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Equities
Canada’s main stock index traded lower Wednesday after two days of advances with weaker crude prices pressuring energy shares. On Wall Street, indexes were also in the red as investors remained wary of the potential impact of rising numbers of coronavirus infections in some regions.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 90.05 points, or 0.58 per cent, at 15,474.7.
South of the border, the Dow Jones Industrial Average fell 163.14 points, or 0.62 per cent, at the open to 25,992.96.
The S&P 500 opened lower by 16.89 points, or 0.54 per cent at 3,114.40. The Nasdaq Composite fell 37.55 points, or 0.37 per cent, at 10,093.82 shortly after market open.
“Stock market sentiment is being tested on Wednesday, as a rising number of coronavirus cases combined with U..S tariff threats against Europe drag heavily on risk appetite,” OANDA senior analyst Craig Erlam said.
“The rising number of coronavirus cases we’re continuing to see in the U.S., in particular, is a major concern despite the Trump administrations previous refusal to lockdown the economy again."
Bloomberg reported that the U.S. is weighing new tariffs on US$3.1-billion in exports from EU countries and the U.K.
Market sentiment was already tempered Tuesday by separate reports suggesting that the European Union was prepared to ban U.S. travellers because of a surge in coronavirus infections in parts of that country, with several U.S. states now seeing record infections. Dr Anthony Fauci, America’s top infectious disease expert, said parts of the United States were seeing a “disturbing surge” in COVID-19 cases.
On the corporate side, Canadian investors will get earnings from BlackBerry Ltd. after the closing bell.
Earlier this month, BlackBerry was removed from the S&P/TSX 60 Index, Canada’s blue-chip stock index. The criteria for being on the index include market value and trading liquidity - the shares easily available to the public for trading. BlackBerry shares have fallen about 20 per cent so far this year. BlackBerry was Canada’s most valuable company in October, 2007, with a market value of roughly $85-billion; its market capitalization is less than $4-billion today.
Elsewhere, GFL Environmental Inc. said it has struck a deal to buy a portfolio of integrated solid waste collection, transfer, recycling and disposal assets in the United States for US$835 million. The assets are being sold as a result of the acquisition of Advanced Disposal Services Inc. by a subsidiary of Waste Management Inc. They include 32 collection operations, 36 transfer stations and 18 landfills supported by 380 collection vehicles across 10 U.S. states.
Overseas, major European markets were in the red. The pan-European STOXX 600 was down 1.54 by afternoon.
Britain’s FTSE 100 fell 2.04 per cent. Germany’s DAX lost 1.8 per cent and France’s CAC 40 slid 1.82 per cent.
In Asia, Japan’s Nikkei fell 0.07 per cent. Hong Kong’s Hang Seng lost 0.50 per cent. The Shanghai Composite Index closed up 0.30 per cent.
Commodities
Crude prices retreated in early going after new figures showed a bigger-than-expected increase in U.S. inventories.
The day range on Brent so far US$41.97 to US$42.89. The range on West Texas Intermediate is US$39.56 to US$40.54. On Tuesday, Brent managed its best level since prices collapsed in March.
Late Tuesday, the American Petroleum Institute said weekly U.S. crude inventories rose by 1.7 million barrels. Analysts had been looking for a smaller build of about 300,000 barrels. Markets will get a more official reading later in the morning when the U.S. Energy Information Administration releases its latest weekly tally.
“The oil market is struggling under the weight of COVID-19 headlines and a surprising build in the API data, which has arguably caught a number of the bulls by surprise,” AxiCorp chief market strategist Stephen Innes said.
“Indeed, oil bulls are feeling like a beast of burden today getting weighted down by the COVID headlines deluge while having to carry that surprising inventory load.”
In other commodities, gold prices hit their best level in almost eight years on safe-haven demand.
Spot gold was up 0.1 per cent at US$1,768.50 per ounce after touching US$1,773, its highest level since October 2012 in early Asian trade, according to Reuters.
U.S. gold futures rose 0.2 per cent to US$1,785.50.
“The fears of second wave cases, particularly in the U.S., and also in Latin America, are driving concerns about sustained weakness in the economic recovery and that’s certainly supporting safe-haven assets like gold,” ANZ analyst Daniel Hynes said.
Currencies
The Canadian dollar was lower in early going as crude prices pulled back and risk sentiment weakened on concern over a jump in coronavirus infections in some areas.
The day range on the loonie so far is 73.63 US cents to 73.92 US cents.
There were no major Canadian economic releases on Wednesday’s calendar. Broader markets will get an updated global growth forecast from the International Monetary Fund.
“The Canadian dollar may be slightly under pressure from incoming 10 per cent tariffs on Canadian aluminum entering the U.S. which are set to be announced by the end of the week and could elicit retaliation by Canadian authorities,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The imposition of the tariffs would be but a blip in the CAD’s path, however, as the broad risk tone and commodity prices will dominate the currency’s price action.”
On global currency markets, the U.S. dollar index, which weighs the greenback against a group of its world counterparts, edged up 0.2 per cent.
Selling pressure hit several major currencies, including British pound, which was down more than a third of a per cent. The euro gave up some of the week’s gains, falling nearly 0.2 per cent, Reuters reported.
Elsewhere, the New Zealand dollar slid nearly 1 per cent against the U.S.dollar after that country’s central bank said the balance of economic risk remain on the downside and it was ready to use additional monetary tools if needed.
More company news
Barrick Gold Corp will lay off most staff at its Porgera gold mine in Papua New Guinea, the mine’s operator said on Wednesday. Barrick was refused an extension of its expired lease on the mine in April, with the government citing unrest and pollution concerns. It stopped production and put the mine in care and maintenance mode while challenging the lease decision in court, but on Wednesday flagged further job cuts and said 2,650 Papua New Guinea nationals would be retrenched by the end of July.
Former Wirecard CEO Markus Braun, who was arrested on suspicion of falsifying the German payments firm’s accounts, has been released from custody, his lawyer told Reuters on Wednesday. Mr. Braun was released after turning himself in on Monday evening, lawyer Alfred Dierlamm said, after posting bail set by a Munich court at US$5.65-million.
Dell Technologies Inc. is considering spinning off its roughly US$50-billion stake in cloud computing software maker VMware Inc, the Wall Street Journal reported. Dell is also exploring taking other steps that could include buying the rest of VMWare, the Journal reported citing people familiar with the matter.
Aurora Cannabis Inc. is laying off about 700 employees, almost one-third of its staff, and closing five cultivation facilities in the company’s second major attempt in recent months to rein in costs after years of unsustainable expansion. As part of the restructuring, the Edmonton-based marijuana grower said it expects to take about $200-million in impairment charges after writing down assets and inventory. The announcement comes less than five months after the company laid off 500 staff and took more than $1-billion in write-downs and impairment charges. At the peak in 2019, Aurora had about 3,000 employees.
Lufthansa has drawn up a plan to prevent an insolvency should a virtual extraordinary shareholders’ meeting on Thursday fail to approve a US$10-billion government bailout, a company source told Reuters on Wednesday. The German government could still get a 20% stake, as originally planned, in two steps without the approval of a shareholders’ meeting or billionaire investor Heinz Hermann Thiele, the source said.
Web hosting company GoDaddy Inc announced a restructuring plan that will affect about 12% of its total workforce, or about 814 employees, due to the fallout from the coronavirus crisis. The world’s largest domain registrar said the employees will either be let go or be moved to other roles and locations and will add about $15 million in pre-tax charges.
Economic news
(9 a.m. ET) U.S. FHFA House Price Index for April.
With Reuters and The Canadian Press
Terry Weber