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Equities
Canada’s main stock index jumped at the start of trading Wednesday with energy shares gaining after crude prices bounced off recent lows. Wall Street indexes were also up sharply with earnings news helping buoy sentiment.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 237.59 points, or 1.7 per cent, at 14,177.65.
The Dow Jones Industrial Average rose 418.46 points, or 1.82 per cent, at the open to 23,437.34.
The S&P 500 opened higher by 51.33 points, or 1.88 per cent, at 2,787.89. The Nasdaq Composite gained 171.32 points, or 2.07 per cent, to 8,434.55 at the opening bell.
Both West Texas Intermediate and Brent were higher in morning trading, turning around losses seen in a volatile early session.
“From the general tone of markets and news updates, it looks like this rally is still being greeted with a healthy degree of scepticism, with a steady flow of predictions that a fresh decline is just around the corner” Chris Beauchamp, chief market analyst with IG said.
“But when everybody is looking for it, such an eventuality is unlikely to occur.”
Sentiment also got a lift after the U.S. Senate passed a US$484-billion relief package for small business, hospitals and testing on Tuesday evening.
Earnings also remain in focus.
After Tuesday’s close, Canadian Pacific Railway Ltd. cut its earnings outlook for the rest of the year as the COVID-19 pandemic caused the North American economy to slow and rail shipments to plummet. The Calgary-based railway said it expects revenue ton miles will fall by about 5 per cent this year, while adjusted profit will be flat compared with 2019. The move came as CP said its profit for the first quarter ended March 31 fell by 4 per cent to $409-million, or $2.98 a share, from $434-million ($3.09 a share) in the first quarter of 2019.
South of the border, shares of Snap Inc. jumped more than 20 per cent after the company topped Wall Street forecasts for revenue and user growth in the latest quarter as people turned to the company’s Snapchat app during the COVID-19 lock down.
In Europe, major markets held gains into the afternoon with the pan-European STOXX 600 advancing 1.7 per cent. Britain’s FTSE 100 rose 2.11 per cent. Germany’s DAX gained 1.47 per cent and France’s CAC 40 added 1.28 per cent.
In Asia, markets finished mixed following Wall Street’s weak hand off. Japan’s Nikkei fell 0.74 per cent. The Shanghai Composite Index edged up 0.6 per cent. Hong Kong’s Hang Seng gained 0.42 per cent.
Commodities
Crude prices steadied somewhat after early losses which saw touch its lowest level in decades amid evaporating demand and global oversupply amid the COVID-19 pandemic.
Brent crude, which fell more than 20 per cent in the previous session, touched US$15.98 a barrel on Wednesday, hitting its lowest since June 1999. As trading continued, Brent rebounded to US$19.72, up 39 US cents.
U.S. West Texas Intermediate was up 9 cents, or 0.8 per cent, at US$11.66.
Crude prices have been spiraling through the week with the May contract for WTI falling into negative territory on Monday as markets grapple with oversupply, sharply diminished demand and growing storage concerns.
“With rock-bottom prices likely to hurt oil producers around the world, we are already seeing the likes of Mexico, Nigeria, and Canada lay out plans to ease back on production even without the OPEC+ production cut coming into play,” Joshua Mahony, senior market analyst with IG, said.
“There is no doubt that these current levels are unsustainable, and the huge push into oil ETFs highlights that desire to capture this opportunity.”
On Tuesday, the American Petroleum Institute reported that U.S. crude inventories rose by 13.2 million barrels, slightly more than markets had been expecting. More official numbers are due later Wednesday from the U.S. Energy Information Administration.
OPEC and its allies have already agreed to cut production by 9.7 million barrels a day. Saudi Arabia said Tuesday that it was ready to take extra measures with other producers, although the group’s next meeting isn’t scheduled until June.
In other commodities, gold reversed early declines with spot gold rising 1 per cent to US$1,702.60 an ounce.
Currencies
The Canadian dollar held early gains after the latest reading on inflation showed the early impact of the spread of the novel coronavirus on consumer prices.
The day range on the loonie so far is 70.24 US cents to 70.78 US cents, with the dollar closer to the higher end of that spread at last check.
Just before the start of trading, Statistics Canada said the country’s annual rate of inflation fell to 0.9 per cent, in March from 2.2 per cent a month earlier. The deceleration in consumer prices was the biggest since 2006, the government agency said.
The overall rate was the lowest since the 0.9 per cent in May 2015.
“The good news is that with signs that the virus curve is flattening, policy makers are now looking to gradually re-open economies in May,” TD senior economist James Marple said.
“After two months of horrific data, we may finally be through the worst. Of course, this assumes that measures are removed slowly enough to avoid another increase in infections. Fingers firmly crossed.”
On global currency markets, safe-haven demand helped buoy both the U.S. dollar and the yen.
The U.S. dollar was flat against a basket of world currencies but still up about 0.5 per cent for the week so far.
The Japanese yen maintained its gains from the past week versus the greenback, up around 0.2 per cent.
More business news
Rogers Communications Inc pulled its 2020 forecast due to uncertain economic conditions as a result of the coronavirus outbreak. The telecom operator’s revenue for first quarter ended March 31 fell 5 per cent to $3.42-billion due to lower subscriber activity during the pandemic.
Metro Inc. reported its second-quarter profit rose from a year ago and sales climbed as shoppers began stocking up due to the pandemic during the last two weeks of the period. The grocery and drug store company says it earned $176.2-million or 69 cents per diluted share for the 12-week period ended March 14 compared with a profit of $121.5-million or 47 cents per diluted share in the same quarter a year earlier. Sales for the quarter totalled $3.99-billion, up from $3.70-billion a year earlier.
Delta Air Lines Inc reported its first first-quarter loss in nine years and forecast a 90 per cent decline in second-quarter revenue as the coronavirus crisis devastates air travel demand. Atlanta-based Delta swung to a US$534-million net loss in the first quarter that ended March 31, or a $0.84 loss per share, from a US$730-million net profit a year earlier.
Facebook will buy a 10-per-cent stake in the digital business of India’s Reliance Industries for $5.7 billion, as the social media firm looks to leverage its highly popular WhatsApp chat service to offer digital payment services. The deal will help the Indian conglomerate cut debt that has piled up in its expensive push to secure top spot for its Jio Infocomm telecom business.
AT&T Inc’s first-quarter revenue fell short of Wall Street expectations and the company pulled its annual forecast on Wednesday, as the impact of the coronavirus outbreak overshadowed a strong growth in monthly phone subscribers. The U.S. media and telecommunications giant said the pandemic reduced earnings by 5 US cents per share. The company said it had limited visibility for the rest of the year, but added that it had enough free cash flow to pay dividends and make debt payments.
Nasdaq Inc reported a 23-per-cent rise in adjusted quarterly profit on Wednesday, benefiting from the coronavirus-fueled market volatility that led to a surge in trading volumes in March. Global financial markets were ravaged by the rapid spread of the pandemic in the first quarter. But the market volatility benefited exchange operators such as Nasdaq, which make most of their money from clearing and settling trades. The company’s adjusted net income rose to US$251-million, or US$1.50 per share, in the first quarter ended March 31, from US$204-million, or US$1.22 per share, a year earlier.
Economic news
Canada’s annual rate of inflation fell to 0.9 per cent in March, from 2.2 per cent in February, Statistics Canada said. The overall rate was the lowest since the 0.9 per cent in May 2015.
With Reuters and The Canadian Press
Terry Weber