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Equities

Canada’s main stock index was treading water at the open Wednesday with weakness in materials stocks weighing on sentiment. On Wall Street, tech shares continued to struggle on valuation concerns even as Fed chair Jerome Powell’s dovish comments helped soothe inflation worries.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 11.82 points, or 0.06%, at 18,341.91.

South of the border, the Nasdaq Composite dropped 64.9 points, or 0.48 per cent, to 13400.254 at the opening bell, falling for six out of the last seven sessions.

The Dow Jones Industrial Average fell 37.6 points, or 0.12 per cent, at the open to 31499.75, while the S&P 500 fell 7.7 points, or 0.20 per cent, at the open to 3873.71.

“We’re going through a very choppy period in the markets, with investors uncertain how to read the movements we’re seeing in bond markets,” OANDA senior analyst Craig Erlam said. “The curve is steepening and investors are fretting a little about the prospect of higher inflation.

“Policy makers are doing their best to alleviate these fears but there appears to be a growing consensus that we will see more inflation this year as a result of the turbo-charged recovery everyone is anticipating.”

In this country, bank earnings continue with results from Royal Bank and National Bank.

RBC said net income excluding one-off items rose to $2.69 per share in the three months through January, compared with $2.44 per share, a year earlier. Analysts had expected $2.26 a share, according to IBES data from Refinitiv.

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Meanwhile, National Bank said net income excluding one-off items rose to $761-million, or $2.15 a share, in the first quarter, compared with $620-billion, or $1.70 a share, a year earlier. Analysts had expected $1.71 a share, according to IBES data from Refinitiv.

Shares of Royal Bank were down slightly in early trading in Toronto. National Bank shares gained more than 3 per cent.

On Tuesday, Bank of Nova Scotia and Bank of Montreal both saw their shares rise after first-quarter profit topped analysts’ forecasts and moved back above prepandemic levels. Both banks also set aside less money to cover write-offs in their fiscal first quarter, which ended Jan. 31, than in any quarter since the COVID-19 pandemic began.

Overseas, the pan-European STOXX 600 was up 0.49 per cent in early afternoon trading. Britain’s FTSE 100 rose 0.23 per cent while Germany’s DAX and France’s CAC 40 advanced 0.76 per cent and 0.11 per cent, respectively.

In Asia, Japan’s Nikkei ended down 1.61 per cent. Hong Kong’s Hang Seng lost nearly 3 per cent.

Commodities

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Crude prices recouped early losses to turn higher despite a surprise build in U.S. inventories.

The day range on Brent is US$64.80 to US$65.82. The range on West Texas Intermediate is US$60.97 to US$61.95.

Figures released by the American Petroleum Institute showed that crude stockpiles rose by 1 million barrels last week. Analysts had been expecting to see a decline. The increase came as a winter storm in parts of the southern United States curbed demand and some facilities were forced to close.

Traders will now turn their attention to more official weekly inventory numbers due later Wednesday morning from the U.S. Energy Information Administration.

“The API inventory selloff, as expected, remained relatively shallow after several banks have raised their house forecasts in response to the recent oil markets strength,” Axi chief market strategist Stephen Innes said.

“Likewise, traders are balloting up forward projections in reaction to the demand recovery and the anticipated draining of OECD inventories.”

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Earlier this week, Goldman Sachs raised its forecast for crude prices, saying it now sees Brent trading at US$70 a barrel in the next quarter and US$75 a barrel later in the year.

In other commodities, gold prices were holding near a one-week high as the U.S. dollar pulled back in the wake of Mr. Powell’s comments.

Spot gold rose 0.2 per cent to US$1,808.01 per ounce, having hit its highest since Feb. 16 at US$1,815.63 on Tuesday. U.S. gold futures were steady at US$1,806.20.

“Powell was just credible enough on his dovishness... so gold had more room to breathe,” Mr. Innes said in a note.

Currencies

The Canadian dollar edged higher as its U.S. counterpart held near recent lows against a group of world counterparts.

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The day range on the loonie is 79.39 US cents to 79.62 US cents.

“FX markets are listless this morning, without any real steer from asset markets,” RBC chief currency analyst Adam Cole said.

There were no major Canadian economic releases due on Wednesday.

On Tuesday, Bank of Canada Governor Tiff Macklem said during a speech that the Canadian economy faces a long period of recuperation as a result of enduring unemployment and a shift toward more digitalization and automation. The Globe’s Mark Rendell reports that Mr. Macklem also shrugged off concerns that inflation could return to the bank’s 2-per-cent target sooner than expected because of fiscal stimulus and vaccine approvals.

On global markes, the U.S. dollar index, which weighs the greenback against a basket of six major currencies, was at 90.111, near the six-week low of 89.941 it hit overnight, according to figures from Reuters.

The Australian dollar, which tends to benefit from rising metal and energy prices, rose to a three-year high of US$0.7945 before paring gains to trade 0.1 per cent stronger at US$0.7914.

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The euro bought US$1.21495, close to the one-month high of US$1.2180 set overnight. The British pound rose past US$1.42 overnight for the first time since April 2018.

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More company news

The Globe’s Jaren Kerr reports that Toronto-based Score Media and Gaming Inc. has filed preliminary documents for a U.S. initial public offering on the Nasdaq exchange as it prepares to expand its sports betting offerings. The company plans to offer five million shares at a price that has not yet been determined, and trade under the ticker SCR. Based on Monday’s closing price on the Toronto Stock Exchange, the new offering would raise about US$180-million.

Bausch Health Companies Inc said on Wednesday it will add two directors from Icahn Group to its board, including Carl Icahn’s son Brett, weeks after the activist investor disclosed a nearly 8% stake in the Canadian drugmaker. With the latest appointment of Bret Icahn and Steve Miller, both portfolio managers at Icahn Capital LP, the size of Bausch Health’s board will increase to 13 members.

Hydro One Ltd. reported its fourth-quarter profit fell compared with a year earlier as the power utility faced higher costs related to the pandemic. Hydro One says it earned net income attributable to common shareholders of $161-million or 27 cents per diluted share for the quarter ended Dec. 31, compared with a profit of $211-million or 35 cents per diluted share a year earlier.

Lowe’s Cos Inc beat estimates for quarterly same-store sales on Wednesday, benefiting from sustained demand from people sprucing up their homes as the COVID-19 pandemic drags on. Same-store sales rose 28.1% in the fourth quarter ended Jan. 29, beating analysts’ estimates of a 21.2% increase, according to IBES data from Refinitiv.

The Federal Aviation Administration (FAA) said on Tuesday it was ordering immediate inspections of Boeing 777 planes with Pratt & Whitney PW4000 engines before further flights after an engine failed on a United flight on Saturday. The engines are used on 128 older versions of the plane accounting for less than 10% of the more than 1,600 777s delivered and only a handful of airlines in the United States, South Korea and Japan were operating them recently.

Economic news

(10 a.m. ET) U.S. new home sales for January.

(10 a.m. ET) U.S. Fed Chair Jerome Powell testifies to the House Financial Services Committee.

With Reuters and The Canadian Press

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