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Canada’s main stock index opened up Wednesday with crude prices nearing their best level in a year. On Wall Street, the S&P 500 and Nasdaq both started higher, buoyed by strong earnings from Alphabet and Amazon.
At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 3.89 points, or 0.02 per cent, at 17,878.38.
In the U.S., the Dow Jones Industrial Average rose 2.2 points, or 0.01 per cent, at the open to 30689.65. The S&P 500 rose 14.0 points, or 0.36 per cent, at the open to 3840.27, while the Nasdaq Composite rose 105.5 points, or 0.78 per cent, to 13718.314 at the opening bell.
On Tuesday, the Dow added more than 400 points to mark its best session since November. The index is up more than 2 per cent for the week. The S&P 500 and Nasdaq added more than 1 per cent during the previous session while the S&P/TSX Composite Index ended up 1.03 per cent.
“The major stock indices rallied on the back of strong earnings results, on hope that a process would pass Joe Biden’s $1.9-trillion fiscal aid package without Republican vote, and as investors breathed a sigh of relief “ with the recent short-squeeze frenzy appearing to be unravelling, Ipek Ozkardeskaya, senior analyst with Swissquote, said in an early note.
Amazon and Alphabet both posted better-than-expected earnings after Tuesday’s close. Alphabet shares were up nearly 8 per cent in morning trading after the company topped quarterly sales expectations for its advertising and Cloud businesses, helped in part by the pandemic, and said it will resume spending on hiring and facility construction.
Amazon shares, meanwhile, were down slightly despite reporting a third consecutive record profit and quarterly sales above US$100-billion. The results were overshadowed by the surprise announcement that CEO Jeff Bezos will step down and become executive chair.
Meanwhile, the dust also continued to settle around the retail rush that saw heavily shorted stocks like GameStop spike last week. U.S. Treasury Secretary Janet Yellen has called a meeting of top financial regulators this week to discuss market volatility. Gamestop’s U.S.-listed shares were up about 1 per cent in early trading after sharp declines in the two previous sessions.
In this country, The Globe and Mail reports this morning that Telus International, a subsidiary of Telus Corp., is expecting to price at the top of its planned IPO range, at US$25 a share, when it begins trading on the Toronto Stock Exchange and the New York Stock Exchange on Wednesday. Telus International, which provides outsourced customer service for brands such as Fitbit, Uber and online gamer Zynga, kicked off a roadshow last week to market its initial public offering. The company said at the time that it was expecting to price its IPO at between US$23 and US$25 a share.
Canadian investors will also get more results from the energy sector, with earnings due from Suncor after the markets close.
Overseas, the pan-European STOXX 600 was up 0.57 per cent by afternoon. Britain’s FTSE 100 was flat. Germany’s DAX and France’s CAC 40 rose 0.53 per cent and 0.22 per cent, respectively.
In Asia, Japan’s Nikkei finished up 1 per cent. Hong Kong’s Hang Seng gained 0.20 per cent.
Crude prices continued their recent gains, helped by new figures showing a drop in U.S. oil and gasoline inventories.
The day range on Brent is US$57.50 to US$58.10. The range on West Texas Intermediate is US$54.81 to US$55.85. Both benchmarks were trading around their best levels in a year early Wednesday.
Late Tuesday, the American Petroleum Institute said weekly U.S. crude oil stocks fell by 4.3 million barrels.
Gasoline stocks fell by 240,000 barrels. Analysts had been expecting to see an increase.
More official government figures for the week are due later Wednesday morning.
“Besides stimulus progress and OPEC compliance, there is strong physical demand in the North Sea, compounded by snowstorms in the east coast of the U.S. supporting the rally in crude oil, gasoline and heating oil, and oil currencies like Canadian dollar,” Axi chief market strategist Stephen Innes said.
“But, the closer we shift towards Brent US$60 a barrel, one would have to assume it could be a potential game-changer as far as OPEC+ production cut mandate is concerned with more producers pressuring to pump more barrels,” he noted.
Markets also drew some support from reports that the latest assessment by the Organization of the Petroleum Exporting Countries and allies that the oil market could be in deficit throughout this year.
In other commodities, spot gold fell 0.1 per cent to US$1,836.36 per ounce. U.S. gold futures added 0.2 pe cent to US$1,836.50.
“Gold got hit with a trifecta of bad news: U.S. stocks are surging again, gold ETF holdings have dropped for a fifth straight day as the scramble towards silver continues, and as the U.S. dollar rally accelerates against the euro,” OANDA senior analyst Edward Moya said.
Spot silver rose 0.6 per cent to US$26.76 an ounce, having earlier risen as much as 2.1 per cent, according to figures from Reuters. On Tuesday, prices fell as much as 8 per cent. Prices jumped to US$30.03 on Monday, their highest since February 2013.
“The silver retail streak appears to be unraveling and despite all the strong fundamental reasons to hold it, momentum selling is winning out,” Mr. Moya said.
The Canadian dollar was off slightly but trading above 78 US cents as the U.S. dollar held steady against a basket of world currencies after hitting a two-month high during the previous session.
The day range on the loonie is 78.14 US cents to 78.35 US cents.
With no major Canadian releases due Wednesday or Thursday, markets are now awaiting Friday’s January jobs report, which is expected to show a slowing pace of job losses compared with December.
Elsa Lignos, RBC’s global head of FX strategy, said markets saw a “quietly risk positive night” with the New Zealand dollar topping the G10 charts on better-than-expected fourth-quarter employment figures.
On world markets, the U.S. dollar index was mostly flat at 91.078 after rising to a two-month high of 91.283 in the previous session.
The New Zealand dollar advanced 0.4 per cent to 72.21 U.S. cents before backing away from those levels in London trading. The Australian dollar added 0.1 per cent to 76.14 U.S. cents after three days of declines.
More company news
CIBC said its planned sale of its majority stake in FirstCaribbean International Bank to GNB Financial Group has not received approval from FirstCaribbean’s regulators and won’t proceed. “While this transaction would have supported FirstCaribbean’s long-term growth prospects, it is only one way of creating value for stakeholders,” said Harry Culham, Group Head, Capital Markets, who also oversees FirstCaribbean. “FirstCaribbean is focused on building deep, long-lasting client relationships in the Caribbean, optimizing our business, and enhancing efficiency over time. We remain committed to executing on our long-term strategy and delivering the best outcome for clients, shareholders, team members and communities.”
Sony Corp raised its full-year profit outlook by one-third and said it was struggling to keep up with pandemic-fuelled demand for the new PlayStation 5 amid a global shortage of semiconductors. Sony, which launched the PS5 in core markets in November, said on Wednesday it expected to sell more than 7.6 million consoles by end-March.
Britain’s GSK said on Wednesday its plan to split into two businesses was on track, as the drugmaker aiding in COVID-19 vaccine developments forecast 2021 profit to fall by a mid- to high-single digit percentage. The company, which earlier in the day announced a tie-up with CureVac to develop a COVID-19 vaccine, reported a 2% fall in turnover in the three months ended Dec. 31. Adjusted earnings came in at 23.3 pence per share.
(8:15 a.m. ET) U.S. ADP National Employment Report for January.
(9:45 a.m. ET) U.S. Markit Services PMI data for January.
With Reuters and The Canadian Press