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Equities

Canada’s main stock index gained early Wednesday, buoyed by higher commodities stocks. On Wall Street, the tech-heavy Nasdaq managed another record high as investors await the minutes from the Federal Reserve’s latest meeting later in the day.

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At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 29.86 points, or 0.15 per cent, at 20,329.89.

In the U.S., the Dow Jones Industrial Average rose 26.80 points, or 0.08%, at the open to 34,604.17.

The S&P 500 opened higher by 7.47 points, or 0.17%, at 4,351.01, while the Nasdaq Composite gained 89.78 points, or 0.61%, to 14,753.42 at the opening bell.

On Wednesday, investors will be awaiting the minutes from the Fed’s latest policy meeting. Last month, the bank surprised markets with its hawkish tone and suggestion that rates could start rising sooner than many had expected as the economy rebounds from the pandemic.

“We expect the minutes from what was widely acknowledged as a hawkish FOMC meeting to display a fair amount of back and forth amongst the members,” Elsa Lignos, global head of FX strategy with RBC, said.

“For the vast majority of the pandemic period, our U.S. economists argue it has been hard to distinguish one member’s musings from another’s — which is to say they have all been doves. That is now breaking down and there are clearly fissures beginning to open up about the timing of removing accommodation.”

She said the minutes are likely to reflect this two-way dialogue.

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“It is still a bit early for any material detail to be announced about tapering, but these minutes certainly may offer the beginnings of providing at least some sense of what members are thinking,” she said.

The minutes are set to be released at 2 p.m. ET.

In this country, Canadian Imperial Bank of Commerce has joined three other global banks to launch a platform for buying and selling the carbon offsets companies use to compensate for emissions they are unable to eliminate in their own operations, The Globe’s Jeffrey Jones reports.

Called Project Carbon, the blockchain-based system will serve as a marketplace for offsets, including forest and wetland protection as well as carbon capture or removal. The blockchain technology operates as a digital ledger that will record all transactions.

Overseas, the pan-European STOXX 600 gained 0.50 per cent by afternoon with tech stocks advancing. Britain’s FTSE 100 added 0.25 per cent. Germany’s DAX was up 0.93 per cent. France’s CAC 40 slid 0.06 per cent. The European Commission revised upward Wednesday its estimates for euro zone growth this year and next, but also cautioned against risks posed by new variants of the coronavirus.

In Asia, Japan’s Nikkei finished down 0.96 per cent. Hong Kong’s Hang Seng ended off 0.40 per cent.

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Commodities

Crude prices rebounded in early going after the previous session’s decline despite continuing uncertainty about OPEC’s next move after output talks fell apart earlier in the week.

The day range on Brent is US$74.19 to US$75.36. The range on West Texas Intermediate is US$73.16 to US$74.32. Both benchmarks were up more than 1 per cent in early going. Brent fell about 3 per cent on Tuesday while WTI lost about 2 per cent.

Traders are watching for signals of what OPEC and its allies plan next after talks to hike output collapsed earlier in the week amid objections from the United Arab Emirates.

The failure of talks had initially given a boost to crude on the possibility that there would be no August production increase, but nervousness quickly set in over the prospect that members would start to open the taps.

“An agreement could still happen in a week or two, but that uncertainty might be enough to support another surge in oil prices,” OANDA senior analyst Edward Moya said.

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“While the decision to keep output unchanged is what the current agreement says, no one should believe that OPEC+ members won’t start increasing output.”

Later in the session, the markets will also get the first to two weekly reports on U.S. crude inventories when the American Petroleum Institute releases its latest figures. Analysts polled by Reuters are looking for a decline of about 3.9 million barrels. More official numbers from the U.S. Energy Information Administration will be released on Thursday morning.

In other commodities, gold prices advanced and were headed for a sixth straight session of gains, helped by a decline in U.S. Treasury yields.

Spot gold rose 0.4 per cent to US$1,804.07 per ounce, after hitting its highest since June 17 at U$1S,814.78 on Tuesday.

U.S. gold futures gained 0.6 per cent to US$1,805.20 per ounce.

“Unquestionably, the key driver (for gold) is the decline in U.S. Treasury yields,” independent analyst Ross Norman said.

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Currencies

The Canadian dollar was slightly firmer as risk sentiment remained cautious and the euro fell against the U.S. dollar ahead of the release of the Fed minutes.

The day range on the loonie is 80.16 US cents to 80.41 US cents.

Investors will get Canada’s Ivey PMI for June later in the session but the next big release is due Friday, when Statistics Canada delivers employment figures for June. Markets are expecting to see a positive reading on hiring for the month.

“Next week’s Bank of Canada announcement is likely to inject some renewed bullishness into the CAD, we think, as the bank deploys another QE pace reduction,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“It likely will not hesitate significantly with the yield on 10-year Canadian government debt touching its lowest point since Feb 24 yesterday.”

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On world markets, the euro changed hands at US$1.1820 ,having touched a three-month low of $1.1806 on Tuesday, according to figures from Reuters. Against the yen, it fell to 130.81 yen, edging near its two-month low of 130.05 set on June 21.

The Australian dollar traded 0.15 per cent higher at US$0.7502, stabilizing after a bounce on Tuesday when the Reserve Bank of Australia announced a third round of its quantitative easing program, but at a size smaller size than the previous two rounds.

In cryptocurrencies, bitcoin was little changed at US$34,823 and ether at US$2,392.

More company news

West Fraser Timber Co. Ltd. says it plans to buy back up to $1-billion worth of its shares. The forestry company says it is conducting a “modified Dutch auction” with a tender price range of $85 to $98 per share. The purchase price will be the lowest price within that range that will allow it to buy back the maximum number of shares tendered by shareholders. West Fraser shares closed at $86.83 on the Toronto Stock Exchange on Tuesday.

Samsung Electronics Co Ltd on Wednesday reported a likely 53% jump in second-quarter operating profit, beating market estimates on the back of strong chip prices and demand despite lower smartphone sales. The preliminary result is up 33% from the first quarter and underscores the soaring demand for chips that has depleted stockpiles amid a pandemic-led consumer appetite for electronics and recovering investment in data centres.

Royal Dutch Shell will boost returns to shareholders via share buybacks or dividends earlier than expected after a sharp rise in oil and gas prices helped it reduce debt, the Anglo-Dutch energy firm said on Wednesday. Shell will increase its distribution to shareholders to 20% to 30% of cash flow from operations beginning in the second quarter, the company said in a trading statement before quarterly results. The move, which comes earlier than many analysts had expected, was due to “strong operational and financial delivery, combined with an improved macroeconomic outlook.”

The U.S. Defense Department cancelled its US$10-billion JEDI cloud-computing project on Tuesday, pulling the Trump-era award to Microsoft Corp and announcing a new multi-vendor contract expected to include its big tech rival Amazon.com. The contract awarded by the Pentagon in late 2019 has been on hold after Amazon filed a lawsuit challenging the decision under then-President Donald Trump. Trump publicly derided then-Amazon CEO Jeff Bezos and repeatedly criticized the company.

Economic news

(10 a.m. ET) Canada’s Ivey PMI for June.

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for May.

(2 p.m. ET) U.S. Fed minutes from June 15-16 meetings.

With Reuters and The Canadian Press

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