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Equities

Canada’s main stock index opened higher Wednesday, helped by gains in energy and mining shares. On Wall Street, key indexes staged a rebound after the previous session’s selloff, helped by positive earnings reports from a number of big companies.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 42.35 points, or 0.2 per cent, at 21,316.92.

The Dow Jones Industrial Average rose 43.83 points, or 0.12%, at the open to 35,412.30.

In the U.S., the S&P 500 opened higher by 10.92 points, or 0.24%, at 4,588.03, while the Nasdaq Composite gained 75.32 points, or 0.52%, to 14,582.22 at the opening bell.

Bond yields hit fresh two-highs on Wednesday. In the predawn period, the yield on the U.S. 10-year note was up at 1.888 per cent ahead of next week’s Federal Reserve policy decision. The yield was slightly lower at 1.85 per cent shortly after the North American open. The Bank of Canada also makes its next policy announcement on Jan. 26.

“Markets are now heavily pricing in four [Fed] rate hikes this year,” OANDA senior analyst Craig Erlam said in a note.

“The question now becomes whether we’re nearing peak Fed fear or if there’s more pain to come.”

In this country, investors got December inflation numbers ahead of the opening bell.

Statistics Canada says the annual rate of inflation hit 4.8 per cent in December, the highest since 1991. The reading was in line with economists’ forecasts and comes ahead of next week’s Bank of Canada policy decision. Increasingly, economists have been moving forward their predictions on when the central bank will start raising rates, citing spiking price pressures and a solid Canadian economy. Some are now expecting the bank will hike by a quarter percentage point next week.

On the corporate side, Wall Street investors will continue to get bank earnings, with results due from Bank of America and Morgan Stanley. Results are also due from United Airlines and Procter & Gamble.

Bank of America said profit rose to US$6.77-billion, or 82 US cents per share, for the quarter ended Dec. 31 from $US5.21-billion, or 59 US cents per share, a year earlier. Analysts on average had expected a profit of 76 US cents per share, according to the IBES estimate from Refinitiv.

Overseas, the pan-European STOXX 600 was up 0.77 per cent by midday. Britain’s FTSE 100 gained 0.55 per cent. Germany’s DAX and France’s CAC 40 were up 0.75 per cent and 0.95 per cent, respectively.

In Asia, Japan’s Nikkei closed down 2.8 per cent. Hong Kong’s Hang Seng edged up 0.06 per cent.

Commodities

Crude prices rose for a fourth session as an outage on a pipeline between Turkey and Iraq heightened supply concerns.

The day range on Brent is US$87.62 to US$89.05. The range on West Texas Intermediate is US$85.77 to US$87.08. Both benchmarks rose more than 1 per cent on Tuesday and touched their best levels since 2014.

“The oil market will only get tighter as Asian demand improves and as many countries begin to pass the peak of the Omicron variant,” OANDA senior analyst Ed Moya said.

“Both the supply and demand crude fundamentals have turned bullish, which means the US$90 level for Brent crude should be the next big test.”

Wednesday’s advance was underpinned by reports that Turkey’s state pipeline operator put out a fire following an explosion that cut oil flow at the Kirkuk-Ceyhan pipeline. The pipeline carries crude out of Iraq to the Turkish port of Ceyhan for export.

In other commodities, gold prices were steady after dipping during the previous sessions as increasing rate-hike expectations pushed bond yields higher.

Spot gold was little changed at US$1,812.72 per ounce, after falling to a one-week low of US$1,805 an ounce on Tuesday. U.S. gold futures was unchanged at US$1,812.30.

“Gold is in for a choppy period, but the medium-term outlook still remains bullish if prices can hover around the US$1800 level,” Mr. Moya said.

Currencies

The Canadian dollar was firmer while its U.S. counterpart traded near a weekly high against a group of major currencies.

The day range on the loonie is 79.83 US cents to 80.16 US cents.

Investors will be closely watching the latest Canadian inflation numbers ahead of the open. Price pressures are expected to continue to mount in December, with the annual rate edging up to 4.9 per cent. The release marks the last major economic report before next week’s Bank of Canada policy decision.

“Today’s Canadian CPI report may serve to the punctuation point for rising expectations that the BoC will lift interest rates at next week’s policy meeting,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.

“Recent data trends have reflected better than expected growth and employment into Q4, with the Business Outlook Survey this week adding to the impression that the economy is operating closer to full capacity.”

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.4 per cent at 95.670 in the premarket period.

Britain’s pound was little changed against the U.S. dollar after new figures showed British inflation rose 5.4 per cent in December, to its highest level in 30 years.

The euro was flat, back on its 50-day moving average at US$1.1333 after in the previous day it had its sharpest daily drop in a month, according to figures from Reuters.

More company news

Barrick Gold Corp said on Wednesday its fourth-quarter production rose 10.1% sequentially, helped by strong performance from its Carlin and Cortez mines. The company reported total preliminary gold output of 1.20 million ounces in the quarter ended Dec. 31, from 1.09 million ounces a quarter ago.

Morgan Stanley on reported higher fourth-quarter profit, as the Wall Street investment bank capitalized on a boom in mergers and acquisitions and generated robust fees from advising on deals. Profit rose to $3.59-billion, or $2.01 per share, in the quarter ended Dec. 31, from $3.27-billion, or $1.81 per share, a year earlier. Analysts on average were expecting the bank to report a profit of $1.91 per share, according to Refinitiv data.

Procter & Gamble Co beat quarterly sales estimates on Wednesday, as the consumer goods giant benefited from higher prices and resurgent demand for cleaning products due to a spike in COVID-19 infections. The Tide detergent maker said net sales rose to $20.95-billion from $19.75-billion in the quarter ended Dec. 31, compared with analysts’ estimates of $20.34-billion, according to IBES data from Refinitiv.

Linamar Corp. says supply chain challenges and labour shortages deteriorated in the fourth quarter to materially hit both revenue and margins. The manufacturer says in a market conditions update Tuesday that it expected global light vehicle production to have climbed higher than expected in the fourth quarter, but higher costs for labour and logistics will weigh on its results. Guelph, Ont.-based Linamar says the labour and supply chain issues have “acutely impacted” its ability to deliver products in its industrial segments. The company also says chief executive Linda Hasenfratz has been named chair of its board of directors. The appointment comes after the death of Frank Hasenfratz, founder and executive chair of Linamar, earlier in January.

Economic news

(8:30 a.m. ET) Canadian CPI.

(8:30 a.m. ET) Canadian wholesale trade for November.

(8:30 a.m. ET) Canada’s household and mortgage credit for November.

(8:30 a.m. ET) U.S. housing starts for December.

(8:30 a.m. ET) U.S. building permits for December.

With Reuters and The Canadian Press

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