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Equities

Canada’s main stock indexed edged higher early Wednesday with higher gold prices giving a boost to mining shares. On Wall Street, the S&P 500 opened up and the Nasdaq hit another record as investors await an afternoon policy announcement from the Federal Reserve.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 9.22 points, or 0.06 per cent, at 15,842.96.

The Dow Jones Industrial Average fell 20.41 points, or 0.07 per cent, at the open to 27,251.89.

The S&P 500 opened higher by 6.24 points, or 0.19 per cent, at 3,213.42. The Nasdaq Composite gained 58.56 points, or 0.59 per cent, to 10,012.32 at the opening bell.

Wednesday’s Fed decision isn’t expected to contain any policy moves, with the central bank’s benchmark rate already near zero following a series of efforts aimed at shoring up the economy as the COVID-19 lockdown hit.

Investors, however, will be watching the Fed’s forecast, particularly for dovish signals which could suggest the powerful central bank will hold rates at low levels for the near future. Last week, a report on the U.S. hiring showed the economy generated more than 2 million jobs last month, defying expectations of further declines and offering some positive economic news as economies reopen.

“The way markets finish today and potentially the course they take over the next few weeks could hinge heavily on today’s Fed meeting,” Jasper Lawler, head of research with London Capital Group, said.

“There was a sudden flip from attack to defence on Tuesday (tech shares up, airlines down, Aussie [dollar] down, yen up). The Fed could determine if that was a blip or a trend-change.”

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Overseas, Europe’s major markets were mostly flat by afternoon. The pan-European STOXX 600 edged up 0.01 per cent. Britain’s FTSE 100 gained 0.12 per cent. Germany’s DAX and France’s CAC 40 fell 0.04 per cent and 0.14 per cent, respectively.

In Asia, markets finished mixed. Japan’s Nikkei gained 0.15 per cent. Hong Kong’s Hang Seng slipped 0.03 per cent. The Shanghai Composite Index fell 0.42 per cent.

Commodities

Crude prices were lower in early going after disappointing U.S. inventory numbers again raised concerns about rebounding demand.

The day range on Brent crude is US$40.31 to US$40.94. The range on West Texas Intermediate US$37.90 to US$38.61.

Late Tuesday, the American Petroleum Institute said crude stocks rose by 8.4 million barrels last week. Analysts had been expecting to see a decline in inventories.

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More official U.S. government figures will be released Wednesday morning by the U.S. Energy Information Administration.

“The more official EIA data is due today and will certainly remain short of the median expectation of a 1.8-million-barrel fall,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank said in a note.

"But news being already out, the marginal impact on oil prices should remain limited. On the other hand, the technical indicators point that the recent rally in oil is overstretched, and a pause or a minor downside correction, should be healthy at these levels."

Both Brent and WTI touched three-month highs on Monday and Brent has more than doubled since falling to a two-decade low below US$16 a barrel in April.

Gold prices were higher ahead of the Fed decision.

Spot gold was up 0.1 per cent at US$1,716.11 per ounce. Bullion saw its best day in a month on Monday. U.S. gold futures rose 0.2 per cent to US$1,725.

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Currencies

The Canadian dollar saw modest gains as its U.S. counterpart drifted lower against world currencies ahead of the Fed decision.

The day range on the loonie so far is 74.47 US cents to 74.79 US cents.

“The U.S. dollar is softer against most of the majors [Wednesday], though moves have generally been small ahead of today’s FOMC announcement,” RBC chief currency strategist Adam Cole said.

"Asset markets are not giving much of a lead, equity futures reversing most of yesterday’s fall, but no more than that. "

On world markets, the euro rose 0.15 per cent to US$1.1354, just shy of US$1.1384, its highest against the greenback since March 10, according to Reuters.

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The Australian and New Zealand dollars extended their recent gains.

The Australian dollar rose 0.46 per cent to 69.90 US cents, just short of an 11-month high. The New Zealand dollar rose 0.5 per cent nearing its highest since late January.

The U.S. dollar fell to 107.37 yen on Wednesday following a 0.6 per cent decline on Tuesday.

More company news

Dollarama Inc beat estimates for quarterly sales on Wednesday, as consumers bought more groceries and other essentials per visit to its stores amid the coronavirus crisis. Dollarama said it witnessed a 22.6% increase in average transaction size even as the number of transactions declined 17.9%, as consumers visited less frequently yet bought larger quantities of goods. Same-store sales, excluding temporarily closed stores, rose 0.7%, while analysts on average had expected a 1.76% decline. As of June 8, 32 Dollarama stores were temporarily closed, it said.

Starbucks Corp forecast its third-quarter operating income to drop by about US$2.2-billion, hit by coronavirus-induced store closures. The world’s largest coffee chain projected a third-quarter adjusted loss of 55 US cents to 70 US cents per share and said it expects U.S. same-store sales to drop by up to 45%. Starbucks also said it expects full-year adjusted earnings of about 55 US cents to 95 US cents per share.

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Ford Motor Co said on it would expand its alliance with Volkswagen AG to produce up to 8 million commercial vehicles. The No. 2 U.S. automaker also said it would build a new electric vehicle for Europe and, starting 2023, it could deliver more than 600,000 units.

U.S. Secretary of State Mike Pompeo on Tuesday chided British bank HSBC for backing moves by China to end Hong Kong’s autonomy, saying such “corporate kowtows” got little in return from Beijing. Pompeo said the United States stood ready to help Britain with alternatives after Beijing reportedly threatened to punish HSBC and break commitments to build nuclear power plants in the country unless the British government allowed China’s Huawei Technologies to participate in building a 5G network. "The United States stands with our allies and partners against the Chinese Communist Party’s coercive bullying tactics,” Pompeo said in a statement, his latest swipe at China’s ruling party.

Economic news

(8:30 a.m. ET) U.S. CPI for May.

(2 p.m. ET) U.S. Fed announcement and summary of economic projections with Chair Jerome Powell’s press conference to follow.

With Reuters and The Canadian Press

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