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Equities

Canada’s main stock index opened higher Wednesday as investors sift through earnings from big corporate names like Shopify and Loblaw. South of the border, indexes saw modest early gains as markets await the Federal Reserve’s next policy decision later in the day.

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At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 31.21 points, or 0.15%, at 20,204.56.

The Dow Jones Industrial Average rose 51.4 points, or 0.15 per cent, at the open to 35,109.95. The S&P 500 rose 1.5 points, or 0.03 per cent, at the open to 4,402.95, while the Nasdaq Composite rose 55.1 points, or 0.38 per cent, to 14,715.664 at the opening bell.

Wednesday’s session will continue to be dominated by earnings from big corporate names on both sides of the border. The Fed’s latest policy statement, due at 2 p.m. ET, will also be a key driver for sentiment.

“Today’s meeting is unlikely to change the overall narrative when it comes to the timing of a taper, but it could offer an insight into whether some of the recent hawkishness from the likes of [St. Louis Fed President James] Bullard and [Atlanta Federal Reserve President Raphael] Bostic is starting to spread to other members of the FOMC,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“The prevailing narrative appears to be one of a greater concern about the employment situation than the big rise in prices that we are currently seeing in some of the latest economic data.”

After Tuesday’s close, investors got strong results from Apple, Google-parent Alphabet and Microsoft. Apple shares were down slightly in early trading, even after the company reported third-quarter sales and profits that topped analyst expectations as consumers bought premium versions of its 5G iPhones and signed up for its subscription services.

“Apple’s earnings impressed, but a lot of that strong performance was already priced in,” OANDA senior analyst Edward Moya said.

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Microsoft shares were up less than 1 per cent in morning trading while Alphabet stock gained more than 3 per cent.

In this country, investors got results from Loblaw and Shopify before the start of trading. Canadian Pacific reports results after the close.

Shopify Inc beat second-quarter revenue expectations helped by a resilient online shopping trend linked to the COVID-19 pandemic. The company reported revenue of $1.12-billion for the quarter ended June 30, compared with analysts’ average estimate of $1.05-billion, according to IBES data from Refinitiv. Shares were down slightly in early trading in Toronto.

Grocery giant Loblaw topped analysts’ revenue forecasts in the latest quarter. The company’s revenue rose to $12.49-billion in the second quarter from $11.96-billion a year earlier. Analysts had been expecting revenue of’ $12.16-billion in the most recent quarter, according to IBES data from Refinitiv. Loblaw stock was up modestly shortly after the start of trading.

Wall Street earnings include McDonald’s, Pfizer and Ford. Facebook reports after the close of trading.

Canadian investors also got the latest reading on price pressures in this country. Statscan says the consumer price index rose 0.3 per cent in June, down from the 0.5-per-cent increase seen in May. Economists had been expecting a number around 0.4 per cent. The annual rate of inflation fell to 3.1 per cent in June, from 3.6 per cent a month earlier. The May reading marked the biggest annual jump since 2011.

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Overseas, the pan-European STOXX 600 rose 0.27 per cent by afternoon. Britain’s FTSE 100 was up 0.08 per cent. France’s CAC 40 gained 0.64 per cent while Germany’s DAX added 0.16 per cent.

In Asia, Hong Kong’s Hang Seng rose 1.54 per cent after a two-day rout. Japan’s Nikkei closed down 1.39 per cent.

Commodities

Crude prices gained in early going after a new report showed a decline in U.S. weekly crude inventories.

The day range on Brent is US$74.58 to US$75.24. The range on West Texas Intermediate is US$71.80 to US$72.53. Both benchmarks were up about 1 per cent in the predawn period. On Tuesday, Brent saw its first decline in six days.

Sentiment was underpinned by a report from the American Petroleum Institute showing that U.S. crude stocks fell 4.7 million barrels last week, more than analysts had been expecting. A second, more official reading is due later Wednesday morning from the U.S. Energy Information Administration.

