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Equities

Canada’s main stock index slid in early trading Wednesday on weakness in consumer staple stocks. On Wall Street, tech shares came under continued pressure from high yields while disappointing retail earnings weighed on broader sentiment.

At 9:36 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 75.02 points, or 0.35 per cent, at 21,378.75.

In the U.S., the Dow Jones Industrial Average fell 61.49 points, or 0.17 per cent, at the open to 35,752.31.

The S&P 500 opened lower by 14.92 points, or 0.32 per cent, at 4,675.78, while the Nasdaq Composite dropped 97.26 points, or 0.62 per cent, to 15,677.88 at the opening bell.

“Technology stocks have been under pressure this week and rising U.S. bond yields (and yields elsewhere), lie behind the shakiness,” OANDA senior analyst Jeffery Halley said.

“Technology valuations have been sub-orbital for a long time now, and they are thus, more vulnerable to an upward adjustment in interest rates.”

For U.S. investors, Wednesday sees the release of a raft of U.S. data ahead of the Thanksgiving break. The second reading on third-quarter came in roughly in line with markets expectations at an annual rate of 2.1 per cent. Weekly jobless claims, meanwhile, fell to 199,000 last week, better than market forecasts and the lowest level since 1969. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.6 per cent last month after gaining 1.6 per cent in September, the Commerce Department said.

Wednesday afternoon will bring the release of the minutes from the latest Federal Reserve meeting. Wednesday is the last full trading day for Wall Street. Markets are closed Thursday for U.S. Thanksgiving and will close early on Friday.

In this country, convenience store operator Alimentation Couche-Tard Inc. hiked its quarterly dividend 26 per cent. The company will pay 11 cents a share up from 8.75 cents. The move came as Couche-Tard earned US$694.8-million or 65 cents per diluted share in the second quarter of its fiscal year, down from US$757-million or 68 cents per share a year earlier. Adjusted profit was $693-million or 65 cents per share, down from US$735-million or 66 cents per share in the second quarter of fiscal 2021. Shares were down nearly 5 per cent in early trading.

On Wall Street, Nordstrom stock sank nearly 28 per cent after the U.S. retailer warned its off-price chain could see product shortages heading into the holiday season. Gap stock, meanwhile, fell more than 20 per cent after that retailer cut its full-year forecast with supply-chain issues hitting revenue.

Overseas, the pan-European STOXX 600 slid 0.50 per cent by afternoon. Britain’s FTSE 100 fell 0.22 per cent. Germany’s DAX lost 1.09 per cent after a new report showed a continued deterioration in German business morale. The Ifo institute said its business climate index fell to 96.5 from 97.7 in October. A Reuters poll of analysts had pointed to a November reading of 96.6.

France’s CAC 40 was off 0.78 per cent.

In Asia, Japan’s Nikkei fell 1.58 per cent after being closed for a holiday on Tuesday. Hong Kong’s Hang Seng rose 0.14 per cent.

Commodities

Crude prices were steady in early going as market skepticism set in about whether a U.S.-led plan to release strategic reserves would prove effective.

The day range on Brent is US$80.77 to US$81.88. The range on West Texas Intermediate is US$78.02 to US$79.23. Brent gained more than 3 per cent on Tuesday while WTI added more than 2 per cent.

On Tuesday, the U.S. announced it would release millions of barrels of oil from strategic reserves in a bid to head off spiking energy prices. The move was part of a coordinated effort with China, India, South Korea, Japan and Britain.

“Obviously, such news doesn’t necessarily scare OPEC, but it probably frustrates them,” Swissquote senior analyst Ipek Ozkardeskaya said.

“The expectation is that they will hit back at their meeting next week, and their decision will have an impact longer than a couple of days or weeks. This is probably why we are seeing the oil bulls coming back to the market, and yes, there is a chance now that we see the $80 offers cleared and a push above that level into next week’s OPEC meeting.”

