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Wall Street futures turned positive Wednesday with investors bracing for what could be another volatile session as oil struggled to recoup some of the previous session’s sharp losses and world stocks slid on growth concerns and Brexit worries. A reading on October U.S. inflation that matched economists' forecasts helped bolster sentiment heading toward the open. TSX futures also shrugged off early losses to shift into the black helped by stabilizing crude prices.

World stocks measured by MSCI’s all-stock index slid 0.3 per cent following a weak open in Europe with Brexit remaining at the forefront as British Prime Minister Theresa May now faces the task of selling her deal.

“It promises to be another interesting and potentially volatile day on Wednesday, with Brexit, the Italian budget, Sino-US trade and oil markets all battling for the spotlight,” OANDA analyst Craig Erlam said.

On Wednesday, Ms. May looks to persuade senior ministers to accept a draft Brexit agreement. The deal has already faced sharp attacks from hard-Brexit proponents within Ms. May’s own Conservative Party caucus. Also weighing on global sentiment heading into the North American start were disappointing German GDP figures, which showed that the economy contracted for the first time since 2015 in the third quarter.

Oil prices, meanwhile, were struggling to find a floor after Tuesday’s selloff. Both Brent crude and West Texas Intermediate were initially higher in early going, helped by reports that OPEC and its partners are considering a proposal to cut output at a meeting next month, but struggled to hold the gains as the morning wore on.

In corporate news, Canadian earnings will be at the forefront.

Cinema operator Cineplex Inc. reported revenue of $386.7-million in the latest quarter, up 4.4 per cent from the previous year’s $370.4-million. Quarterly profit, however, fell 40.7 per cent to $10.2-million from $17.2-million last year. Diluted earnings per share in the quarter totalled 16 cents, down from 27 cents a year earlier.

Loblaw, meanwhile, topped analysts forecasts, reporting earnings excluding one-time items of $1.49 a share in the latest quarter. By that measure, analysts had been expecting earnings of $1.44. Net profit, however, fell to $106-million or 28 cents a share, from $88.3-million or $2.24. The most recent quarter includes a charge related to a tax court ruling connected to the company’s former Barbadian banking subsidiary Glenhuron Bank Ltd. Loblaw has said it will appeal that ruling.

Aimia Inc. and Canopy Growth also reported ahead of the start of trading.

On Wall Street, results are due from Macy’s before the bell. Cisco posts its latest earnings after the close of trading.

Investors also got U.S. inflation numbers for October ahead of the start of trading. The U.S. Commerce Department said the consumer price index rose 0.3 per cent in October from the previous month. The 12-month reading came in at 2.5 per cent. Both figures were in line with economists' expectations.

“Overall, this report suggests that the Fed’s preferred core inflation measure, core PCE, could dip below 2 per cent but not by enough to prevent them from hiking at their December meeting,” CIBC economist Katherine Judge said.

Overseas, European markets were mixed after a soft start. On Wednesday, Italy stuck to its earlier plan to raise its structural deficit by 0.8 per cent of GDP next year, rather that cut it as required by European Union rules. The move pushed Italian bond yields to their highest in three weeks.

The pan-European STOXX 600 was down 0.6 per cent with most major indexes in the red in early going. Britain’s FTSE was down 0.02 per cent and Germany’s DAX fell 0.56 per cent. France’s CAC 40 slid 0.56 per cent.

Asian markets, meanwhile, were mostly lower as crude price volatility weighed. Japan’s Nikkei managed to finish up 0.16 per cent while the Shanghai Composite Index fell 0.85 per cent and Hong Kong’s Hang Seng slid 0.54 per cent.

Commodities

Crude prices are struggling to find a floor heading into the North American open after Tuesday’s sharp losses amid rising hopes that OPEC and its partners will cut output at a meeting next month. Brent crude pushed higher overnight but gave back some of the gains predawn. Brent is down more than 17 per cent since the middle of last month. The day range on Brent so far is US$65.02 to US$66.81. West Texas Intermediate also saw overnight gains but was trading little changed as the opening bell approached. The range on WTI is US$55.13 to US$56.49.

Sentiment was bolstered somewhat by a Reuters report that OPEC and other countries are looking at a proposal to cut output by 1.4 million barrels a day, a bigger reduction that previously discussed. The cuts are expected to be on the agenda at a meeting next month.

“Oil has stabilized a little today, even paring some of its losses at the moment, although today’s gains pale into insignificance compared to the losses incurred on Tuesday,” Mr. Erlam said in an early note. “It seems we’re seeing one negative headline after another for oil at the moment, whether it’s Iranian sanctions waivers, inventory builds, record US output or lower demand growth forecasts.”

He noted that an OPEC report on Tuesday forecast lower demand growth for the fourth straight month. As well, he said, the International Energy Agency revised up non-OPEC output for 2019, leaving demand unchanged “for now.”

