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Equities

Canada’s main stock index rallied for a second day Wednesday with higher crude prices buoying energy shares. On Wall Street, indexes also open higher on the back of positive earnings from big-name companies.

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At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 112.33 points, or 0.56 per cent, at 20,055.04.

In the U.S., the Dow Jones Industrial Average rose 45.0 points, or 0.13 per cent, at the open to 34556.96. The S&P 500 rose 8.1 points, or 0.19 per cent, at the open to 4331.13, while the Nasdaq Composite rose 9.9 points, or 0.07 per cent, to 14508.747 at the opening bell.

“It seems that buy-the-dip remains the go-to strategy for investors on any material price dips,” OANDA senior analyst Jeffrey Halley said.

“With the U.S. earning’s session progressing nicely, despite being lost in the delta-noise this week, I shall not argue that point.”

On the corporate side, shares of Netflix were down in early trading after the streaming giant forecast third-quarter paid subscriber additions short of Wall Street forecasts. Netflix said it expects to add 3.50 million paid subscribers in the third quarter, compared with analysts’ estimates of 5.51 million, according to IBES data from Refinitiv. The company also said it added 1.54 million paid subscribers during the second quarter ended June 30, beating analysts’ estimates of 1.04 million. Netflix also said it was in the early stages of expanding its video game offerings, which would be available to subscribers at no extra charge.

In this country, Montreal-based CN said profit in the three months ended June 30 climbed to $1-billion, or $1.46 a share, compared with $545-million, or 77 cents, in the same period of 2020. Revenue rose by 12 per cent to $3.6-billion.

The Globe’s Eric Atkins reports that CN said it is standing behind its full-year financial guidance and expressed hope COVID-19 vaccinations will help end the pandemic, but cautioned the surging Delta variant of the virus throws the recovery into doubt. The earnings were released after Wednesday’s close.

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CN shares were higher in morning trading in Toronto.

Early Wednesday, Rogers Communications reported revenue ahead of analysts’ forecasts in the most recent quarter. The company’s total revenue rose to $3.58-billion in the quarter ended June 30, compared with analysts’ average estimates of $3.56-billion, according to IBES data from Refinitiv.

Wall Street earnings this morning include Johnson & Johnson and Coca-Cola.

Overseas, the pan-European STOXX 600 rose 1.15 per cent in early afternoon trading. The ECB begins two days of meetings on Wednesday and will deliver its latest policy decision on Thursday morning.

Britain’s FTSE 100 was up 1.49 per cent. Germany’s DAX gained 0.69 per cent. France’s CAC 40 rose 1.23 per cent.

In Asia, Japan’s Nikkei closed up 0.58 per cent. Hong Kong’s Hang Seng slid 0.13 per cent.

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Commodities

Crude prices rose despite an increase in weekly U.S. inventories as risk appetite returns to the market.

The day range on Brent is US$68.63 to US$70.37. The range on West Texas Intermediate is US$66.44 to US$68.21.

“After Monday’s price meltdown, oil prices consolidated nervously at their recent lows overnight,” OANDA’s Jeffrey Halley said in a note.

“Although risk appetite showed signs of recovery in other asset classes, notably equities, gains by oil were limited after the U.S. [American Petroleum Institute] Crude Inventories rose unexpectedly.”

The industry group said weekly crude stocks rose by 806,000 barrels for the week that ended July 16. Analysts had been looking for a decline.

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

Prices took a hit early this week as a rise in COVID-19 cases linked to the delta variant sparked concern about the health of the recovery in demand. As well, the OPEC+ group announced it had reached a deal to raise supply by 400,000 barrels a day for each month from August to December.

In other commodities, gold prices fell for a second day, hit by a stronger U.S. dollar.

Spot gold fell 0.2 per cent to US$1,805.81 per ounce. U.S. gold futures slipped 0.3 per cent to US$1,805.50.

“Any gold rally is capped by a firm U.S. dollar, while the downside remains supported in this week’s heightened global risk environment,” Mr. Halley said.

“The loss of upside momentum has shifted the risks for gold to the downside.”

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Currencies

The Canadian dollar was modestly firmer as crude prices advanced while its U.S. counterpart gained against a basket of world currencies.

The day range on the loonie is 78.56 US cents to 78.92 US cents.

“The CAD continues to drag its feet even as global risk sentiment improves and commodity prices (generally) pick up,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Both factors should, in theory, provide a bit more of a lift for the CAD. Crude oil has bounced nicely (up 1.3% on the session) but the CAD is struggling to push on through yesterday’s late highs.”

There were no major Canadian economic releases on Wednesday’s calendar.

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On world markets, the U.S. dollar held firm during the Asian session but rose as European markets opened. Against a basket of currencies, the U.S. dollar was up 0.2 per cent at 93.166, its highest in 3.5 months, according to figures from Reuters.

The British pound, which on Tuesday hit its lowest since February, was down 0.2 per cent at $1.3604.

The euro was down 0.2 per cent against the U.S. dollar at US$1.17545, close to its lowest since early April. Investors are awaiting Thursday’s ECB policy decision.

More company news

Great-West Lifeco Inc’s U.S. subsidiary Empower Retirement will buy Prudential Financial Inc’s full-service retirement business for $4.45-billion. “Empower’s acquisition of Prudential’s full-service retirement business will add significant scale and capabilities, further solidifying its leadership position in the world’s largest retirement market,” Paul Mahon, president and CEO, Great-West Lifeco, said in a statement.

Canfor Corp. says it is curtailing production capacity at its Canadian sawmills beginning Monday as a result of extreme wildfire conditions in Western Canada. The Vancouver-based lumber producer says about 115 million board feet of capacity will be reduced during the third quarter due to significant supply chain challenges and a transportation backlog.

Johnson & Johnson on Wednesday forecast $2.5 billion in 2021 sales of its COVID-19 vaccine, which has fallen way behind rival shots from Pfizer and Moderna as the company deals with vaccine production issues and safety concerns. J&J said it expects full-year sales of $91.3-billion-$92.1-billion this year from the rest of the business, and $93.8-billion to $94.6-billion including contribution from the single-dose vaccine.

Coca-Cola Co raised its full-year sales forecast, as demand rebounds for its beverages from the re-opening of theaters, restaurants and stadiums. The company said it expects annual organic revenue to rise 12 per cent to 14 per cent, compared with its prior forecast of a high single digits increase.

Harley-Davidson Inc reported its second straight quarterly profit, as sales of its motorcycles rebounded from the lows suffered during lockdowns a year earlier. Net profit was $206.3-million, or $1.33 per share, in the quarter ended June 27, compared with a loss of $92.2-million, or 60 cents, a year earlier. Revenue from motorcycles and related products nearly doubled to $1.33-billion.

Economic news

8:30 a.m. (ET) Canada’s new housing price index for June.

With Reuters and The Canadian Press

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