Meanwhile, U.S. crude and gasoline stocks rose last week while distillate inventories fell, according to figures from the American Petroleum Institute on Tuesday. Crude stocks rose by 2.3 million barrels for the week ended Nov. 19, against an analyst expectation of a decline by about 500,000 barrels. More official U.S. government figures are due later Wednesday morning.

In other commodities, gold prices edged.

Spot gold was up 0.2 per cent at US$1,793.52 per ounce in the early predawn period, after slipping 0.9 per cent to its lowest since Nov. 5 on Tuesday. U.S. gold futures advanced 0.5 per cent to US$1,793.50.

Currencies

The Canadian dollar was little changed while its U.S. counterpart managed a fresh 16-month high against world currencies ahead of the release of the latest Fed minutes.

The day range on the loonie is 78.77 US cents to 78.97 US cents.

There were no major Canadian economic releases due on Wednesday.

On world markets, the U.S. dollar index hit a fresh 16-month high on Wednesday at 96.666 ahead of the Fed minutes, which will be released Wednesday afternoon.

RBC chief currency strategist Adam Cole says focus will likely be on any discussion of speeding up tapering of the Fed’s bond-buying program.

“Powell was asked about this and he said the Fed reserves the right to speed up if necessary,” Mr. Cole said.

“But we want to see the degree to which this is being considered.”

The euro, meanwhile, fell 0.3 per cent to its lowest level since early July 2020 at US$1.1205, according to figures from Reuters. The declines followed a disappointing reading on Germany business morale.

The New Zealand dollar was the biggest mover in the Asian session and was down 0.4 per cent to US$0.6918 after the Reserve Bank of New Zealand lifted rates 25 basis points.

In bonds, the yield on the U.S. 10-year note was up at 1.683 per cent ahead of the North American open.

More company news

Nordstrom Inc said labor costs pinched its quarterly profit and warned of product shortages at its off-price stores heading into the holiday season. The Seattle-based company, like other retailers, is under tremendous pressure to keep its shelves stocked for the holiday season as shipping logjams, shuttered factories in Asia and a scarcity of raw materials rip through global supply chains and result in product shortages. Nordstrom Rack off-price stores have especially suffered from severe shortages of women’s apparel and shoes. The company said third-quarter net sales at Nordstrom Rack stores fell 8% from 2019 levels. Shares sank 26 per cent in premarket trading.

Gap Inc lowered its full-year forecast, with the apparel retailer expecting an up to $650-million hit to revenue amid supply chain disruptions that include factory closures in Vietnam and pricey air freight to ship goods. Gap stock was down more than 18 per cent in premarket trading.

Canadian Pacific Railway Ltd. says its proposed acquisition of Kansas City Southern could be approved in about a year, after the U.S. regulator established a schedule for its regulatory review. The Surface Transportation Board says anyone wanting to participate in the proceeding as a party of record must file a notice of intent by Dec. 13 regarding the US$31-billion transaction, including the assumption of US$3.8-billion of debt.

Deere & Co reported a 69% rise in fourth-quarter profit on Wednesday as solid demand for its tractors and combines from farmers cushioned the impact of a worker strike. Farmers’ income has surged this year on the back of soaring crop and livestock prices, encouraging them to replace older equipment despite price hikes by manufacturers. Deere said sales of its large and some medium equipment jumped 23% in the quarter, while sales of smaller farm and turf equipment rose 17%.

Economic news

(8:30 a.m. ET) U.S. real GDP for Q3. (revision)

(8:30 a.m. ET) U.S. initial jobless rate for week of Nov. 20.

(8:30 a.m. ET) U.S. goods trade deficit for October.

(8:30 a.m. ET) U.S. wholesale and retail inventories for October.

(8:30 a.m. ET) U.S. durable and core orders for October.

(10 a.m. ET) U.S. personal spending and income for October.

(10 a.m. ET) U.S. core PCE price index for October.

(10 a.m. ET) U.S. new home sales for October.

(10 a.m. ET) U.S. University of Michigan consumer sentiment for November.

(2 p.m. ET) U.S. Fed minutes for Nov. 2-3 meeting released.

With Reuters and The Canadian Press

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