“Even reports that OPEC+ are discussing a 1.4 million barrel per day cut is doing little to support prices which could remain under heavy pressure ahead of next month’s meeting in Vienna," Mr. he said. “We may see some near-term support around US$55 in WTI and US$65 in Brent, with US$50 and US$60, respectively, being the next key levels below if the sell-off continues.”

In other commodities, gold prices were lower at the U.S. dollar held near recent highs. Spot gold fell 0.2 per cent to US$1,200.18 an ounce. Spot gold prices touched their lowest since Oct. 11 during Tuesday’s session. U.S. gold futures were also weaker.

“The continuing dollar strength is weighing on gold. What people are doing is selling everything to buy the dollar and that includes gold,” Alasdair Macleod, head of research at GoldMoney.com, told Reuters.

Currencies and bonds

The Canadian dollar was little changed against its U.S. counterpart as oil prices remained under pressure and the greenback backed off a 16-month high against a basket of world currencies as investors took profits. The range on the loonie so far is 75.48 US cents to 75.65 US cents.

RBC chief currency strategist noted that currency markets traded in extremely tight ranges overnight with Britain’s pound pushing back above US$1.30 in early trading in Asia before drifting lower again “as it is clear the technical agreement on Brexit detail still has many hurdles to cross, starting with today’s Cabinet meeting.”

For the day ahead, aside from Britain’s cabinet meeting, the markets will get comments from Federal Reserve chair Jerome Powell, although the remarks aren’t due until after the European and North American close, Mr. Cole noted.

The U.S. dollar index, which weighs the greenback against a basket of world currencies, was trading at 97.201 early Wednesday, down about 0.1 per cent. On Monday, the index touched a 16-month high of 97.69.

In bonds, U.S. yields were little changed ahead of Mr. Powell’s remarks and the release of October inflation figures. The yield on the U.S. 10-year note was mostly unchanged at 3.138 per cent at last check.

Stocks set to see action

Canopy Growth on posted a bigger quarterly net loss as the Canadian marijuana producer spent more in the weeks before full legalization of recreational use in mid-October. In the reported quarter, the company’s operating expenses rose to $180.6-million from $27.7-million a year earlier. However, the company said it expected to spend less on marketing after the formal legalization in Canada took effect on Oct. 17. Revenue jumped 33 per cent to $23.3-million, missing analysts’ estimate of $61.7-million, according to Reuters. Canopy’s U.S.-listed shares were down 9 per cent in premarket trading.

Aimia Inc. says it has launched a review of its future strategic direction as it works to complete the sale of its Aeroplan program. The loyalty rewards company says the board of directors has asked management to present it with alternative visions and plans regarding the company’s future after the sale of Aeroplan. The review came as Aimia reported it earned $21.7-million or 11 cents per share in its third quarter, compared with a loss of $40.3-million or 29 cents per share in the same period last year Revenue totaled $372.7-million for the quarter ended Sept. 30, up from $350.5-million in the third quarter of 2017.

Canada Goose Holdings Inc’s quarterly profit jumped 34.5 per cent, led by stronger demand for its fashionable parkas. The Toronto-based coat-maker said on Wednesday net income rose to $49.9-million or 45 cents per share in the second quarter ended Sept. 30, from $37.1-million or 33 cents per share a year earlier. Revenue climbed to $230.3-million from $172.3-million. The company’s U.S.-listed shares were up 10 per cent in premarket trading on the results.

Macy’s Inc raised its annual earnings forecast ahead of the crucial holiday shopping season, as the department store chain benefits from a revamped loyalty program and a growing online business. Macy’s now expects adjusted earnings of between US$4.10 and US$4.30 per share in fiscal year 2018, compared with an earlier forecast of US$3.95 to US$4.15 per share, the company said on Wednesday. Sales from Macy’s stores and third-party licensees open for more than 12 months rose 3.3 per cent in the third quarter ended Nov. 3, Macy’s said. The figure topped analysts’ average estimate of a 2.82 per cent increase, according to IBES data from Refinitiv.

More reading:

Wednesday’s small-cap stocks to watch

Wednesday’s analyst upgrades and downgrades

Economic news

The U.S. consumer price index rose 0.3 per cent month-over-month in October. The annual rate of inflation came in at 2.5 per cent.

(6 p.m. ET) U.S. Fed chair Jerome Powell discusses national and global economic issues at the Dallas Fed.

With Reuters and The Canadian Press

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 3:59pm EDT.

SymbolName% changeLast
GOOS-T
Canada Goose Holdings Inc
-2.17%16.69
GOOS-N
Canada Goose Holdings Inc
-0.72%12.33
CGX-T
Cineplex Inc
-1.18%7.55
AIM-T
Aimia Inc
-1.09%2.71
WEED-T
Canopy Growth Corp
+20.33%5.03

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