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Equities
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 41.12 points, or 0.2%, at 20,327.32.
In the U.S., the Dow Jones Industrial Average fell 112.31 points, or 0.35 per cent, at the open to 31,816.31.
The S&P 500 opened lower by 11.89 points, or 0.30 per cent, at 3,929.59, while the Nasdaq Composite dropped 39.42 points, or 0.35 per cent, to 11,225.03 at the opening bell.
Later in the session, Wall Street will get the latest Fed minutes, with traders looking for further clues about how aggressively the central bank intends to move in coming months. While markets expect the central bank to continue with a course of 50-basis-point increases, Fed chair Jerome Powell has suggested the Fed isn’t considering a 75-basis-point move at the moment.
“Given recent commentary from various Fed officials it could be argued that these minutes are probably a little bit stale, especially given the recent deterioration in some of the recent economic data, and the fact that we look set to get two more 50 basis-point rate moves between now and September,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“Nonetheless, the discussion over balance sheet reduction is likely to be the more interesting one when it comes to today’s minutes, particularly the decision to start off with $47.5-billion, as opposed to going straight in with $95-billion a month reduction.”
The Fed minutes are scheduled to be released at 2 p.m. ET.
In this country, Canada’s biggest banks move into the spotlight as earnings start rolling in. Bank of Nova Scotia and Bank of Montreal both reported early Wednesday. The remainder of the big banks report through the rest of the week.
Scotiabank’s net income excluding one-off items was $2.77-billion, or $2.18, in the three months ended April 30, compared with $2.48-billion, or $1.90, a year earlier. Analysts had expected $1.96 a share, according to IBES data from Refinitiv. Shares rose more than 3 per cent in early trading.
Bank of Montreal said net income excluding one-time items rose to $2.19-billion, or $3.23, in the three months ended April 30, from $2.1-billion, or $3.13, a year earlier. BMO shares were up modestly short after the opening bell.
Overseas, the pan-European STOXX 600 gave up early gains to slid 0.03 per cent by late morning. Britain’s FTSE 100 edged up 0.20 per cent. Germany’s DAX and France’s CAC 40 each lost 0.20 per cent.
In Asia, Japan’s Nikkei slid 0.26 per cent after a mixed handoff from Wall Street. Honk Kong’s Hang Seng gained 0.29 per cent.
Commodities
Crude prices gained in early going on tight supply and higher demand as the summer travel season nears.
The day range on Brent is US$111.06 to US$112.07. The range on West Texas Intermediate is US$110.14 to US$111.19. Prices had a mixed session on Tuesday with Brent edging higher while WTI slid.
“The oil market remains tight but the COVID situation in China points to a gradual pickup in demand and that might keep this market rangebound a while longer,” OANDA senior analyst Ed Moya said.
“It looks like the only thing that will send oil back to the pre-COVID levels is demand destruction across the world’s largest economies and that probably won’t happen,” he said.
Figures from the American Petroleum Institute showed U.S. gasoline inventories fell by 4.2 million barrels last week while distillate stocks dropped by 949,000 barrels. Crude stocks rose by 567,000 barrels.
More official figures will be released later Wednesday morning by the U.S. Energy Information Administration. Analysts are expecting those numbers to show a decline in both crude and gasoline inventories last week.
In other commodities, gold prices fell as the U.S. dollar firmed ahead of the release of the Fed minutes.
Spot gold was down 0.4 per cent at US$1,859.39 per ounce by early Wednesday morning, after rising to a two-week high of US$1,869.49 on Tuesday. U.S. gold futures dropped 0.4 per cent to US$1,857.80.
“Gold should remain supported as inflationary pressures weigh further, China’s COVID situation remains a big unknown, and corporate America continues to slash outlooks,” Mr. Moya said in a note.
Currencies
The Canadian dollar was weaker as its U.S. counterpart rose after a two-day losing streak.
The day range on the loonie is 77.82 US cents to 78.07 US cents.
“Firm crude and a modest premium for Canadian rates—which may have the potential to widen a little more in the CAD’s favour in the weeks ahead—constitute modest support for the CAD in the near-term,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic releases on Wednesday’s calendar.
On world markets, the U.S. dollar index has fallen around 3 per cent after hitting two-decade highs earlier this month but bounced 0.4 per cent off one-month lows reached earlier this week, according to figures from Reuters.
The New Zealand dollar initially bounced higher after that country’s central bank hiked rates by half a percentage point. However, the gains faded as the U.S. dollar advanced.
The New Zealand dollar rose as much as 0.8 per cent at one point to a three-week high of US$0.6514. But as the U.S. dollar gained momentum, it ceded most of those gains to trade 0.2 per cent higher at US$0.648, Reuters reported.
The euro, meanwhile, slipped 0.6 per cent on Wednesday, to US$1.067. The euro hit its best rate against the green back in a month on Tuesday after ECB chief Christine Lagarde signalled higher rates in the months ahead.
In bonds, the yield on the U.S. 10-year note was lower at 2.74 per cent in the predawn period.
More company news
Nordstrom Inc raised its annual profit and revenue forecasts as the upscale retailer counts on demand from affluent consumers to help it overcome decades-high inflation, sending its shares up 11% in extended trading. Net sales across Nordstrom’s banner stores exceeded pre-pandemic levels in the first quarter with a 23.5% jump after Americans returning to offices and social events snapped up designer apparel and footwear.
Twitter Inc will face shareholders on Wednesday during its annual meeting, as doubt remains over whether the social media company will complete its deal to be acquired by billionaire Elon Musk at the agreed-upon price. The Tesla chief executive tweeted on May 13 that the $44 billion acquisition was “temporarily on hold” while he sought more information about the proportion of fake accounts on Twitter. The company said last week it remained committed to the deal at the agreed price.
Apple Inc. has told its suppliers to speed up iPhone development after China’s strict COVID-19 lockdowns hampered the schedule for at least one of the new phones, Nikkei reported on Wednesday, citing multiple sources with knowledge of the matter told Reuters. Lockdowns due to China’s zero-COVID policy led iPhone assembler Pegatron Corp to suspend operations at its Shanghai and Kunshan plants earlier this year.
Economic news
(8:30 a.m. ET) U.S. durable and core orders for April.
(2 p.m. ET) U.S. Fed minutes from May 3-4 meeting are released.
With Reuters and The Canadian Press
Terry Weber