler, head of research for London Capital Group, said. “Both exercises typically result in a lot of false starts before the real thing.”
Major European markets were weaker in early going after European finance ministers failed to agree on a rescue package for the bloc’s economies.
European Union finance ministers talked through the night looking to strike a deal to support the bloc’s economies but had failed to reach an agreement by Wednesday morning. Discussions were suspended until Thursday.
A Reuters report suggested that a disagreement between Italy and the Netherlands over what conditions should be attached to euro zone credit for governments fighting the pandemic was blocking progress on the aid package.
Meanwhile, optimism over indications that some world hot spots had plateaued faded after France officially registered more than 10,000 deaths from coronavirus infections. France is now the fourth country to cross that level after Italy, Spain and the United States. In the U.S., the number of cases has topped 380,000. Canada is nearing 18,000 cases.
In this country, Alberta Premier Jason Kenney said that province’s unemployment rate will likely surpass 25 per cent, resulting in the most challenging economic period since the Great Depression. Speaking at an energy symposium on Tuesday, Mr. Kenney projected 500,000 unemployed Albertans, far worse that an earlier projection from private bank economists.
On the corporate side, bank annual meetings continue with AGMs from Royal Bank and Canadian Imperial Bank of Commerce.
Overseas, the pan-European STOXX 600 was down 0.68 per cent by afternoon, paring some of the morning’s losses.
Britain’s FTSE 100 fell 0.85 per cent. Germany’s DAX fell 0.40 per cent and France’s CAC 40 fell 0.89 per cent.
In Asia, indexes put in a mixed session with Japan’s Nikkei turning around after early losses to finish up 2.13 per cent. The Shanghai Composite Index slipped 0.19 per cent. Hong Kong’s Hand Seng fell 1.17 per cent.
Commodities
Crude prices were positive in early going as markets nervously await a meeting Thursday among major producers aimed at reaching an agreement to cap output and shore up the market.
The day range on Brent crude is US$$31.71 to US$32.96. The range on West Texas Intermediate is US$24.16 to US$25.29. On Tuesday, Brent fell 3.4 per cent while WTI slumped more than 9 per cent.
Markets are looking ahead to a Thursday teleconference call among OPEC members and their allies. Last month, crude prices went into a tailspin after the group failed to reach a deal on extending production caps, sparking a price war between Saudi Arabia and Russia.
Thursday’s call is expected to be more successful, although questions linger over what role the United States would play in production cuts.
“Market participants remain skeptical whether the group can agree on a deal to cut oil production,” Milan Cutkovic, market analyst with AxiCorp., said. “If the meeting fails to produce results, oil prices may collapse below the psychologically important $20 figure.”
“This would have serious consequences for oil producers worldwide and could also lead to another sell-off on the stock market.”
In other commodities, gold prices were higher but volatile as risk appetite pulls back.
Spot gold rose up 0.2 per cent to US$1,651.51 per ounce, after climbing to its highest since March 10 on Tuesday at US$1,671.40. U.S. gold futures rose 0.4 per cent to US$1,689.80.
“Fundamentals are still bullish, but in the short term the market will take cues from every bit of news that pops up,” Avtar Sandu, a senior commodities manager at Phillip Futures, told Reuters, adding that a firmer U.S. dollar and profit-taking weighed on prices.
Currencies
The Canadian dollar was slightly weaker as risk sentiment weighed.
The day range on the loonie so far us 71.02 US cents to 71.51 US cents.
“There were no major new developments on the coronavirus front, with PM [Justin] Trudeau stating that 500,000 masks were due to arrive from 3M on Wednesday and Canada was working to produce 30,000 made-in-Canada ventilators,” Elsa Lignos, global head of FX strategy for RBC, said.
“He also stated that they were looking at ways to provide more credit to Canadians and that the package was still a work in progress.”
On global markets, the U.S. dollar firmed on fading optimism over the time line for improvements in the global virus crisis.
Against a basket of currencies, the U.S. dollar rose 0.3 per cent to 100.170, and gained the same amount against the Chinese yuan. On Tuesday, the U.S. dollar index saw its biggest decline in roughly two weeks.
The euro, meanwhile, fell 0.4 per cent to US$1.0852, with a failure by European Union finance ministers to agree on further support for their coronavirus-hit economies.
“The speed of the COVID19 crisis on the real economy has been so brutally fast that it requires rapid policy response,” Derek Halpenny, EMEA head of research for global markets at MUFG, wrote in a note.
“On an EU-wide perspective that has not been forthcoming.”
More company news
Cogeco Inc. reported earnings per share from continuing operations in the second quarter of $2.18 on Revenue of $610.8-million. The company also withdrew its financial guidance for the fiscal year, citing the uncertainty caused by the COVID-19 pandemic.
The Stars Group Inc. says two proxy advisory firms have recommended that shareholders back its deal to be acquired by Flutter Entertainment. The company says Institutional Shareholder Services Inc. and Glass Lewis & Co. have recommended shareholders vote to support the all-share transaction. The combination will create one of the world’s largest online betting and gambling companies.
Britain’s biggest retailer Tesco estimated a hit of up to US$1.1-billion from the costs of dealing with the coronavirus pandemic and warned it couldn’t give profit guidance for the current financial year. The supermarket group said on Wednesday if trading returned to normal by August, it was likely the extra expenses for its retail operations - mainly staff and logistics costs - would be offset by higher sales and relief from a business tax introduced by the government to help companies through the crisis.
Heroux Devtek Inc. says it is withdrawing its 2020 guidance due to market uncertainty caused by the coronavirus.
Zoom Video Communications Inc was hit with a class-action suit by one of its shareholders on Tuesday, accusing the video-conferencing app of overstating its privacy standards and failing to disclose that its service was not end-to-end encrypted. Shareholder Michael Drieu claimed in a court filing that a string of recent media reports highlighting the privacy flaws in Zoom’s application have led to the company’s stock, which had rallied for several days in the beginning of the year, to plummet.
Economic news
Canada Mortgage and Housing Corp. says the rate of seasonally adjusted housing starts for all areas of the country fell 7.3 per cent in March to 195,174.
Statistics Canada says the value of building permits issued by Canadian municipalities fell 23.3 per cent to $1.4-billion in March. British Columbia and Quebec had the strongest declines, likely reflecting provincial measures put in place mid-month to slow the spread of COVID-19, the agency said in a release. The numbers are based on preliminary flash estimates.
8:30 a.m. ET - Canadian building permits for February.
2 p.m. ET - Minutes from the U.S. Federal Reserve’s latest meeting.
With Reuters and The Canadian Press
Terry Weber