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Equities
Canada’s main stock index opened higher Wednesday with energy stocks getting a lift from improved crude prices and strong results from Shopify Inc. On Wall Street, major U.S. indexes opened in the red as investors await the latest policy announcement from the Federal Reserve later in the day.
At 09:31 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was up 49.64 points, or 0.26 per cent, at 19,224.73.
The Dow Jones Industrial Average fell 124.5 points, or 0.37 per cent, at the open to 33860.46. The S&P 500 fell 1.6 points, or 0.04 per cent, at the open to 4185.14, while the Nasdaq Composite dropped 7.4 points, or 0.05 per cent, to 14082.782 at the opening bell.
On Wednesday, all eyes will be on the Fed, even as few expect to see a change in policy.
“There are rumours that the Fed could gently start talking about the tapering of its bond purchases, as the U.S. jobs market recovers at an encouraging speed, the economic growth seems robust, and higher inflation is knocking loudly at the door,” Ipek Ozkardeskaya, senior analyst with Swissquote, said.
“But I believe that [Fed chair] Jerome Powell will avoid having that taper talk at this month’s meeting, as Joe Biden’s plan to nearly double the capital gains tax should give another shake to the financial market, and stock investors can’t affort being slapped by Biden and by Powell at the same time.”
The Fed’s policy announcement is due at 2 p.m. ET followed by a news conference with Mr. Powell.
On the corporate side, Wall Street gets more tech earnings after the close of trading, with results from Apple and Facebook.
Microsoft and Google-parent Alphabet released results after Tuesday’s close. Microsoft shares were down more than 2 per cent after the company met quarterly sales forecasts and topped profit expectations. Some analysts suggested the dip in the stock was the result of investors reacting to one-off tax and currency advantages in the quarterly report.
Shares of Alphabet, meanwhile, gained more than 5 per cent in early trading after that company posted record profit for the second consecutive quarter and announced a US$50-billion share buyback.
In this country, B.C.-based miner Teck Resources Ltd. posted a 246.8-per-cent increase in adjusted profit early Wednesday, helped by higher copper prices and rising demand for raw materials as economies reopen. Teck reported net adjusted income of $326-million, or 61 cents per share, in the first quarter ended March 31, from $94-million, or 17 cents per share, a year earlier. Analysts were expecting a profit of 62 cents, according to Refinitiv IBES data.
Meanwhile, Shopify Inc. topped first-quarter revenue estimates, helped by a boom in online shopping driven by the pandemic. The company’s revenue rose 110 per cent to US$988.6-million in the quarter, above analysts’ estimate of US$865.5-million, according to IBES data from Refinitiv. Shopify shares spiked more than 9 per cent in early trading in Toronto.
Overseas, the pan-European STOXX 600 was up 0.05 per cent by afternoon. Britain’s FTSE 100 added 0.52 per cent. Germany’s DAX and France’s CAC 40 rose 0.40 per cent and 0.58 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.21 per cent. Hong Kong’s Hang Seng rose 0.45 per cent.
Commodities
Crude prices were higher with optimistic demand forecasts offsetting higher-than-expected weekly U.S. inventories and continued concern about the impact of rising COVID-19 cases in some regions.
The day range on Brent is US$66.16 to US66.81. The day range on West Texas Intermediate is US$62.67 to US$63.30.
In a research note on Wednesday, Goldman Sachs said it expects “the biggest jump in oil demand ever, a 5.2 million barrels per day (bpd) rise over the next six months.” The report cited pent-up travel demand and an acceleration in vaccinations in Europe as reasons for the increase, according to a Reuters report.
However, rising COVID-19 infections in India continue to weigh on market sentiment, raising concerns about demand in the world’s third-biggest oil market.
The first of two weekly U.S. inventory reports also tempered market action. The American Petroleum Institute said crude stocks rose by 4.319 million barrels last week, more than analysts had been expecting. More official numbers are due later in the morning from the U.S. Energy Information Administration.
In other commodities, gold prices slid to a one-week low as Treasury yields firmed ahead of the Fed’s policy announcement.
Spot gold was down 0.6 per cent at US$1,766.44 per ounce, having fallen to its lowest since April 20 at US$1,764.90 earlier in the day. U.S. gold futures eased 0.7 per cent to $1,766.70 per ounce.
Currencies
The Canadian dollar held near recent highs as its U.S. counterpart edged up against world currencies ahead of the Fed’s policy decision.
The day range on the loonie is 80.53 US cents to 80.65 US cents. On Monday, the loonie touched a five-week high and has traded just below that level since then.
Canadian investors got a better-than-expected reading on February retail sales. Statscan says sales rose 4.8 per cent, beating earlier forecasts for a 4-per-cent increase. The government agency also said early estimates suggested a 2.3-per-cent increase in March.
On world markets, the U.S. dollar index rose 0.2 per cent at 91.047, bouncing from Monday’s low of 90.679, its weakest level since March 3.
The euro slipped 0.2 per cent to US$1.2070, off Monday’s two-month high of US$1.2117.
The U.S. dollar stood at 108.97 yen, having jumped 0.59 per cent overnight and extending its recovery from a seven-week low of 107.48 touched last week, according to figures from Reuters.
More company news
Boeing Co reported a smaller quarterly loss, helped by an improvement in aircraft deliveries as its 737 MAX jets come back on line and airlines prepare for a recovery in travel this summer. The U.S. planemaker reported a core operating loss of US$353-million in the first quarter ended March 31, compared with a loss of US$1.70-billion a year earlier.
Deutsche Bank posted a better-than-expected net profit for the first quarter, driven by its investment banking activities which outperformed major U.S. rivals. The German lender on Wednesday reported a first-quarter net profit attributable to shareholders of 908 million euros (US$1.1-billion) versus a year-earlier loss of 43 million. That beat consensus profit expectations of around 600 million euros. It was the strongest quarter for Deutsche since the first quarter of 2014.
Starbucks Corp missed quarterly sales estimates, even though the coffee chain raised its annual forecast for revenue and profit on the expectation that more customers will return as they get vaccinated. Global comparable sales were hurt by weakness at its international business, where the COVID-19 pandemic has forced governments to restrict travel and shut cafes. Still, the company raised its 2021 revenue forecast to between US$28.5-billion and US$29.3-billion. It expects adjusted earnings per share between US$2.90 and US$3. The results were released after the close.
Economic news
(8:30 a.m. ET) Canadian retail sales for February.
(8:30 a.m. ET) U.S. goods trade deficit for March.
(2 p.m. ET) U.S. Fed announcement with Chair Jerome Powell’s press conference to follow.
(9 p.m. ET) U.S. President Joe Biden addresses Joint Session of Congress for the first time.
With Reuters and The Canadian Press
Terry Weber