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Equities

Canada’s main stock index jumped at the open Wednesday with higher crude prices bolstering energy shares. On Wall Street, indexes were also higher with a rally in Walt Disney Co. shares helping buoy sentiment.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 91.9 points, or 0.56 per cent, at 16,459.93.

The Dow Jones Industrial Average rose 96.31 points, or 0.36 per cent, at the open to 26,924.78.

The S&P 500 opened higher by 13.75 points, or 0.42 per cent, at 3,320.26. The Nasdaq Composite gained 26.71 points, or 0.24 per cent, to 10,967.87 at the opening bell.

After topping US$2,000 an ounce on Tuesday, gold continued to gain early Wednesday, with spot gold hitting a record of US$2,036.49.

“So far, we haven’t seen much profit-taking on the recent push, it will be interesting to watch how investors behave above the $2,000 mark,” Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, said.

“Either we will see a solid support building at this level, offering a new basis for a further advance as investors increase hedges against the mounting global inflation risks amid massive monetary and fiscal stimuli, or a sharp downside correction if speculative traders judge there is little potential left for more gains.”

Talks for a new U.S. coronavirus aid package appeared to be nearing a break through with Treasury Secretary Steven Mnuchin saying White House and Democratic leaders in U.S. Congress expect to reach a deal by the end of this week.

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Speaking to reporters following a negotiating session with House of Representatives Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer, Mr. Mnuchin said headway was made on extending unemployment benefits and preventing housing evictions during the pandemic, according to a Reuters report.

On the corporate side, shares of Walt Disney Co. were up more than 9 per cent in early trading after the company managed to post an adjusted profit despite a big hit related to the COVID-19 pandemic. Investors drew some solace from the Disney+ streaming service, which had 60.5 million paying customers as of Monday. Disney also surprised markets with news that it will release Mulan on the streaming platform next month for people to watch at home for US$30. The movie will be released in theatres in markets were Disney+ is not available.

In this country, Great-West Lifeco Inc said it will sell its Canadian subsidiary GLC Asset Management Group Ltd. to Mackenzie Financial Corp. for $175-million.

In earnings, insurer Manulife Financial reports after the close of trading.

Overseas, major European markets were higher by afternoon. The pan-European STOXX 600 up 0.65 per cent. Germany’s DAX and France’s CAC 40 rose 0.59 per cent and 0.79 per cent, respectively. Britain’s FTSE 100 rose 1.06 per cent.

A new report showed that euro zone business activity returned to modest growth last month as some regions eased curbs put in place to stem the spread of the novel coronavirus. Wednesday’s final Composite Purchasing Managers’ Index (PMI) from IHS Markit rose to 54.9 in July from June’s 48.5, exceeding the 54.8 flash estimate. It had been below the 50 level separating growth from contraction for four months.

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In Asia, Japan’s Nikkei ended down 0.26 per cent. Hong Kong’s Hang Seng gained 0.62 per cent. The Shanghai Composite Index rose 0.17 per cent.

Commodities

Crude prices gained in early going, helped by a bigger-than-expected drop in U.S. inventories.

The day range on Brent so far is US$44.24 to US$45.18. The range on West Texas Intermediate is US$41.47 to US$42.41.

Late Tuesday, the American Petroleum Institute said weekly crude stocks fell by 8.6 million barrels. Analysts had been looking for a decline of about 3 million barrels.

Official figures from the U.S. Energy Information Administration are due later on Wednesday.

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“The theme remains the same with prices stabilizing as demand recovers from 2Q lows but stutters to fully recovering because of the continued negative economic impact of COVID-19 lockdowns and the fear of the virus hampering what should be a consumer-led recovery,” AxiCorp chief market strategist Stephen Innes said.

“The rebound in May-June likely surprised most market participants, but the flat-lining through July raises some downside price risk if positive momentum is exhausted.”

In other commodities, spot gold was up 0.8 per cent at US$2,033.86 per ounce, after hitting a record high of US$2,036.49. U.S. gold futures rose 1.4% to $2,049.30.

“The latest rise in U.S.-China tensions that brings the [phase one of the U.S.-China] trade deal into question adds to an extensive laundry list of concerns that are sending investors toward safe-haven assets, and gold seems to be top of that list,” Mr. Innes said.

Currencies

The Canadian dollar was higher, trading near the mid-75-US-cent mark, as crude prices gained and its U.S. counterpart weakened on global markets.

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The day range on the loonie is 75.01 US cents to 75.44 US cents with the dollar sitting near the higher end of that spread in the predawn period.

“We also think this is some belated ‘reward’ for constructive Canadian economic data that seemed to have little impact on USDCAD late last week,” Shaun Osborne, chief FX strategist with Scotiabank said.

“Firm commodity prices will extend a little more support to the CAD.”

The loonie held most of the early gains after Statistics Canada reported that June’s trade deficit rose to $3.2-billion from $1.3-billion the month before. Both imports and exports rose sharply but remained below levels in the month before the large swaths of the economy went into lockdown.

On global markets, the U.S. dollar slid as investors await an agreement on U.S. pandemic relief package.

The U.S. dollar index, which weighs the greenback against a group of currencies, fell to 93.05, near last week’s two-year low of 92.53, according to Reuters.

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More company news

BMW expects to make an operating profit this year despite losing US$787-million in the second quarter after sales of its luxury cars slumped during coronavirus lockdowns, the company said on Wednesday. The German manufacturer of BMWs, Minis and Rolls-Royces, said deliveries had begun to recover, including in China, but the rebound would not be enough to make up for the shortfall in sales lost to the pandemic.

Moderna Inc said on Wednesday it has started talks with several countries for supply agreements for its experimental coronavirus vaccine and has received about US$400-million in deposits for potential supply. Last week, Moderna announced the start of a late-stage trial on 30,000 people to demonstrate that its vaccine is safe and effective, the final hurdle prior to regulatory approval. It has said the vaccine could be ready for widespread use by the end of this year. “As we pivot to a commercial stage company, we recognize the need for responsible pricing in the face of the pandemic,” Chief Executive Officer Stéphane Bancel said.

Brazil’s Embraer said revenue at its commercial aviation segment, usually its largest and most profitable, had tumbled 82% to US$109-million in the second quarter due to the coronavirus pandemic. Embraer, like its larger planemaker rivals Airbus and Boeing, has seen demand tumble as the pandemic ground air travel to a halt. The company reported a net loss of US$315-million in the quarter.

Wendy’s Co fell short of Wall Street estimates for quarterly revenue, but signaled a recovery in sales in the last two months as lockdown restrictions eased. The burger chain’s revenue fell about 8 per cent to US$402.3-million in the second quarter ended June 28, missing the estimate of US$409.7-million, according to IBES data from Refinitiv.

Economic news

Payroll processor ADP said U.S. private payrolls rose by 167,000 in July. Economists had been forecasting an increase of more than 1 million positions.

Statistics Canada says Canada’s trade deficit rose to $3.2-billion in June from a revised $1.3-billion the month before. The agency said imports and exports were both up sharply but still below levels in February, before the pandemic’s economic impact was felt.

The U.S. trade deficit narrowed in June. The U.S. Commerce Department said the trade deficit fell to US$50.7-billion from US$54.8-billion. Economists polled by Reuters had forecast the trade gap would narrow to US$50.1-billion in June.

(10 a.m. ET) U.S. non-manufacturing ISM for July.

With Reuters and The Canadian Press

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