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Equities

Canada’s main stock indexed jumped at the open Wednesday with higher crude prices boosting energy shares. South of the border, major U.S. indexes were also higher with optimism over the reopening of the economy underpinning sentiment.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 162.75 points, or 1.09 per cent, at 15,048.23.

In the U.S., the Dow Jones Industrial Average rose 249.08 points, or 1.03 per cent, at the open to 24,455.94. The S&P 500 opened higher by 30.69 points, or 1.05 per cent, at 2,953.63, while the Nasdaq Composite gained 120.52 points, or 1.31 per cent, to 9,305.62 at the opening bell.

“The overarching theme that governments are easing up on their lockdown restrictions is still relevant,” CMC Markets analyst David Madden said in an early note.

He also noted that optimism surrounding Moderna’s potential COVID-19 vaccine faded somewhat after medical website STAT said trial results, which triggered a rally in world stocks earlier in the week, lacked detail.

“It seems traders should treat every trial result with caution given the volatility around both Gilead and Moderna announcements over recent weeks,” IG senior market analyst Joshua Mahony said.

“Every specialist seems to indicate that a vaccine will take some time to develop, yet markets treat each trial announcement like we are on the cusp of a huge breakthrough that could see everything swiftly return to normal.”

Ahead of the opening, markets got results from U.S. retailers Target and Lowe’s. Lowe’s reported a jump in sales in the latest quarter as lockdowns spurred home improvement spending. Target, meanwhile, saw a spike in online sales for the period, although costs related to the pandemic weighed on results. Lowe’s shares were up nearly 2 per cent in morning trading. Target’s shares were down about 1 per cent in morning trading.

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Overseas, major European markets were mostly higher by afternoon. The pan-European STOXX 600 rose 0.27 per cent. Britain’s FTSE 100 gained 0.40 per cent. Germany’s DAX was up 0.29 per cent. France’s CAC 40 fell 0.26 per cent.

In Asia, Japan’s Nikkei gained 0.79 per cent. The Shanghai Composite Index fell 0.51 per cent. Hong Kong’s Hang Seng edged up 0.05 per cent.

Commodities

Crude prices advanced in early going, bolstered by signs of improving demand as economies reopen.

The day range on Brent is US$34.38 to US$35.06. The range on West Texas Intermediate is US$31.56 to US$32.31.

On Tuesday afternoon, the American Petroleum Industry said weekly crude inventories fell by 4.8 million barrels to 521.3 million.

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More official figures will be released after the start of trading by the U.S. Energy Information Administration.

“The energy market has undergone a big turnaround in the past month," CMC Markets U.K. analyst David Madden said.

"The reopening of economies has sparked speculation that demand for oil will increase. Reports from China and India point to an increase in demand for fuel."

He said falling output has also helped boost prices with OPEC and its allies cutting production this month and reports suggesting a they want to maintain the cuts beyond June.

In other commodities, gold prices edged higher as investors again seek out safer holdings.

Spot gold was up 0.2 per cent at US$1,747.82 per ounce. U.S. gold futures rose 0.4 per cent to US$1,752.40.

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“The so called ‘vaccine hope’ rally in equities has weakened. Gold is back in focus with bad economic releases... trade relations can take an ugly turn at any moment,” said Jigar Trivedi, commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai.

Currencies

The Canadian dollar was firmer in a quiet market, helped by steady crude prices.

The day range on the loonie so far is 71.63 US cents to 71.85 US cents.

“Central bank speakers and events dominate the calendar today,” RBC chief currency strategist Adam Cole said.

“In the US, the FOMC minutes are unlikely to reveal much new, given the multiple speeches and interviews [Jerome] Chair Powell has given subsequent to the meeting. At the time, his tone leaned on the somber side with regard to the challenges ahead faced by the economy, we would expect a similar tone to be revealed here.”

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In addition to two Fed speakers, markets also get remarks from Bank of Canada deputy governor Timothy Lane, who is set to speak this afternoon on the topic of 'policies for the great global shutdown and beyond."

Ahead of the open, Canadian markets also got a reading on Canadian inflation. Statistics Canada said the consumer price index fell 0.2 per cent year-over-year, roughly in line with economists’ forecasts.

On global markets, the euro edged higher, rising 0.18 per cent to US$1.0945, near a two-week peak of $1.09755 reached on Tuesday.

The U.S. dollar index was near the three-week low of 99.225 seen during the previous session.

Elsewhere, New Zealand central bank chief Adrian Orr backtracked a little from the possibility of negative rates – a prospect he had flagged just days before – lending support to the New Zealand dollar, according to Reuters.

More company news

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Target Corp reported a 64% plunge in quarterly profit on Wednesday, pummeled by costs to tackle the coronavirus outbreak, even as panic-buying during the crisis lifted the big-box retailer’s online and store sales. The company’s net earnings fell to US$284-million from US$795-million, a year earlier. On an adjusted basis, the company earned 59 cents per share. Revenue rose 11.3% to US$19.37-billion, edging past expectations of US$19.04-billion.

Home improvement retailer Lowe’s Cos Inc reported an 11.2% rise in quarterly same-store sales on Wednesday, as coronavirus lockdowns led people to spend more on tools and paint for home remodelling and repairs. The company’s net earnings rose to US$1.34-billion, or US$1.76 per share, in the first quarter ended May 1, from US$1.05-billion, or US$1.31 per share, a year earlier. Total net sales rose to US$19.68-billion from US$17.74-billion. The company also scrapped its full-year outlook.

British engine-maker Rolls-Royce said that it would need to lay-off at least 9,000 of its 52,000 staff to make annual cost savings of 1.3 billion pounds as it seeks to cope with the downturn in air travel caused by the pandemic. The job losses would mostly take place in its civil aerospace business, the company said, as it started consultations with unions.

Harley-Davidson Inc is reopening its factories this week at lower production rates and sending dealers a narrower range of motorcycles, the Wall Street Journal reported on Wednesday. The U.S. motorcycle maker, which closed its U.S. assembly plants in March due to the coronavirus outbreak, may not ship any additional new motorcycles this year to about 70% of its 698 dealers in the country, the report said.

Royal Caribbean Cruises Ltd on Wednesday said it expects to post interest expenses between US$590-million and $610-million for the rest of the year and sees a second-quarter loss as ships remain anchored because of the COVID-19 pandemic. The cruise operator also said booking volumes for the remainder of the year were lower than the same time last year at prices that are down low-single digits.

Economic news

Statistics Canada said the consumer price index fell 0.2 per cent on a year-over-year basis. In March, the annual rate of inflation was 0.9 per cent. Economists had been expecting a decline in the latest report, with most forecasting a dip of 0.1 per cent year-over-year.

Canadian wholesale sales fell 2.2 per cent to $63.9-billion in March, Statscan said. That came after three months of gains.

(10 a.m. ET) U.S. quarterly services survey for Q1.

(2 p.m. ET) U.S. Fed minutes from April 28-29 meeting released.

With Reuters and The Canadian Press

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