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Equities

Canada’s main stock index fell at the Wednesday’s opening bell with lower crude prices pulling energy stocks lower. South of the border, indexes saw a muted start as investors await developments in talks aimed at reaching a new coronavirus relief package.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 42.54 points, or 0.26%, at 16,230.72.

On Wall Street, the Dow Jones Industrial Average fell 38.13 points, or 0.13 per cent, at the open to 28,270.66.

The S&P 500 opened lower by 3.21 points, or 0.09 per cent, at 3,439.91, while the Nasdaq Composite gained 13.90 points, or 0.12 per cent, to 11,530.39 at the opening bell.

Broader market attention continues to focus on talks between the White House and Democrats over a potential U.S. stimulus package. Talks between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are expected to continue on Wednesday. On Tuesday, U.S. President Donald Trump said he was willing to accept a large aid bill despite some opposition within the Republican Party.

Speaking with reporters, Ms. Pelosi, when asked about whether an agreement could be reached by the end of the week, said: “I hope so. That’s the plan.”

“There’s been an incredible confidence in these markets that a deal will be reached in both cases and the downside risks just don’t seem to be being factored in,” OANDA senior analyst Craig Erlam said.

“Perhaps Mitch McConnell’s recent warnings to the White House about making a deal before the election are weighing a little today, with the Senate being the main barrier to an agreement.”

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On the corporate side, shares of Netflix Inc. were down more than 5 per cent in early trading after the company fell short of market expectations for paid subscriber growth in the third quarter. The streaming giant said it added 2.2 million subscribers globally during the latest quarter. Analysts had been looking for growth of about 3.4 million. Netflix had cautioned that a surge in new additions during the lockdown early this year would fade as restrictions ease.

Later Wednesday, Tesla Inc. reports its latest results after the closing bell.

In this country, Canadian National Railway Co. could see some selling pressure after reporting that revenue fell by 11 per cent in the latest quarter while profit slid 17 per cent. The results were released after the close of markets and followed earnings from smaller rival Canadian Pacific Railway earlier in the day. Both rail companies missed analysts expectations with their results.

Canadian National Railway shares were down about 3 per cent in early trading in Toronto.

Ahead of the start of trading, Statistics Canada released readings on retail sales in August and September inflation.

The agency said retail sales grew 0.4 per cent in August. That marked the fourth month of gains since April’s record decline. However, it was also below market forecasts, which has been expecting a gain around 1 per cent.

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Statscan also said the consumer price index fell 0.1 per cent in September from August levels. That was in line with forecasts. The annual rate of inflation in September was 0.5 per cent compared with 0.1 per cent in August.

Overseas, major European markets were lower. The pan-European STOXX 600 fell 0.94 per cent in afternoon trading. Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 were all down about 1 per cent.

In Asia, stocks saw a mixed finish. Japan’s Nikkei added 0.31 per cent while Hong Kong’s Hang Seng gained 0.75 per cent. The Shanghai Composite Index closed down 0.09 per cent.

Commodities

Crude prices slid in early going on a surprise rise in U.S. inventories.

The day range on Brent is US$42.31 to US$43.04. The range on West Texas Intermediate is US$40.85 to US$41.59.

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The American Petroleum Institute said U.S. crude stocks rose by 584,000 barrels last week to 490.6 million barrels. Analysts polled by Reuters had been expecting a draw down of about 1 million barrels.

More official government figures are due shortly after the markets open on Wednesday.

The latest figures added to the downward pressure already seen by the markets as COVID-19 infections continue to rise around the world and governments again impose restrictions, raising concerns about the rebound in demand.

OANDA senior analyst Jeffrey Halley said markets drew some early support from recent statements from OPEC+ on maintaining prices and rising expectations that the U.S. will strike a stimulus deal, although risks remain.

“With so much good news being priced into financial markets to the total exclusion of the risks to the process, the potential correction from disappointments could be formidable indeed,” he said. “WTI, with so much good news priced in, is acutely vulnerable to a massive downward correction in that scenario.”

