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Equities
Canada’s main stock index edged higher at the start of trading Wednesday in the wake of strong results from a pair of Canadian banks. On Wall Street, the tech-heavy Nasdaq gained at the open helped by gains by Salesforce.com Inc. on the back of positive results in the latest quarter and an upbeat forecast.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 9.24 points, or 0.06 per cent, at 16,626.72.
In the U.S., the Nasdaq Composite gained 50.15 points, or 0.44 per cent, to 11,516.62 at the opening bell.
The Dow Jones Industrial Average rose 9.44 points, or 0.03 per cent, at the open to 28,257.88, while the S&P 500 opened higher by 6.35 points, or 0.18 per cent, at 3,449.97.
“Whether its optimism over the fact that the U.S. and China are talking trade again, or that new cases of coronavirus in the U.S. now seem to be in decline, the resilience of U.S. markets is all the more surprising in that it appears to be happening on its own, though there is some evidence of a ripple out effect in markets like the Nikkei 225, which does appear to be holding up fairly well, trading up at six month highs,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
He said U.S. markets were also likely being helped by optimism ahead of Federal Reserve chair Jerome Powell’s speech on Thursday at the Fed’s symposium at Jackson Hole, Wyoming. Mr. Hewson said Mr. Powell is likely to use the speech to reinforce the Fed’s commitment to do whatever is necessary to support the U.S. economy as it recovers from the pandemic.
In this country, investors get results from Royal Bank of Canada and National Bank. A day earlier, Scotiabank and Bank of Montreal offered a mixed picture of the Canadian banking sector in the latest quarter, with BMO beating analysts’ forecasts while Scotiabank fell short. Bank of Nova Scotia and Bank of Montreal added a combined $3.2-billion more to reserves against future losses in the third quarter.
RBC reported net income of $3.2-billion, or $2.20 per share, for the three months that ended July 31. In the same fiscal quarter a year earlier, RBC earned $3.26-billion, or $2.22 per share. Adjusted for certain items, RBC said it earned $2.23 per share, above analysts’ consensus estimate of $1.81, according to Refinitiv.
National Bank, meanwhile, reported profit of $602-million, or $1.66 per share, for the fiscal quarter that ended July 31, compared with $608-million, or $1.66 a share, a year earlier. On average, analysts expected the bank to post earnings per share of $1.30, according to Refinitiv.
Royal Bank shares were up about 2 per cent in early trading in Toronto. National Bank stock was also up about 2 per cent shortly after the start of trading.
South of the border, shares of Salesforce.com Inc. spiked 20 per cent in premarket trading after the company raised its annual revenue forecast and beat estimates for quarterly results on coronavirus-related demand for its online business software that supports remote work and commerce. Salesforce will soon join the Dow as part of a shakeup that sees Exxon Mobil and Pfizer drop out of the index.
Overseas, major European markets were mixed in afternoon trading with the pan-European STOXX 600 up 0.35 per cent. Britain’s FTSE 100 slid 0.22 per cent. Germany’s DAX and France’s CAC 40 rose 0.31 per cent and 0.18 per cent, respectively.
In Asia, Japan’s Nikkei finished down 0.03 per cent. The Shanghai Composite Index lost 1.3 per cent and Hong Kong’s Hang Seng edged up 0.02 per cent.
Commodities
Crude prices were largely steady in early going, drawing support from a decline in U.S. inventories and production shutdowns in the Gulf of Mexico ahead of hurricane Laura.
The day range on Brent is US$45.81 to US$46.10. The range on West Texas Intermediate US$43.20 to US$43.47. Both benchmarks managed their best levels in five months on Tuesday.
“Given the short-term nature of Gulf Coast storm disruptions, the oil patch will soon turn to the broader markets for support where the reflationary theme is taking hold, supported by progress on trade negotiations between the U.S. and China,” AxiCorp chief global market strategist Stephen Innes said.
Ahead of the storm, producers shut 1.56 million barrels per day (bpd) of crude output, representing 84 per cent of the Gulf of Mexico’s offshore production and close to the 90 per cent outage that hurricane Katrina brought 15 years ago, according to Reuters.
Prices were also supported by figures released late Tuesday by the American Petroleum Institute showing that U.S. crude inventories fell more than expected. More official figures are due later Wednesday from the U.S. Energy Information Administration.
In other commodities, gold prices were lower as the U.S. dollar firmed ahead of Thursday’s address by Fed chair Jerome Powell.
Spot gold was down 0.5 per cent at US$1,918.77 per ounce. U.S. gold futures edged 0.1 per cent higher to US$1,925.30.
Currencies
The Canadian dollar was down modestly as crude prices steadied and its U.S. counterpart firmed on world markets.
The day range on the loonie was 75.79 US cents to 75.99 US cents.
“USD is slightly up against most of G10 and mixed versus EM [emerging markets],” Daria Parkhomenko, RBC FX strategy associate, said in an early note.
On Wednesday, Bank of Canada senior deputy governor Carolyn Wilkins is scheduled to deliver opening remarks at a workshop on the 2021 renewal of the BoC’s monetary policy framework.
A day earlier, BoC deputy governor Lawrence Schembri said Canadians routinely overestimate inflation, a “perception gap” that has been exacerbated by the COVID-19 crisis – posing a communications challenge for the Bank of Canada as an inflation-targeting central bank.
On global markets, the U.S. dollar index, which weighs the greenback against a basket of currencies was up 0.16 per cent at 93.11 after weakening on Tuesday following figures showing U.S. consumer confidence slid to the lowest in more than six years.
Against the euro, the U.S. dollar stood at US$1.1818 following a 0.4-per-cent decline in the previous session.
The British pound bought US$1.3141 having risen 0.7 per cent against the dollar on Tuesday.
More company news
Nordstrom Inc reported a bigger-than-expected loss and a 53% fall in sales, as its stores were shut for about half of the reported quarter due to the COVID-19 pandemic. The Seattle-based company posted net sales of US$1.78-billion for the second quarter ended Aug. 1, compared with US$3.78-billion, a year earlier. Nordstrom reported a net loss of US$255-million, or US$1.62 per share, compared to a profit of US$141-million, or 90 US cents per share, a year earlier. Analysts were expecting a loss of US$1.48 per share, according to IBES data from Refinitiv.
The Globe’s Andrew Willis reports that former central banker Mark Carney is taking his crusade for sustainable investing to one of the world’s largest money managers, joining Brookfield Asset Management Inc. with a mandate to create funds focused on both generating profit and saving the planet. Brookfield appointed the high-profile former Bank of England and Bank of Canada governor as its vice chair and head of ESG (environmental, social and governance) and impact fund investing. The Toronto-based company oversees more than US$500-billion of assets, including a global collection of renewable power plants.
Economic news
(8:30 a.m. ET) U.S. durable goods orders for July. The Street expects a rise of 4.0 per cent from June and an increase of 1.7 per cent year-over-year.
With Reuters and The Canadian Press
Terry Weber