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Equities

Canada’s main stock index traded higher at Wednesday’s open, continuing a string of gains, with pot stocks helping drive the advance. On Wall Street, key indexes hit record levels buoyed by solid earnings as investors await fresh comments from Federal Reserve chair later in the day.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 86.18 points, or 0.47 per cent, at 18,494.8.

In the U.S., the Dow Jones Industrial Average rose 52.2 points, or 0.17%, at the open to 31428.02. The S&P 500 rose 9.6 points, or 0.24%, at the open to 3920.78, while the Nasdaq Composite rose 85.6 points, or 0.61%, to 14093.347 at the opening bell.

“In all likelihood, after a few firm sessions, equities just ran out of short-term momentum, with a lack of new drivers from the Biden-stimulus progression prompting a wait-and-see-for-a day approach,” OANDA senior analyst Jeffrey Halley said.

“The buy everything trade still has the upper hand and FOMO [fear of missing out] hasn’t gone, it’s just taken a little rest.”

On Wednesday, earnings continue to roll in with U.S. investors getting results from General Motors and Coca-Cola ahead of the start of trading. Uber Technologies reports after the close.

GM posted a higher-than-expected fourth-quarter profit on strong demand for trucks and SUVs during the COVID-19 pandemic. GM said it earned $2.8-billion compared with a loss of $194-million in the prior year. On an adjusted basis, it earned $1.93 a share, above the $1.64 analysts polled by Refinitiv had expected. However, the automaker also forecast weaker-than-expected 2012 results citing a shortage of chips used in car production. GM shares were down about 4 per cent in early trading.

Shares of Twitter Inc. were up nearly 11 per cent in morning trading after the company topped analysts’ sales and profit forecasts in the latest quarter and forecast a strong start to 2012 as ad spending recovers. Total revenue in the latest quarter was US$1.29-billion, an increase of 28 per cent from a year earlier. Twitter shares are up more than 10 per cent for the year so far.

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Markets will also be waiting for Mr. Powell’s latest comments on the state of the U.S. economy as it rebounds from the latest wave of COVID-19 infections. He is scheduled to speak at 2 p.m. ET at the Economic Club of New York.

“Mr. Powell recently expressed concern there were some pockets of weakness in the U.S.’s economic rebound and that was before the last week’s not-so-hot U.S. non-farm payrolls report was posted,” CMC markets analyst David Madden said. “The chatter about higher inflation being in the pipeline helped nudge up government bond yields so the central banker might have to manage expectations in that regard.”

In this country, Canada’s biggest insurers are scheduled to deliver their latest quarter results. Manulife Financial, Sun Life and Great-West Life all report earnings after the close of trading.

Overseas, major European markets were mixed in morning trading with the pan-European STOXX 600 edging up 0.21 per cent. Germany’s DAX slid 0.08 per cent while France’s CAC 40 was flat. Britain’s FTSE 100 edged up 0.19 per cent.

In Asia, Japan’s Nikkei gained 0.19 per cent. Hong Kong’s Hang Seng rose 1.91 per cent.

Commodities

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Crude prices continued an extended rally, gaining after new figures showed a decline in weekly U.S. crude inventories.

The day range on Brent is US$60.87 to US$61.49. The range on West Texas Intermediate is US$58.10 to US$58.69. Brent has now gained for nine consecutive sessions.

The American Petroleum Institute said late Tuesday that crude inventories fell by 3.5 million barrels last week. Analysts had been expecting to see an increase of more than 900,000 barrels. More official figures are due later Wednesday morning from the U.S. Energy Information Administration.

Crude’s advance has been supported, in part, by supply cuts from major producers, including Saudi Arabia, which has reduced supply in February and March in addition to current OPEC+ supply curbs.

“At current price levels, the big risk event that could limit top side oil market ambitions over the short term could be that traders start to price in Saudi Arabia’s unilateral February/March cut to be rolled back,” Axi chief market strategist Stephen Innes said.

“But the big fear is that Russia may then drive OPEC+ discussions towards broaching the possibility of an early unwind,” he said in an early note.

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In other commodities, gold prices gained for a fourth straight session on Wednesday, helped by a softer U.S. dollar.

Spot gold was up 0.2 per cent to US$1,840.96 per ounce, U.S. gold futures gained 0.3 per cent to US$1,843.40.

Currencies

The Canadian dollar was relatively steady in early going, trading above the mid 78-US-cent mark, as the U.S. dollar slid to near its weakest level in two weeks against a group of world currencies.

The day range on the loonie is 78.68 US cents to 78.90 US cents.

There were no major economic releases on the Canadian calendar. Later in the morning, Bank of Canada deputy governor Timothy Lane speaks on digital currencies and payment modernization.

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“Gains in crude are perhaps starting to look a little stretched but the Canadian dollar looks due some short term — at least — catch-up to rising energy prices,” Shaun Osborne, chief FX strategist with Scotiabank, said.

On world markets, the U.S. dollar index slid to a two-week low of 90.299 on Wednesday for the first time this month, according to figures from Reuters.

The U.S. dollar lost 0.1 per cent to 104.42 yen, with the Japanese currency hitting its highest against the greenback since Jan. 29.

The euro edged up to US$1.2142, adding to a three-day gain and hitting its highest since the start of February. The British pound set fresh three-year highs of US$1.3853.

More company news

Oracle Corp and Walmart’s plan to buy TikTok’s U.S. operations has been pushed back indefinitely, as President Joe Biden reviews the previous administration’s efforts to address potential security risks posed by Chinese tech companies, the Wall Street Journal reported on Wednesday. The administration of former President Donald Trump had cited national security concerns in its targeting of TikTok, arguing that the personal data of U.S. users could be obtained by China’s government, while TikTok denies the allegation.

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Coca-Cola Co reported a 5-per-cent fall in quarterly revenue on Wednesday, as fresh pandemic curbs slammed the brakes on the soda maker’s biggest sales drivers, such as restaurants, cinemas and sporting events, in many parts of the world. Net revenue fell to $8.61-billion in the fourth quarter ended Dec. 31, from $9.07-billion a year earlier.

The Globe’s Eric Atkins reports Air Canada will lay off more than 1,500 people and suspend service on several U.S. and international routes amid a lack of demand for air travel in the COVID-19 pandemic. The 17 temporary route suspensions, including Toronto to Fort Myers, Fla., Boston and Dublin will be phased in beginning on Feb. 12 and last until at least April 30, a spokesman for Montreal-based Air Canada said in an e-mail. The cuts will temporarily eliminate 1,500 unionized jobs and an unspecified number of management positions, Peter Fitzpatrick said.

Cisco Systems Inc reported a decline in revenue for a fifth straight quarter, as enterprise clients spent less on its network infrastructure products for offices due to the rise of remote working. The weaker performance overshadowed a better-than-expected forecast for current-quarter revenue and sent the company’s shares lower in premarket trading. The company’s total revenue fell slightly to $11.96-billion in the second quarter ended Jan. 23, from $12.01-billion a year earlier. Analysts were expecting a figure of $11.92-billion, according to IBES data from Refinitiv.

Economic news

(8:30 a.m. ET) U.S. CPI for January.

(8:30 a.m. ET) U.S. wholesale inventories for December.

(11:30 a.m.) Timothy Lane, deputy governor of the Bank of Canada, will speak by videoconference to the Institute for Data Valorisation.

(2 p.m. ET) U.S. Fed Chair Jerome Powell speaks to the Economic Club of New York.

With Reuters and The Canadian Press

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