In other commodities, gold rose as the U.S. dollar weakened on broad market optimism over a possible U.S. stimulus deal.

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Spot gold gained 0.6 per cent at US$1,918.56 per ounce, after hitting a one-week high earlier in the session. U.S. gold futures were up 0.4 per cent at US$1,922.10 per ounce.

Currencies

The Canadian dollar rose in early going as its U.S. counterpart touched its lowest level in a month against a group of world currencies as optimism over U.S. stimulus talks opened the door for riskier holdings.

The day range on the loonie is 76.16 US cents to 76.44 US cents.

“The CAD’s underperformance may reflect focus on Ottawa where PM [Justin] Trudeau’s decision to make a Conservative motion today on a COVID-19 spending committee (to look at the misuse of public funds) a confidence matter threatens to trigger a general election,” Shaun Osborne, chief currency strategist with Scotiabank, said.

“We doubt the opposition parties really want to go down this rabbit hole in the midst of the pandemic and with polling suggesting that the minority Liberal government could win a majority if a vote were held now, however.”

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Early Wednesday, the U.S. dollar index, which weighs the greenback against a basket of currencies, was down 0.3 per cent at 92.801.

Riskier currencies like the New Zealand and Australian dollar advanced with the New Zealand currency gaining 0.6 per cent and the Australian dollar added 0.5 per cent, according to figure from Reuters.

The euro rose to a one-month high against the U.S. dollar in early trading and was last up 0.3 per cent at US$1.18555.

China’s yuan surged, in both offshore and onshore trading, led by firmer central bank guidance and recent data suggesting a more sustained recovery in the world’s second-largest economy. The offshore yuan reached its strongest in two years versus the U.S. dollar towards the end of the Asian session at 6.6278 before easing somewhat, Reuters reported.

More company news

RioCan Real Estate Investment Trust says Jonathan Gitlin, currently the trust’s president and chief operating officer, will succeed Edward Sonshine as chief executive next year. Gitlin will become CEO effective April 1, 2021. Mr. Sonshine is set to retire from the top job on March 31, 2021, and will become non-executive chairman of RioCan’s board of trustees.

Hong Kong’s Cathay Pacific Airways Ltd said on Wednesday it would slash 5,900 jobs and end its regional Cathay Dragon brand, joining peers in cutting costs as it grapples with a plunge in demand due to the coronavirus pandemic. The airline would also seek changes in conditions in its contracts with cabin crew and pilots as part of a restructuring that would cost HK$2.2 billion (US$283.9-million).

Gap Inc is considering closing stores in some European countries, as the apparel retailer looks to save cash while dealing with a sales slump brought on by the COVID-19 pandemic and competition from fast-fashion companies. The San Francisco-based company, which had 129 Gap brand stores in Europe at the end of July, said late on Tuesday options being explored include the possible closure of outlets in the United Kingdom, France, Ireland and Italy by mid-2021.

Shares of Snap Inc rallied 25 per cent in premarket trading on Wednesday after the Snapchat messaging app owner beat user growth and revenue forecasts as more people signed up to chat with friends and family during the coronavirus pandemic. Daily active users (DAUs), a widely watched metric by investors and advertisers, rose 18% year-over-year to 249 million in the quarter ended Sept. 30, the company said in a statement. Analysts had expected 244 million, according to IBES data from Refinitiv.

Exchange operator Nasdaq Inc reported a 76% surge in third-quarter profit on Wednesday, boosted by strength in its non-trading businesses and a surge in trading volumes. Net income attributable to the company rose to US$264-million, or US$1.58 per share, for the quarter ended Sept. 30, from US$150-million, or 90 US cents per share, a year earlier.

Economic news

Statistics Canada says the annual rate of inflation was 0.5 per cent in September. On a monthly basis, consumer prices fell 0.1 per cent.

The agency said Canadian retail sales rose 0.4 per cent in August, marking the fourth straight month of gains.

(2 p.m. ET) U.S. Beige Book is released.

With Reuters and The Canadian Press

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