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Equities

Canada’s main stock index slipped at the start of trading Wednesday ahead of the Bank of Canada’s latest policy announcements. Wall Street’s key indexes edged up in early going as investors await a fresh reading on inflation later in the week.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 37.53 points, or 0.19%, at 20,028.39, with the financials sector slipping 0.4 per cent

In the U.S., The Dow Jones Industrial Average rose 26.3 points, or 0.08 per cent, at the open to 34626.16. The S&P 500 rose 5.7 points, or 0.14 per cent, at the open to 4232.99, while the Nasdaq Composite rose 55.3 points, or 0.40 per cent, to 13980.231 at the opening bell..

“Wall Street is in for a choppy market until Thursday’s [U.S.] inflation report,” OANDA senior analyst Ed Moya said in a note.

“U.S. stocks have largely been stuck in a range since mid-April and don’t seem likely to be breaking out anytime soon. Investors want to see how hot pricing pressures get and how much downside in equities will occur once the Fed’s taper tantrum begins.”

In this country, the Bank of Canada delivers its next policy announcement shortly after the start of trading.

“The Bank of Canada gets set to meet later today, and could well give further indications on the timeline of a possible taper sometime in Q3,” Michael Hewson, chief market analyst with CMC Markets U.K., said. “The central bank is likely to look through the rise in CPI to 3.4 per cent, citing it as temporary, along with the weaker performance of the economy and jobs market, which they expect to improve in the second half.”

The Globe’s Mark Rendell and David Parkinson report that the central has undershot its $3-billion weekly target for government bond purchases in each of the past two weeks, saying that it has “operational flexibility” in managing the new, reduced size for its quantitative easing program that it put in place in late April.

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On the corporate side, Pembina Pipeline Corp. has joined with an Indigenous-owned group to propose an offer for the Trans Mountain oil pipeline, marking the first time a major energy company has signalled its intention to bid for the line now being expanded.

The Globe reports that Pembina has formed a 50-50 partnership with Western Indigenous Pipeline Group, or WIPG, a coalition of First Nations and Métis representatives from communities along the 1,150-kilometre route of the pipeline in Alberta and British Columbia. The partnership is called Chinook Pathways.

Ahead of the open, retailer Dollarama said sales rose to $954.2-million in the first quarter, from $844.8-million a year earlier. Analysts had been looking for sales of $963-million in the latest quarter, according to Refinitiv IBES. Same-store sales, excluding temporarily closed stores, increased by 5.8 per cent. Net earnings rose to $113.6-million, or 37 cents per share, from $86.1-million, or 28 cents per share, a year earlier.

Overseas, major European markets were mixed with the pan-European STOXX 600 down 0.05 per cent by afternoon. Britain’s FTSE 100 fell 0.28 per cent. Germany’s DAX slid 0.54 per cent. France’s CAC 40 gained 0.08 per cent.

In Asia, Japan’s Nikkei finished down 0.35 per cent. Hong Kong’s Hang Seng lost 0.13 per cent.

Commodities

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Crude prices rose on a decline in U.S. inventories and signs of rising demand as economies reopen.

The day range on Brent is US$72.12 to US$72.83. The range on West Texas Intermediate is US$69.95 to US$70.62. Both benchmarks gained more than 1 per cent on Tuesday.

“The volatility in oil markets is somewhat higher than elsewhere, with Brent crude and WTI powering back to recent highs overnight,” OANDA senior analyst Jeffrey Halley said.

“Fighting talk from U.S. Secretary of State over Iran sanctions helped oil ignore a stronger U.S. dollar as fears of a flood of post-nuclear-deal Iranian oil hitting markets faded.”

Markets have been cautiously watching talks over the Iran nuclear agreement and the possibility of Iranian supply returning to market.

However, U.S. Secretary of State Antony Blinken said on Tuesday that even if Iran and the United States returned to compliance with a nuclear deal, hundreds of U.S. sanctions on Tehran would remain in place.

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Sentiment was also bolstered by weekly U.S. inventory figures from the American Petroleum Institute showing that stocks fell by 2.1 million barrels in the week ended June 4. That was in line with analysts’ expectations. More official weekly figures are due later Wednesday from the U.S. Energy Information Administration

Meanwhile, the EIA forecast fuel consumption growth this year in the United States would be 1.49 million barrels per day (bpd), up from a previous forecast of 1.39 million bpd, according to a Reuters report.

In other commodities, gold eased on a firmer U.S. dollar.

Spot gold was down 0.3 per cent to US$1,887.91 per ounce, while U.S. gold futures slipped 0.2 per cent to US$1,891.10.

“There’s a great deal of uncertainty about the next move in gold prices,” CMC Markets’ Michael Hewson said.

Currencies

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The Canadian dollar was firmer ahead of the Bank of Canada’s latest policy decision while its U.S. counterpart held onto recent gains against a group of world currencies.

The day range on the loonie is 82.53 US cents to 82.75 US cents.

The Bank of Canada’s announcement is due at 10 a.m. ET. No change is expected on rates but investors will be watching for news on the bank’s asset purchase program.

“The statement-only affair will likely be rather uneventful with the Bank having just announced a reduction in its pace of asset purchases on April 21 (we expect another reduction in July),” Shaun Osborne, chief FX strategist with Scotiabank, said in a note.

“Meanwhile, the country has remained locked down for the most part but the bank should foresee a strong pickup in activity once provinces reopen fully — thanks to a fast vaccinations drive that puts Canada ahead of all major countries in terms of first doses.”

On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, sat at 90.077.

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The Australian and New Zealand dollars held in narrow bands, with the Australian dollar at US$0.7744, roughly the middle of the past two months’ range, and the New Zealand dollar trading likewise at US$0.7199, according to figures from Reuters.

Britain’s pound was slightly higher at US$1.4168.

The euro was steady at US$1.2179 in the Asia session ahead of Thursday’s policy decision from the European Central Bank.

More company news

Canadian oil sands producers said on Wednesday they would form an alliance to achieve net-zero greenhouse gas emissions from their operations by 2050, as the cash-rich firms come under pressure to meet the country’s goal on energy transition. Oil sands producers, which extract some of the world’s most carbon-intense crude, face investor pressure to reduce their environmental impact. The alliance, which includes Canadian Natural Resources , Cenovus Energy, Imperial Oil, MEG Energy and Suncor Energy, will work with federal and Alberta governments to help Canada meet its climate goals, the companies said.

United Parcel Service Inc expects to top $100-billion in total revenue in 2023, the world’s biggest parcel delivery company said on Wednesday as it laid out its three-year financial targets. The company forecast full-year revenue between $98-billion to $102-billion for 2023, compared with the average analyst estimate of $100.19-billion, according to Refinitiv data. It reported a full-year revenue of $84.6-billion in 2020.

Campbell Soup Co reported a near 5% fall in quarterly profit on Wednesday, hurt by rising raw material and supply chain costs. Net earnings attributable to the company fell to $160-million, or 52 cents per share, in the three months ended May 2, from $168-million, or 55 cents per share, a year earlier.

Economic news

(10 a.m. ET) Bank of Canada policy announcement.

(10 a.m. ET) U.S. wholesale inventories for April.

With Reuters and The Canadian Press

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