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Equities

Canada’s main stock index started higher Wednesday after the previous session’s record finish with rising crude prices underpinning energy stocks. On Wall Street, key indexes were little changed as investors await the minutes of the most recent Federal Reserve meeting.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 35.61 points, or 0.19 per cent, at 19,139.75.

In the U.S., the Dow Jones Industrial Average rose 14.7 points, or 0.04 per cent, at the open to 33444.98. The S&P 500 fell 0.3 points, or 0.01 per cent, at the open to 4074.29, while the Nasdaq Composite dropped 23.1 points, or 0.17 per cent, to 13675.296 at the opening bell.

On Wednesday, markets will be watching the afternoon release of the Fed minutes.

“At its most recent meeting the Federal Reserve faced a tricky balancing act when it came to managing the message over its optimism around a U.S. economic recovery, while at the same time not giving markets the impression that they might look to rein back on their monetary policy stimulus too soon,” CMC U.K. chief market analyst Michael Hewson said.

“There was a concern that markets might take the wrong message from some Fed officials moving their dot plot estimates for a possible rate rise from 2024 into 2023, as well as 2022, on the back of optimism over upgraded economic forecasts, due to the newly signed off fiscal stimulus, and an accelerated vaccination program.”

That, he said, remains a risk, with four Fed officials suggesting they now see a rate hike in 2022 and seven expecting an increase in 2023. As well, Mr. Hewson said, 10-year Treasury yields are now higher than they were at the time of the most recent Fed meeting.

“[Fed chair Jerome] Powell was clear that the Fed was happy to tolerate an inflation overshoot before taking any action pre-emptively and this appears to have soothed concerns in this regard for now, with yields slipping back despite Friday’s bumper payrolls report,” Mr. Hewson said.

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In this country, investors got a reading on international trade in February.

Statistics Canada says this country’s trade surplus narrowed to $1-billion for the month, from $1.2-billion in January. Still, the agency says the latest report marks the first time Canada has posted two consecutive surpluses since late 2016. The agency says exports fell 2.7 per cent in February while imports declined 2.4 per cent.

“Canada’s trade balance was able to stick it out in positive territory for a second consecutive month in February,” CIBC senior economist Royce Mendes said.

“That said, the surplus of $1.0bn, which was down from $1.2bn in January, was accompanied by a decline in two-way trade.”

Overseas, the pan-European STOXX 600 edged up 0.03 per cent in morning trading. Britain’s FTSE 100 was up 0.82 per cent. France’s CAC 40 gained 0.26 per cent. Germany’s DAX was largely flat.

In Asia, Japan’s Nikkei finished up 0.12 per cent, off earlier highs seen during the session. Hong Kong’s Hang Seng closed down 0.91 per cent.

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Commodities

Crude prices wavered in early going with optimism over the global economy offset somewhat by concerns over a rise in U.S. fuel inventories and the possibility of easing Iran sanctions amid talks to revive the nuclear deal.

The day range on Brent is US$62.23 to US$63.17. The range on West Texas Intermediate US$58.80 to US$59.73.

“The oil market has trouble finding its feet, let alone an equilibrium, as the apparent buyers strike continues after the API [American Petroleum Institute] reported an unexpected hefty build in gasoline inventories,” Axi chief market strategist Stephen Innes said.

The industry group said late Tuesday that gasoline inventories rose by 4.6 million barrels last week while distillate stocks were up by 2.8 million barrels. Crude inventories fell by 2.6 million barrels.

More official figures are due from the U.S. Energy Information Administration later Wednesday morning.

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Markets have also been closely watching indirect talks between Iran and world powers. A Reuters report described the talks as “constructive” on Tuesday with an agreement to form working groups to discuss the possibility of reviving the 2015 nuclear deal that could lead to Washington lifting sanctions on Iran’s energy sector and increasing oil supply.

In other commodities, gold prices fell as economic optimism weighed on the metal’s appeal as a safe-haven holding.

Spot gold was down 0.2 per cent to US$1,740.37 per ounce. U.S. gold futures slipped 0.2 per cent to US$1,739.40 per ounce.

“The better-than-expected economic data from the United States is not allowing gold prices to go above a certain level,” Sunilkumar Katke, head of currencies and commodities at Axis Securities, said.

Currencies

The Canadian dollar was weaker as crude prices slid and its U.S. counterpart held near two-week lows against a group of world currencies ahead of the release of the latest Fed minutes.

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The day range on the loonie is 79.25 US cents to 79.58 US cents.

“The CAD has slipped modestly, in line with its commodity peers and the somewhat cautious risk mood,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Renewed restrictions in Ontario aimed at combatting a jump in virus variant cases may be adding to the soft CAD tone at the margin and perhaps leave the door open for further losses.”

On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, was at 92.368, close to a two-week low, having fallen from its recent high of 93.439, which it hit on March 30, according to figures from Reuters.

Euro-U.S. dollar was steady at US$1.18705, having strengthened so far this month.

The Australian dollar fell against the U.S. dollar, down 0.4 per cent at 0.76385, while the New Zealand dollar was down 0.3 per cent.

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More company news

The Globe’s Alexandra Posadzki reports the chief executive officer of MDA Ltd. says the rapidly expanding global space economy and shrinking cost of launching satellites provide growth opportunities for the maker of the iconic Canadarm, which is expected to start trading on the Toronto Stock Exchange as early as Wednesday. The Brampton, Ont.-based MDA, once known as MacDonald, Dettwiler and Associates, has cut the size and price of its initial public offering as Canada’s red-hot market for high-growth technology IPOs has cooled. The space equipment company laid out plans in March to raise $500-million and price its shares at $16 to $20 each, but reduced the deal to $400-million and the price to $14 a share.

Private equity firm CVC Capital Partners is proposing taking Toshiba Corp private in a deal worth about US$20-billion, a person familiar with the matter said, as the Japanese tech giant faces pressure from activist shareholders to improve its governance. “Toshiba received an initial proposal yesterday, and will ask for further clarification and give it careful consideration,” Toshiba said in a statement, without providing further details.

Mobile app and gaming company AppLovin Corp, which is backed by private equity giant KKR & Co Inc, said on Wednesday it was targeting a valuation of more than $30 billion in its U.S. initial public offering (IPO). The company said it was looking to raise as much as US$2.13-billion in its IPO by selling 25 million shares at a price range of US$75 to US$85 per share.

Economic news

G20 finance minsters and central bank governors videoconference

(8:30 a.m. ET) Canada’s merchandise trade balance for February.

(8:30 a.m. ET) U.S. goods and services trade deficit for February.

(2 p.m. ET) U.S. Fed minutes from March 16-17 meeting.

With Reuters and The Canadian Press

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