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Equities

Canada’s main stock index saw early gains evaporate Wednesday as weaker gold prices weighed on materials stocks. South of the border, indexes also struggled in early trading after a weaker-than-expected reading on private hiring offset optimism about the coronavirus vaccine rollout.

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At 9:53 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 79.22 points, or 0.43 per cent, at 18,342.38.

Material stocks were down more than 2 per cent, hit by weaker gold prices.

In the U.S., the Dow Jones Industrial Average fell 38.6 points, or 0.12 per cent, at the open to 31352.96. The S&P 500 fell 6.3 points, or 0.16 per cent, at the open to 3863.99, while the Nasdaq Composite dropped 22.5 points, or 0.17 per cent, to 13336.25 at the opening bell.

“Equity markets are experiencing a wax on, wax off week, tail-chasing short-term momentum of whichever story carries the most weight on the day,” OANDA senior analyst Jeffrey Halley said. “Yesterday it was bubbles, which saw equity markets unwind part of the impressive rallies seen on Monday.”

Sentiment got a lift after U.S. President Joe Biden said the U.S. expects to take delivery of enough coronavirus vaccines to inoculate all adults by the end of May, two months earlier than expected. That news comes as investors look ahead to Friday’s key U.S. jobs report, which is expected to show a gain of about 150,000 new positions in February.

However, before Wednesday’s open, payroll processor ADP said U.S. private employers hired fewer than expected people last month, raising concerns over the strength of the U.S. labour market. Private payrolls increased by 117,000 jobs in February, short of the 177,000 economists had been expecting. However, ADP also revised January’s gain up to 195,000, from the 174,000 initially reported.

In this country, investors got results from the financial services sector with earnings from Laurentian Bank.

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Laurentian reported adjusted earnings per share of $1.03 per diluted share for its most recent quarter, up from an adjusted profit of 79 cents per diluted share a year earlier. Analysts had expected adjusted profit of 74 cents per share, according to financial data firm Refinitiv. Revenue totalled $247.4-million, up from $238.7-million in the year earlier quarter.

Laurentian shares were up 6 per cent in early trading.

Elsewhere, The Globe’s Rachelle Younglai reports that home sales in Toronto and Vancouver soared in February as the condo market rebounded and low interest rates continued to push up prices of detached houses in the suburbs. In the Toronto region, home resales hit a record for February, 52.5 per cent higher year over year, with condos leading the way up, according to the Toronto Regional Real Estate Board. Condo resales in the city were 27 per cent higher than in January.

Overseas, major markets turned mixed by afternoon after a stronger start. Britain’s FTSE 100 rose 0.31 per cent as investors await the latest U.K. budget. Germany’s DAX fell 0.06 per cent. France’s CAC 40 was flat.

In Asia, Japan’s Nikkei ended up 0.51 per cent. Hong Kong’s Hang Seng spiked 2.7 per cent helped by gains in bank stocks.

Commodities

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Crude prices rose ahead of Thursday’s OPEC+ meeting with reports suggesting members and their allies are weighing extending current production curbs into April.

The day range on Brent so far is US$62.38 to US$63.88. The range on West Texas Intermediate is US$59.24 to US$60.82.

Reuters reported early Wednesday that OPEC+ members are considering rolling over current supply caps from March to April instead of raising output because of fragile demand as the COVID-19 pandemic continues. The report cited three OPEC+ sources.

Meanwhile, positive vaccine news also helped sentiment.

“Headlines around reopens and vaccines in the U.S. were all very positive,” Axi chief market strategist Stephen Innes said.

“President Biden said they would be enough vaccine doses for all American adults by the end of May. San Francisco announced it would reopen indoor dining, cinemas, and gyms on a limited basis. Meanwhile, in Texas, Governor Abbot lifted several pandemic restrictions, including the mask mandate.”

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Elsewhere, the American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 7.4 million barrels last week. Analysts had been expecting a decline. However, the increase came while U.S. refining capacity was hit by winter storms in Texas.

In other commodities, gold prices slid.

Spot gold fell 0.8 per cent to US$1,725.00 per ounce, having dropped to its lowest since June 15 at US$1,706.70 on Tuesday. U.S. gold futures were down 0.6 per cent to US$1,724.00.

“As long as fiscal stimulus keeps getting pumped into the U.S. economy and the Federal Reserve remains reticent about doing something to quash yields, gold prices will struggle,” IG Market analyst Kyle Rodda said.

Currencies

The Canadian dollar was higher, helped by a solid reading on economic growth and higher crude prices, while its U.S. counterpart slid against a group of world currencies.

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The day range on the Canadian dollar 79.09 US cents to 79.41 US cents.

“The CAD is marginally firmer against the USD, with the pro-risk market mood and rising crude prices (WTI nearing $61/bbl) helping drive (marginal) gains,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.

“We expect the CAD to remain well-supported in the short-run but Thursday’s OPEC+ meeting is a clear risk for elevated crude prices and therefore the CAD,” he said in an early note.

On Tuesday, Statistics Canada said the Canadian economy grew at an annual rate of 9.6 per cent in the fourth quarter, exceeding market forecasts. The agency also estimated growth of 0.5 per cent in January even as strict COVID-19 restrictions hit some regions of the country.

On global markets, the U.S. dollar index, which weighs the greenback against six major currencies, slid to 90.971 after dropping back from a nearly one-month high overnight.

Other commodity-linked currencies also saw gains. The Australian dollar rose 0.1 per cent to US$0.7828, building on gains of about 0.7 per cent the previous two days, according to figures from Reuters. The Norwegian crown traded mostly higher against the U.S. dollar and the euro after advancing about 1 per cent in each of the past two sessions, the news agency said.

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The euro was steady at US$1.2086 after rising more than 0.3 per cent in the previous session, when it rebounded from an almost one-month low below US$1.20.

More company news

Exxon Mobil Corp on Wednesday outlined plans to grow its dividend and cut debt through 2025 as it reins in spending. Exxon said it plans capital spending of $16-billion to $19-billion in 2021 and $20-billion to $25-billion a year through 2025 on high return. The company also promised to lower its emissions to meet the Paris Agreement goals.

Ryanair hopes to fly up to 70% of 2019 passenger numbers this summer, group Chief Executive Michael O’Leary told a British parliamentary committee on Wednesday. “We would be hopeful that we could fly maybe 60, 70% of our normal traffic volumes during the peak summer months... June, July, August and September,” rising to around 80-90% in the winter, he said.

Dollar Tree Inc missed market estimates for holiday-quarter sales on Wednesday as competition from big-box retailers increased, while demand for party supplies and other non-essential products came under pressure due to the COVID-19 pandemic. Net income rose to $502.8-million, or $2.13 per share, from $123-million, or 52 cents per share, a year earlier. Net sales rose to $6.77-billion in the fourth quarter ended Jan. 30 from $6.32-billion a year earlier, but missed estimates of $6.79-billion, according to IBES data from Refinitiv.

Economic news

(8:15 a.m. ET) U.S. ADP National Employment Report for February.

(8:30 a.m. ET) Canadian building permits for January.

(10 a.m. ET) U.S. ISM Services PMI for February.

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

With Reuters and The Canadian Press

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