Canada’s main stock index edged higher at the open on Wednesday, as gains in miners on the back of firmer gold prices offset a 1% slide in the energy sector.
In early trading, the Toronto Stock Exchange’s S&P/TSX composite index was up 26.75 points, or 0.13%, at 20,463.87.
U.S. markets also started positively after the country released its latest inflation reading and the first batch of U.S. corporate earnings were released.
The U.S. consumer price index rose 0.4% in September from the month prior and 5.4% year over year. Economists expected to see a month-to-month increase of 0.3% or annualized rate of 5.3%.
But even with the slightly higher than expected reading, markets are still searching for direction this morning.
The data comes amid a surge in the costs of energy products and could cast doubts on the Federal Reserve’s view that high inflation is transitory.
“Inflation is strong, and a little worrisome. But, it is not unexpected given what has been going on in the marketplace between higher energy costs, supply chain problems and labor shortages,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
JPMorgan and BlackRock kicked off the third-quarter earnings season, with both surpassing analysts’ expectations. But Delta Air Lines, which also reported earnings this morning, missed Wall Street estimates for quarterly revenue and warned of a pre-tax loss for the fourth quarter due to a sharp rise in fuel prices.
Wall Street ended lower in choppy trading on Tuesday, as investors grew jittery in the run-up to earnings amid worries about supply chain problems and higher prices affecting businesses emerging from the pandemic. The TSX closed up 0.1%.
Equities
Commodities
Oil prices edged down on Wednesday on concerns that oil demand growth will fall as major economies suffer through inflation and supply chain issues though surging prices for power generation fuel such as coal and natural gas limited losses.
Brent crude futures were down 24 cents, or 0.2%, to $83.18 a barrel in morning trade. U.S. West Texas Intermediate (WTI) crude futures were down 23 cents or 0.2% to $80.41 a barrel.
Both contracts pared losses after falling as much as 70 cents earlier when China, the world’s biggest crude importer, released data showing September imports fell 15% from a year earlier.
In the metals market, zinc and aluminum prices stormed to fresh peaks as a power crisis sparked cuts in smelter output.
Zinc touched a near 14-year high in Shanghai while in London they jumped the strongest in over 3-1/2 years after Nyrstar said it will cut production by up to 50% at its three European zinc smelters due to the soaring price of electricity.
Electricity prices have surged to record highs in recent weeks, driven by power shortages in Asia and Europe, with China’s crisis expected to last through the end of the year and crimp growth in the world’s second-largest economy.
An analyst cautioned, however, that soaring power prices are also likely to hit industrial output, crimping demand for metals.
“We should not forget that not only the primary metals producers are being hit by the power crunch, but also the metals manufacturers, the ones further down the value chain,” said Daniel Briesemann at Commerzbank in Frankfurt.
“At the moment, everyone apparently wants to see higher prices, so they are focusing on just one side of the equation.”
Benchmark zinc on the London Metal Exchange had gained 3.3% to $3,372.50 a tonne in morning trade, the strongest since March 2018.
Aluminium, the most power intensive base metal, gained 1.3% on the LME to $3,106.50 a tonne after hitting the highest since July 2008 at $3,118.50.
Copper, nickel and lead were all up more than 1%.
Currencies and bonds
The U.S. dollar is trading with a weak tone this morning, awaiting the U.S. inflation report. Major bond markets are generally firmer, with U.S. 10-year Treasury yields lower so far today, below 1.6%.
The Canadian dollar is stronger against the greenback, trading confidently above 80 cents U.S.
Other corporate news
BlackRock Inc, the world’s largest money manager, beat third-quarter profit estimates as an improving economy helped boost its assets under management, driving up fee income. Adjusted net income rose 19% to $1.69 billion, or $10.95 per share, in the quarter ended Sept. 30 from a year earlier. Analysts on average were expecting the company to report a profit of $9.35 per share, according to IBES data from Refinitiv.
JPMorgan Chase & Co reported a bigger-than-expected 24% jump in third-quarter profit on Wednesday, boosted by a global dealmaking boom and strength in its wealth management arm. JPMorgan’s net income rose to $11.7 billion, or $3.74 per share, in the quarter ended Sept. 30, compared with $9.4 billion, or $2.92 per share, a year earlier. Analysts on average had expected earnings of $3.00 per share, according to Refinitiv. Total reported revenue rose 1% to $29.65 billion in the quarter.
Apple Inc fell 0.7% after a report said the iPhone marker was planning to cut production of its iPhone 13 by as many as 10 million units due to the global chip shortage.
Economic news
The consumer price index rose 0.4% last month after climbing 0.3% in August, the Labor Department said on Wednesday. In the 12 months through September, the CPI increased 5.4% after advancing 5.3% year-on-year in August. Excluding the volatile food and energy components, the CPI climbed 0.2% after edging up 0.1% in August, the smallest gain in six months. The so-called core CPI rose 4.0% on a year-on-year basis after increasing 4.0% in August. Economists polled by Reuters had forecast the overall CPI rising 0.3% and the core CPI gaining 0.2%.
(2 p.m. ET) U.S. budget balance for September.
(2 p.m. ET) U.S. Fed minutes from Sept. 21-22 meeting.
With files from Reuters
Darcy Keith