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“Official U.S. crude inventory data is more likely to move prices [on Wednesday] than the FOMC unless the taper word is mentioned,” OANDA senior analyst Jeffrey Halley said.

“Official inventories are expected to fall by 2.9 million barrels, with gasoline stocks also falling. A more significant than expected fall could be enough to shake Brent and WTI out of their ranges and test the upside.”

In other commodities, gold prices were steady ahead of the Fed decision.

Spot gold was up 0.1 per cent at US$1,800.40 per ounce. U.S. gold futures were steady at US$1,798.90.

“Gold continued to range quietly overnight, finishing barely changed at US$1,799 an ounce,” Mr. Halley said. “Some pre-FOMC risk hedging is evident in Asia, though, no doubt assisted by the ructions in China’s stock markets, which is also supporting digital currencies today.”

Currencies

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The Canadian dollar was firmer, trading around the mid-79-US-cent mark, as its U.S. counterpart saw modest gains against a group of world currencies.

The day range on the loonie is 79.32 US cents to 79.63 US cents.

“The Canadian dollar is a modest out-performer on the day, reflecting the calmer risk backdrop and firmer commodity prices,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.

On world markets, the U.S. dollar index moved into positive territory after trading lower in Asian hours. The greenback was last up 0.1 per cent at 92.534, according to figures from Reuters.

The Japanese yen, Swiss franc and the euro held onto the previous day’s gains in Asian trading hours, with the safe-haven yen trading at 109.80 per dollar and the euro at US$1.1809.

More company news

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The Globe’s Tim Kiladze reports that Inter Pipeline Ltd.’s board of directors is throwing its support behind a takeover bid from Brookfield Infrastructure Partners LP, capping off a tense battle that saw both companies take each other to court. Inter Pipeline’s support follows the decision Monday to abandon its backing of a friendly merger with Pembina Pipeline Corp., which triggered a $350-million termination fee to be paid to Pembina, and also comes after Brookfield raised its takeover bid for a second time.

Boeing Co posted its first profit in almost two years, as deliveries of its best-selling 737 MAX jets to airlines gained traction amid a sharp rebound in travel bookings following an increase in global COVID-19 vaccinations. Boeing’s core operating profit was $755-million in the second quarter ended June 30, compared with a loss of $3.32-billion a year earlier.

Buyout fund Cinven has bought a majority stake in Restaurant Brands International’s unit in the Iberian peninsula, in a deal valuing RB Iberia at $1.18-billion, the companies said in a joint statement on Wednesday. The founders of Restaurant Brands Iberia and Burger King Europe GmbH - the European branch of the fast-food chain - will retain a minority stake in the Iberian unit, and the current executive team will stay in place, the statement added.

Pfizer Inc on Wednesday raised its forecast for sales of the COVID-19 vaccine that it developed with Germany’s BioNTech to $33.5-billion from $26-billion, the second increase this year in the face of a global scramble for the shots.

McDonald’s Corp said easing COVID-19 restrictions and the popularity of a new meal inspired by South Korean pop band BTS helped the world’s biggest fast-food chain beat Wall Street expectations for global sales on Wednesday. Same-store sales jumped 40.5% in the second quarter and exceeded the pre-pandemic levels of 2019 for the second straight quarter. Analysts were expecting a 39.81% rise. Total revenue surged by a better-than-expected 57% to $5.89-billion in the three months ended June 30, compared to a year ago when McDonald’s posted a 30% drop due to coronavirus restrictions. Net income more than quadrupled to $2.22-billion and excluding certain items, the company earned $2.37 per share.

Tilray said net revenue rose 25.3% to $142.2-million during the fourth quarter. The company posted a net income of $33.6-million in the three months ended May 31, compared with a net loss of $84.3-million a year earlier. The reported quarter included a one-time adjustment of $19.9-million, resulting from excess inventory quantities due to the Aphria merger. On an adjusted basis, core earnings rose nearly four-fold to $12.3-million.

Economic news

(8:30 a.m. ET) Canada’s CPI for June.

(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press briefing to follow.

With Reuters and The Canadian Press

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