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Equities
Canada’s main stock index started higher Wednesday, buoyed by gains in the energy sector and improved global sentiment. On Wall Street, indexes gained after new figures showed the annual rate of U.S. inflation rose at its fastest pace in decades in December, although the increase also matched market forecasts.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 86.48 points, or 0.41 per cent, at 21,361.29.
In the U.S., the Dow Jones Industrial Average rose 84.14 points, or 0.23 per cent, at the open to 36,336.16.
The S&P 500 opened higher by 15.52 points, or 0.33 per cent, at 4,728.59, while the Nasdaq Composite gained 109.65 points, or 0.72 per cent, to 15,263.10 at the opening bell.
On Wednesday, the early focus was on the morning release of U.S. inflation figures for December. The figures showed the annual rate of inflation in the United States rose 7 per cent in December, the fastest pace since 1982. The reading matched economists’ forecasts. On a monthly basis, consumer prices rose 0.5 per cent, just a touch ahead of the 0.4-per-cent increase markets had been expecting.
On Tuesday, U.S. Federal Reserve chair Jerome Powell’s testimony before the Senate banking committee, soothed markets by offering few surprises and again suggesting that the central bank is focused on fighting inflationary pressures.
“Mr. Powell noted that the Fed could hike rates to rein in inflation, intended to start the balance sheet run-off sooner rather than later, but also said inflationary pressures would peak mid-year,” OANDA senior analyst Jeffrey Halley said.
“What he didn’t say was also important. He didn’t back four rate hikes in 2022, nor a March start to hikes, nor did he give any details on when the Fed balance sheet run-off would start.”
In this country, earnings start to roll in with results from Shaw Communications Inc. ahead of the start of trading. The company is now awaiting regulatory approval for a $26-billion takeover by Rogers Communications Inc.
Shaw says it earned $196-million or 39 cents in its latest quarter, up from $163-million or 31 cents in the same quarter last year. Revenue in the first quarter of Shaw’s 2022 financial year totalled nearly $1.39-billion, up from $1.37-billion a year ago.
After the close, investors will get results from retailer Aritzia.
Overseas, the pan-European STOXX 600 was up 0.61 per cent by midday. Britain’s FTSE 100 gained 0.79 per cent. Germany’s DAX and France’s CAC 40 rose 0.57 per cent and 0.47 per cent, respectively.
In Asia, Japan’s Nikkei jumped 1.92 per cent. Hong Kong’s Hang Seng advanced 2.79 per cent., buoyed by gains in tech shares.
Commodities
Crude prices gained in early going as concerns about the potential hit from the spread of the Omicron variant to demand continued to ease.
The day range on Brent is US$83.52 to US$84.35. The range on West Texas Intermediate is US$81.17 to US$81.99. If the early gains hold, both benchmarks will mark their sixth positive day in eight.
“Oil prices seem poised to trade between US$80 and US$100 a barrel as the global demand outlook still looks upbeat as most major economies are getting closer to the other side of the omicron fence,” OANDA senior analyst Ed Moya said in a note.
“WTI crude is poised to make a run towards last year’s highs if stockpiles continue to decline,” he said.
In testimony on Tuesday, Fed chair Jerome Powell said he expects the economic impact from the current spike in COVID-19 infections to be “short-lived”.
Prices also drew support from industry figures showing that crude inventories fell by 1.1 million barrels last week. More official U.S. government figures are due later Wednesday morning.
On Tuesday, the U.S. Energy Information Administration raised its oil demand forecast, saying it expects U.S. demand to climb by 840,000 barrels a day in 2022, up from an earlier forecast for an increase of 700,000 bpd.
In other commodities, gold prices held near one-week highs.
Spot gold was little changed at US$1,819.90 per ounce by early Wednesday morning, after scaling a near one-week high of US$1,822.91 on Tuesday. U.S. gold futures were up 0.1 per cent at US$1,821.00.
“Gold forecasts for the year are all over the place, with most economists/analysts anticipating weaker prices as higher interest rates and fresh record highs for equities might dent demand for the precious metal,” Mr. Moya said.
Currencies
The Canadian dollar gained, buoyed by positive risk sentiment and firmer crude prices, while its U.S. counterpart held above two-month lows against a group of world currencies.
The day range on the loonie is 79.48 US cents to 79.71 US cents.
There were no major Canadian economic releases due on Wednesday.
On world markets, the U.S. dollar index was last trading at 95.611, steady on the day. It had dipped to 95.533 in the Asian session, the lowest since Nov. 18. The greenback took a hit after Mr. Powell failed to signal a more aggressive stance on tightening monetary policy during his Senate appearance.
The U.S. dollar was 0.1 per cent higher at 115.44 yen, while the euro was steady at around US$1.1355, according to figures from Reuters. A rise above US$1.1387 would take the euro to its highest since mid-November.
The Australian dollar, often viewed as a liquid proxy for risk appetite, pulled back from nearly one-week highs at US$0.72230 as the greenback steadied.
In bonds, the yield on the U.S. 10-year note was marginally higher at 1.748 per cent after hitting a two-year high on Monday.
More company news
Mining company Iamgold Corp. says Gordon Stothart has stepped down as president and chief executive officer. He has also resigned from the board. Chief financial officer Daniella Dimitrov will take over the post on an interim basis.
Teck Resources Ltd. has received strike notice from the union representing workers at the company’s Highland Valley Copper operations in British Columbia’s southern Interior. A statement from Teck says the United Steelworkers Local 7619 issued strike notice Tuesday. The company says the 1,048 workers covered by the notice would be entitled to begin job action when 72-hour strike notice expires and 48 hours after the mediator reports to the Labour Relations Board.
Economic news
(8:30 a.m. ET) U.S. CPI for December.
(2 p.m. ET) U.S. budget balance for December.
(2 p.m. ET) U.S. Fed Beige Book is released.
With Reuters and The Canadian Press
Terry Weber